Do student loans go away after 7 years? — Student Loan Debt Guide

George Simons

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.

Student Loan Information that Typically Appears on Your Credit Report

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:

  • Total balance owed;
  • Your payment history
  • The origination date of the loan; and
  • The company reporting the debt

Amount of Time a Defaulted Student Loan Debt Will Remain on Your Credit Report

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.

Is there a Statute of Limitations for a Debt Appearing on Your Credit Report?

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.

What To Do If You are Pursued by a Student Loan Debt Collector

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:

  • Garnish your wages, absent a court order;
  • Garnish your Social Security;
  • Obtain your federal or state tax refund(s); or
  • Block you from applying for, and receiving, federal student loans to return to school.

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:

  1. Engaging in “Rehabilitation” - This means that the debt collector will take your loans out of default status contingent upon you making a series of consecutive on-time payments. Generally, you can only rehabilitate a loan once. It is important to successfully make the payments on-time since rehabilitation is the only way to remove the default notation from your credit history.
  2. Consolidation - When you consolidate your defaulted loans, you effectively pay off the default loan by taking out a new loan with new repayment terms.
  3. Repayment - If you can afford to pay your defaulted federal loans back, this is the fastest and most efficient way to settle your outstanding student loan debt. Under certain circumstances, your debt collector may even be authorized to waive some of the associated late fees and other collection expenses.

If you have been sued by a debt collector trying to collect on a defaulted student loan debt, utilize SoloSuit to respond.

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Summary of What To Do If You Have Defaulted Student Loans on Your Credit Report

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!

Additional Resources

Advice on how to file an FDCPA lawsuit against a debt collection agency

Tips on how to answer a summons for debt collection.

Strategies for how to get back on track after coming through the other side of a debt lawsuit.

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