When Do Student Loans Ever Go Away? 7 Years? 10? Ever? | Tate Law

Quick Facts

• Loan Forgiveness Timeline: Federal student loans can be forgiven after 10 years through Public Service Loan Forgiveness (PSLF) or after 20-25 years under Income-Driven Repayment (IDR) plans.

• Default Status and Credit Reports: Defaulted loans don’t disappear after 7 years, but the default status may be removed from your credit report, though the debt remains.

• Loan Discharge Options: Loans may be discharged in cases of death, permanent disability, or school fraud.

• Private Loan Statute of Limitations: Private loans may have a statute of limitations, which limits legal action but doesn’t erase the debt.

• Bankruptcy and Student Loans: Bankruptcy can discharge student loans, but it requires proving undue hardship, which is difficult to achieve.

Whether you’ve made payments in years or not, your student loan debt can vanish. But to access loan forgiveness programs or other options, you may need to get your loans out of default and into good standing.

With Americans carrying an insurmountable amount of student loan debt — over $1.6 trillion in total — it’s only natural to ask: “Do student loans ever go away?” Thankfully, the federal government has various programs in place that provide borrowers with loan forgiveness, cancellation, and discharge.

Keep reading to learn when your student loans will go away and what to do if you haven’t paid your student loans in years.

Related: How Long Do Student Loans Last?

Student loans don’t go away after seven years. There is no program for loan forgiveness or cancellation after seven years. But if you recently checked your credit report and wondered, “why did my student loans disappear?” The answer is that you have defaulted student loans.

The big credit bureaus — Equifax, Experian, TransUnion — remove the default status and late payments from your credit report seven years after the first missed payment that led to the loan defaulting or being charged off.

Most borrowers will see a jump in their credit scores the following month after their student loans fall off their report. That’s a good thing. But it doesn’t remove their responsibility to pay back the loans. You’ll still owe the debt until you pay it back, it’s forgiven, or, in the case of private student loans, the statute of limitations runs out. Read more about how student loans work.

Related: What Happens if You Default on Sallie Mae Student Loan?

Eligible borrowers can have their loans forgiven after 10 years — if they meet certain requirements. To qualify, they must spend a decade working in a public service job and make regular payments under one of the four types of income-driven repayment plans. Qualifying positions range from nonprofit work to teaching in a charter or public school, to law enforcement, and providing medical care at a public hospital.

Related: PSLF Medical School

To qualify for tax-free loan forgiveness, borrowers need to:

• Make 120 on-time monthly payments while working full-time in an eligible public service position.

• Have the right loan — only federal Direct Loans qualify, not Perkins loans or the old Federal Family Education Loans.

• Be in the right payment plan — the income-driven repayment plans Congress designed to help lower-income borrowers.

The Public Service Loan Forgiveness Program was broken for years. Few borrowers got relief. The eligibility requirements made qualifying challenging. But the Biden administration recently introduced sweeping changes that are fixing PSLF — at least temporarily.

As a result of the coronavirus pandemic, the Education Department is using its authority under the Heroes Act to count payments borrowers made on nonqualifying FFELP Loans retroactively. The department expects this change will benefit around 550,000 borrowers.

Learn More: Public Service Limited Waiver Opportunity

Student loans will remain on your credit reports and in your life until their paid in full or you qualify for Public Service Loan Forgiveness, income-based repayment forgiveness, or some other discharge or cancellation opportunity that wipes your remaining loan balance.

Related: Private Student Loan Forgiveness Programs

Federal student loans go away:

• After 10 years — Public Service Loan Forgiveness.

• After at least 20 years of student loan payments under an income-driven repayment plan — IDR forgiveness and 20-year student loan forgiveness.

• After 25 years if you borrowed loans for graduate school — 25-year federal loan forgiveness.

• When you die, or a parent dies — Parent PLUS Loan Forgiveness.

• When you suffer a severe and permanent mental or physical disability that prevents you from working — Total and Permanent Disability Discharge.

• When you teach for five consecutive years in a Title I school district — Teacher Loan Forgiveness.

• If you went to a school that acted fraudulently (e.g., falsified placement rates, used deceptive marketing, and practiced predatory recruiting) — Borrower Defense to Repayment.

• When you file student loan bankruptcy and prove that repaying your debt would cause you and your dependents undue hardship.

Learn More: How to Apply for Student Loan Forgiveness

Unlike in the UK, where student loans are written off after 30 years, the US Department of Education does not automatically write off federal loans after any set period. Without a statute of limitations, borrowers can find themselves stuck paying debts until death.

The student loan debt crisis has become a national issue, prompting President Joe Biden to make promises to offer relief for American borrowers during his campaign — including $10 thousand of student loan forgiveness and increasing Pell Grants for lower-income individuals.

He made good on his promise of student debt relief last year by signing an executive order offering up to $20 thousand in forgiveness — only for court rulings to stand in the way.

Now, the administration has brought the case to the Supreme Court and paused federal student loan payments until a decision is reached on its legality.

Learn More: How to Get Rid of Student Loan Debt Legally

Federal student loans are never written off because they’ve grown old or expired. On the other hand, banks and loan holders write off their debts when they lose the right to sue borrowers for missing payments.

When that happens, the lender considers the debt “stale” or “time-barred” and clears it from its books. But you can still be hounded by debt collectors demanding payment.

