Student loan statute of limitations: What to know about your college debt

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A statute of limitations is a legal time limit that creditors and debt collectors must follow when trying to collect a debt. If you’ve defaulted on your student loan debt, it may be subject to a statute of limitations. However, the exact time frame depends on the type of debt and your state of residence.

What is the statute of limitations on student loan debt?

The debt collection statute of limitations governs how long a creditor can sue you in an attempt to collect an unpaid debt. For contractual debts like student loans, states typically limit the debt collection time frame to somewhere between three and 10 years.

Once the statute of limitations runs out on a debt, the debt is considered “time barred.” But a time-barred debt isn’t the same thing as debt forgiveness. An expired statute of limitations prohibits a creditor or collection agency from suing you, but you may continue to receive collection calls and letters, and the account might still remain on your credit reports.

Student loans with a statute of limitations

Federal student loans do not have a statue of limitations, so lenders and collections agencies have no time limit when it comes to legally forcing you to pay (aka suing you). Whether you’ve been in student loan default for one year or 20 years, the loan holder could legally use the court system to compel you to pay if it desires to do so.

Private student loans, on the other hand, have a statute of limitations of anywhere from three to 10 years. After this, they become time barred. The exact time frame depends on your state of residence.

If you’re trying to figure out whether your student loan statute of limitations has passed, you can review your state’s guidelines or contact your state attorney general.

How long is the statute of limitations on student loans for credit reporting?

Federal law also limits how long most types of negative information can remain on your credit report. In most cases, the Fair Credit Reporting Act (FCRA) allows derogatory items like defaulted debts or collection accounts to stay on your credit report for up to seven years.

Because federal student loans do not have a statute of limitations, these negative accounts can remain on your credit report indefinitely. Only after you pay your federal student loans can the default be removed from your credit reports — and even then, it will still take seven years from the time of repayment for those accounts to be removed.

Can student loans ever be discharged?

While many types of debts can be discharged through bankruptcy, student loans are much harder to erase. To have them discharged, you’ll need to prove to the court that repaying the loans would cause you undue financial hardship. This could mean demonstrating that:

  • You’re unable to maintain a minimal standard of living if you have to repay the loan.
  • Repaying the loan would cause you to remain in a financial hardship status for a significant portion of the loan repayment timeline.
  • You’ve already tried in good faith to repay the loan before you filed for bankruptcy.

If you can convince the court that repaying your student loan would cause you undue financial hardship, the court may opt to discharge your debt. However, the bankruptcy court might also decide to discharge only part of your debt or to adjust your loan repayment terms instead.

Private student loans may be a little easier to include in a bankruptcy filing than federal student loans. A recent New York appeals court ruling found that private student loans aren’t protected from bankruptcy discharge, which could encourage more borrowers to pursue this option. Some lawmakers are also working to introduce an easier path to bankruptcy for federal student loans, allowing federal loans to be discharged after a 10-year waiting period.

The bottom line

The consequences of defaulting on student loans can make your financial life difficult in a number of ways. These negative accounts can damage your credit history and credit score, making it hard to qualify for new financing until you resolve the situation. Defaulted federal student loans also don’t have a debt collection statute of limitations, and you may not be able to discharge these debts in bankruptcy.

If you’re struggling with defaulted federal student debt, you might want to consider whether student loan rehabilitation or consolidation could benefit you. With defaulted private student loans or federal loans where consolidation or rehabilitation isn’t an option, it might be helpful to speak with a student loan attorney or an organization that offers student loan help for personalized advice.

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Written by
Michelle Black
Contributing writer
Michelle Lambright Black is a credit expert with over 19 years of experience, a freelance writer and a certified credit expert witness. In addition to writing for Bankrate, Michelle's work is featured with numerous publications including FICO, Experian, Forbes, U.S. News & World Report and Reader’s Digest, among others.
Edited by
Student loans editor