Statute of Limitations for Federal & Private Student Loans

What is the statute of limitations for student loans?

If I took out a student loan 10 years ago and haven't paid it off yet, do I still have to pay it? What is the statute of limitations for student loans?

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  • Federal student loans have not statute of limitations.
  • Private student loans are subject to state statutes of limitations.

Thank you for your question about statute of limitations on student loans.

You did not specify whether your loans are federal student loans or private student loans. This distinction is huge, as the statute of limitations for federal student loans and for private student loans are not the same.

Check the Dept. of Education’s National Student Loan Data System (NSLDS) to see if the loan is federal. State statutes of limitations do not apply to federal loans, and are subject to collection indefinitely. Student loans not backed by federal grants or guarantees do not appear in the NSLDS, and are therefore private. Private student loans are subject to state statutes of limitations.

Federal Student Loans

The bad news: Due to changes in federal laws in 1998 and 2005, collection on federal student loans now have no statute of limitation and — with very limited exceptions — can no longer be erased though bankruptcy.

The good news: There are many options available for student loan resolution, some of them quite flexible. Depending on the specifics of the situation, student loan borrowers may be eligible for programs that offer extended repayment periods, modifications that are income-sensitive (income based repayment or income contingent repayment, or graduated (starting small and rise over time). Some plans also offer possibility of “rehabilitating” a defaulted loan, so that some or all negative information about the loan is expunged from the borrower’s credit report if certain criteria are met.

Several federal and state agencies offer programs to help you cancel or reduce all or a portion of your student loan debt. Student loan forgiveness programs involve you making and honoring a long term commitment to teaching, nursing, or military service. To learn about some of the specific forgiveness programs available and how you can apply, visit the Federal Student Aid Web site.

Struggling with debt questions? Let the Bills.com Debt Coach review your debts and give you your options to resolving these debts.

Private Student Loans

Private student loans have entirely different rules for statutes of limitations. Unlike federal student loans, private student loans are subject to state’s statute of limitations for taking legal action to collect on written contracts. Once the statute of limitations expires, you can raise the statute of limitations as a defense, if the creditor attempts to take legal action to collect on the debt. However, just because the statute of limitations passes does not mean that a creditor or collection agent cannot try to collect on the debt. If you make a payment on a debt whose statute of limitations has passed, you can bring an expired debt back to life.

The statutes of limitations start running 30 days after your last payment on the debt. If you think that the statute of limitations for a private student loan debt is about to expire, I encourage you to consult with an attorney in your area to discuss the implications of an expired statute, and what actions you need to avoid to prevent the statute of limitations from being tolled or restarted.

The statute of limitations for a written contract no longer apply if the creditor or collection agency sues you, before the statute of limitations expires, and obtains a judgment against you. If that happens, you will be subject to wage garnishments, bank levies, and liens.

I hope this information helps you Find. Learn & Save.

Best,

Bill

Bills.com

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  • CM
    Jan, 2013
    Cynthia
    I cosigned a Sallie Mae, private, tuition answer, student loan over six years ago. The signer has not made a single payment. Has the statute of limitation ran out on this loan? I've sent dispute letters to three or four different collection agencies. These letters were certified. The collection agencies did not respond in the 30 days given as I requested. Will I still be liable?
    0 Votes

    • BA
      Jan, 2013
      Bill
      Cynthia, you raise a tricky question. Each state has its own statute of limitations for breach of contract. You did not mention in which state you reside, or where the primary borrower resided when he or she signed the loan. Also, depending on the language in the original loan documents, it is possible another state's SOL laws would apply. Let us say for the sake of argument you reside in California, the primary borrower resides in Texas or Florida, and the Sallie Mae contract states everyone agrees to use the laws of Pennsylvania, where Sallie Mae has its mailing address. All of these states have a 4-year statute of limitations, so answering your question is easy — a court hearing this case would use a 4-year statute of limitations.