Most states let them call and send letters so long as they don’t violate the Fair Debt Collection Practices Act.

Related: What Happens If You Don’t Pay Student Loans?

Not paying your student loans can have serious financial consequences, including:

• Damage to Your Credit: Your late payment history can be reported to the credit bureaus, resulting in lowered credit rating.

• Default: If your federal student loan is delinquent for 270 days or more, it will go into default, having major negative consequences for your financial life.

• Legal Action: Your loan holder can take you to court if you default on your loans.

• Wage Garnishment: The government can garnish up to 15 percent of your disposable income.

• Seized Tax Refunds & Social Security Benefits: The government may withhold your tax refund or a portion of your Social Security benefits to repay your defaulted student loan debt.

The bottom line is that it’s in your best interest to pay your loans. Luckily, the Biden Administration has passed several Repayment Plan options depending on the type of loan you hold which may allow you to update your monthly payment amount and make it more manageable.

Related: Income-Driven Repayment: How It Works

Better yet, you may be eligible for student loan forgiveness and just not know it yet. Check out this article to see if there may be a forgiveness path for you.

Related: How to Apply for Loan Forgiveness

It’s important to keep up with student loan payments, or else you might be in for some serious financial and legal consequences. Wage garnishments and court-sanctioned debt collection measures are a few of the possible repercussions. But, if you stay on top of those payments, you can maintain a good credit score and avoid any penalties or extra interest charges that come with late payments.

Do you have a defaulted student loan 20 years ago? Maybe you left the country. Or maybe you ignored the bills because you couldn’t afford the payments.

Whatever your reason, it’s been years since you’ve dealt with your student loans. But now, you’re ready.

Here are step-by-step instructions on what to do when it’s been years since you paid your student loans.

Step 1: Find your loans.

Old federal student loans are easier to find than private student loans. The Department of Education lists every type of loan you borrowed on the Federal Student Aid site. So even if your loans have fallen off your credit report, you can find them on Studentaid.Gov. You can also call FSA customer service at 1-800-433-3243. The representative will check the National Student Loan Data System to find your loan information.

Finding private student loans is trickier. There’s no central database for private student loan debt. To find your loans, check your credit reports with all three bureaus to see if any student loans that aren’t on the FSA website are listed. Those loans are likely private student loans. Another option is to call the most popular private lenders to see if they have an account for you. But that’s tedious and scary.

Step 2: Ask about your repayment options.

Once you find your loans, the next step is to figure out your repayment options. Federal student loan borrowers have four options to get out of default:

• repayment in full

• settlement

• consolidation

• loan rehabilitation

The best option for you will depend on your personal finances and whether you’ve previously consolidated your loans or completed the loan rehabilitation program. If you have an FFEL Consolidation loan, you may be able to consolidate a second time. But loan rehabilitation is limited to once per loan. Check out this guide to learn how to get student loans out of collections.

Also, the Education Department rolled out a plan to give defaulters a “fresh start”, providing access to repayment plans, financial aid, and loan forgiveness programs — all without the headache of rehabilitation or consolidation.

Related: Fresh Start Program Student Loans

Private loan holders and collection agencies don’t offer the same repayment options. Unless you can find a lender willing to refinance your delinquent debt, your best option will either be negotiating a payoff or filing a student loan complaint in bankruptcy.

Learn More: Can You Settle Student Loans?

Step 3: Follow up with the new servicer.

If you don’t negotiate a payoff, your federal loans will be sent to a new student loan servicer after you get out of default. Make sure the new company has updated contact information for you. Also, review your payment plan. If you need a lower monthly payment, look into the different income-driven repayment plans. Those plans give you an affordable payment based on your family size and discretionary income.

You can use the Loan Simulator to estimate your monthly bill under the repayment options the Department of Education offers.

Both federal and private student loans fall off your credit report about seven years after your last payment or date of default.

You default after nine months of nonpayment for federal student loans, and you’re not in deferment or forbearance. So you’ll have the negative information for those nine months plus seven years of negative information before the loans fall off your credit report.

Private student loans usually default or are charged off around 120-180 days of non-payment. Once that status appears on your credit report, it will be another 7.5 years before the loans are removed.

• How long do student loans stay on your credit? Student loans will remain on your credit report until you pay them off, or they’re removed seven years after you default. If you’re trying to buy a home, but your student loans are killing your credit score, you can try to remove the loans because the loan servicer or collection agency reports inaccurate information.

• How long do defaulted student loans stay on credit reports? Defaulted student loans will hit your credit report for seven years after the default status was entered. Until then, the defaulted loans will affect the interest rates you get for home and auto loans and credit cards.

• What does it mean if my student loan is closed on my credit report? Your student loan could show closed on your credit report if you paid it in full, negotiated a settlement, refinanced with a private lender, or combined them into a Direct Consolidation Loan.

Learn More: Do This When Defaulted Student Loans Not Showing On Credit Report

President Biden has placed most federal student loans into forbearance and suspended collection activities like Social Security and tax refund offset throughout the coronavirus pandemic. And he has authorized blanket loan cancellation of up to $20 thousand of student debt per borrower, but that’s on hold until the Supreme Court decides the plan’s fate this summer.

Schedule a call where we can evaluate your student loan repayment options. With the right strategy, you can tackle your remaining balance and meet your financial goals even if your student loans never go away.

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