August 13, 2020
Summary: Got questions about student loan debt? This guide is for you. If you've been sued for a student loand debt, use SoloSuit to respond in 15 minutes.
If you took out student loans to pay for an undergraduate or graduate degree, you may have been surprised to discover that student loan debt impacts your credit and will appear on your credit report. Many people are surprised because there is a notion that student loans are “good” debt that is treated differently from credit card debt and personal loan debt. Regardless of whether student loan debt is “good” or “bad”, the fact remains that it will impact your credit.
Many people with student loan debt are curious about how long the debt stays on their credit report. For example, some people ask, “Will my student loan debt go away and not appear on my credit report after seven years?” We will address this question and provide important info about student loans.
Both private and public student loans will likely appear on your credit report with each of the “Big 3” credit companies (i.e. TransUnion, Experian, and Equifax). For each loan you took out, a “trade line” will appear on your credit report. A trade line is essentially a brief summary of a particular type of debt. So, for example, if you have multiple private and public student loans, each loan will have a trade line on your credit report. The trade line typically highlights the following info:
Typically, a defaulted debt, including student loan debt, will be taken off your credit report after 7.5 years from the date of the first missed payment. Though, it is important to understand that the 7.5 year period applies to private student loans. In contrast, if you defaulted on a public student loan, the amount of time it will remain on your credit report is actually 7 years from the date of default OR from the date the loan was transferred from the guarantor of a Federal Family Education Loan (FFEL) to the Department of Education. There is also a very big exception to the 7 year rule - Perkins loans never age off while a balance is owed. This means if you took out, and subsequently defaulted on a Perkins loan, the trade line will continue to show until the student loan is paid off, even after 7.5 years have elapsed. The only way to get a Perkins loan removed from your credit report is to pay the loan off or to consolidate the debt with another loan.
This is a fairly common question and highlights the confusion associated with the term “statute of limitations.” It is important to note the fact that the time limit to file a lawsuit and the time associated with a debt appearing on a credit report are not related.
The statute of limitations typically comes into play when someone is interested in learning about the amount of time a lender has to file a lawsuit against them. You should know that public loans (i.e. loans disbursed and managed through the federal government) are not subject to a statute of limitations.
In contrast, private student loans are in fact subject to a statute of limitations. The applicable limitations period will be predicated either on the state in which you reside or the state that controls the loan agreement.
You may be asking yourself, “What happens to the debt that appears on the credit report when the statute of limitations expires?” As mentioned previously, the two issues are not related. As a result, when a statute of limitations expires, it does not mean a debt will be, or should be, removed from your credit report.
If you fail to make a student loan payment, or miss multiple payments, do not be surprised if you are contacted by a debt collector. Student loans receive virtually the same treatment as other loans when the borrower fails to make payments. Whether you have private loans or federal loans, they loan be turned over to a debt collector. Though, there are important distinctions on the steps you can take to remedy the missed payments depending on the type of student loans you took out.
If you took out private student loans, there is no standard option or action to take when dealing with a collection agency, aside from paying what is owed. Though, you may be able to negotiate with the debt collector and try to establish a reasonable payment plan. You should also know that a debt collector trying to collect payments on a private student loan generally are unable to:
If, on the other hand, you took out federal student loans, you may have additional options when dealing with a federal student loan collector. These options include:
If you have been sued by a debt collector trying to collect on a defaulted student loan debt, utilize SoloSuit to respond.
SoloSuit takes the guesswork out of responding to a debt collection lawsuit, including a student loan debt collection lawsuit. SoloSuit is a step-by-step web-app that will ask you a series of questions. Upon answering these questions, you can either print the completed forms and mail in hard copies to the court where the debt collector filed suit, or you can pay SoloSuit to file it for you and to have an attorney review the document.
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If you need help determining how to appropriately respond to a student loan debt collection lawsuit, consider using SoloSuit. Take a moment to review these FAQs to learn more about the services provided by SoloSuit.
If you took out private or federal student loans and subsequently defaulted on paying the loans, do not be surprised if they appear on your credit report and remain on your report for at least 7 years. Also, if you are contacted by a debt collector seeking repayment of your student loans, it is important to understand the options available to you to try and reach an amicable outcome with the debt collector.
Best of Luck!
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