      However, if Sallie Mae files an action against one of you and you and the primary borrower reside in other states with longer statutes of limitations, the local court may use a longer statute of limitations. Our advice? Take a copy of the loan contract to a local lawyer who has civil litigation experience. He or she will read the contract, review its choice-of-laws clause, ask you questions about the primary borrower's state of residence, and give you a better answer than I shared here. In the meantime, read the Bills.com article What Is My Statute of Limitations? for a longer discussion of this difficult issue.

      Regarding the debt validation letter you mentioned, consumers have a 30-day window to validate a debt, but the Fair Debt Collection Practices Act is vague on how much time a collection agent has to respond to a debt validation letter.
      0 Votes

  • RB
    Jun, 2012
    Rick
    I am still a student. I have 3.5 years left of becoming a doctor. I keep getting calls for late payments but BOA refuses to accept the letter of enrollment. I am frustrated with this.
    0 Votes

  • DD
    May, 2012
    Dario
    I was just reading about loan forgiveness. I served, and was honorably discharged from the Armed Forces after serving for seven years. I also taught undergraduate students at a State University for one year, another year as a State Social Worker and three years as a Paralegal.That's twelve years. Do I qualify for the ten-year needed for loan forgiveness? Thanks again for your informative answers.
    0 Votes

    • BA
      May, 2012
      Bill
      Dario, there are rules about applying for the forgiveness program and the number of years a person needs to make payments under the program, in order to get the debt forgiven.

      Contact the Federal Student Aid Information Center at (800) 433-3243, or visit the Dept. of Education's Student Aid Web page. To see a detailed outline of the program for public service employees read the document Loan Forgiveness for Public Service Employees.
      0 Votes

  • OO
    May, 2012
    olga
    I graduated from college in 1972 using the GI Bill. A couple of months ago I received a letter from the Treasury Dept. that I owed an unspecified amount, and they began taking $98.00 a month from my Social Security benefit. The debt is 40 years old. Do I have any recourse to have the loan forgiven. Also, does the Statute of Limitations applies to debts incurred prior to the law becoming effective.Is that law retroactive to old debts? Thanks for your help. By the way, I have been adjudged disabled by Social Security, does that help? God Bless You.
    0 Votes

    • BA
      May, 2012
      Bill
      First, do you owe anything on your student loans? If you repaid them in full, then attack that area first. I don't know many people who keep records from 40 years ago, but if you can show you paid your debt down to a zero balance, then you have an excellent starting place to stop the administrative offset.

      I am not aware of any statute of limitations for federal student loans regardless of when the debt occurred.

      Regarding loan forgiveness, if you worked in public service (such as police, fire, public school, and so on) for ten years during your career, you may have an argument for a Public Service Loan Forgiveness. See the Federal Student Aid Debt Resolution Web site to learn if you can request a hearing to reduce the amount offset from your Social Security benefit.
      1 Votes

    • RP
      May, 2012
      raul
      There are no statute of limitations for federal student loans. However, there ARE statute of limitations for bank robberies, kidnappings, thefts, etc. etc. Isn't there something wrong about this?
      3 Votes

    • BA
      May, 2012
      Bill
      I realize you ask a rhetorical question, but I can't resist getting sucked into responding. The policy behind statutes of limitations on crimes are to encourage police and prosecutors to pursue investigating and prosecuting crimes quickly, relatively speaking. Because evidence and memories tend to degrade or be lost over time, the framers of the Constitution tried to create safeguards to assure due process. They wanted to avoid depriving people of their liberty, and took the stance that it is better to let a guilty person go free than imprison an innocent.

      A student loan cannot be compared to a crime. Applying for a student loan is a voluntary act. If an applicant does not like the terms of a student loan, he or she is free to walk away from the offer. Indeed, many people earn college degrees without loans, so student loans are not requirements or prerequisites for a college or trade school education.
      2 Votes

  • SB
    Apr, 2012
    Spring
    Are your student loans still collectible if they were taken out prior to the law changes in 1998?
    0 Votes

    • BA
      Apr, 2012
      Bill
      Bankruptcy laws apply to cases filed as of that date, and not the bankruptcy law in effect when the debts were incurred. In other words, when Congress made big changes to bankruptcy law in 1978 and 2005, those changes applied to cases filed on or after October 1, 1979 and October 17, 2005, respectively.
      0 Votes