It’s been a rough decade for many student loan borrowers, including Jennifer (name changed for privacy). A stroke sidelined her, and disability payments weren’t enough to stay ahead of her debt. Creditors have been hounding her relentlessly, threatening to garnish her nonexistent wages. Fortunately, the statute of limitations just ran out on her credit card debts, and those threats have stopped.
Could the same thing be true of her student loans? What about yours? If you’ve defaulted on your student loans, it’s natural to wonder if there’s any chance the debt will just go away, especially if it’s been a while since a credit collector’s come calling.
But is it even possible to run out the statute of limitations on student loan debt?
Is There a Statute of Limitations for Paying Back Student Loan Debt?
In the context of debt collection, a statute of limitations refers to how long a creditor has to sue you for repayment, and it varies based on state law and the type of lender.
Different states limit the debt collection time frame to between three and 10 years. If your lender doesn’t sue you within your state’s student loan statute of limitations, your debt is considered “time-barred” — in other words, it’s too late to use the legal system to collect.
But that’s not the same as forgiveness or cancellation of the debt. Your debt doesn’t go away. Technically, you still owe it, and in many states, the lender can still attempt to collect on it by calling you or sending you collection letters. The account may even continue to show up on your credit reports.
But the creditor can no longer sue you to collect it. That means they have no way to use the legal system to force collection, including garnishing your wages or placing liens (a type of claim) on your property. Thus, any further payment requests are just that — requests.
But more important than the amount of time is the type of student loan lender it applies to.
Types of Student Loans With a Statute of Limitations
While there’s a statute of limitations on student loan debt, unfortunately, most student loans don’t qualify. That’s because only private student loans are subject to a statute of limitations. There is no statute of limitations on federal student loan debt.
Statute of Limitations Consequences on Federal vs. Private Student Loans
Most student loans in the U.S. are federal student loans. And since federal student loans aren’t subject to a statute of limitations, the U.S. Department of Education can sue federal student loan borrowers at any time.
In fact, unlike private lenders, federal student loan servicers have several ways to collect on student loans without a court order. That means they don’t need to sue you at all. These include wage garnishment and the Treasury Offset Program, which can seize tax refunds.
So whether you’ve been in default for one year or 40 years, or whether you’re earning a paycheck from a full-time job or collecting Social Security, federal loan servicers are always able to collect.
Thus, if you’re in default on federal student loans, it’s crucial to get out of default as soon as possible to avoid dire consequences like wage garnishment, which can be up to 15% of your income. The federal government can also garnish up to 15% of Social Security and disability benefit payments without having to sue you first.
On the other hand, getting your federal student loans into an income-driven repayment plan lowers your monthly payment to 10% of your discretionary income, adjusted for family size. And if you’re unemployed or close enough to the poverty line, your monthly payment could be as low as $0.
If you have private student loans in default and you haven’t paid on them in several years, you may have a shot. Consult a bankruptcy or consumer advocacy attorney in your state. They can help you determine whether your private student loan debt is past the statute of limitations and whether to wait it out.
How to Determine the Statute of Limitations on Your Student Loans
Typically, your loans are subject to the statute of limitations for the state where you live. There’s no universal standard, and every state allows a different amount of time before the statute of limitations on debt collection expires.
But it isn’t always clear which state’s statute of limitations applies, especially if your lender files a lawsuit in another state or your promissory note (your loan contract) has language that says differently.
For example, the applicable statute of limitations could be for the state where you lived at the time you took out the loan, the state where you currently live, the state where you attended college, or the lender’s state of incorporation.
So don’t automatically assume the statute of limitations in the state where you currently live applies. Consult your promissory note to see if it specifies which state’s laws apply. And if you’re unsure, an attorney specializing in student loans can help you figure it out.
Once you know which state’s limitations period applies, you can find your state’s statute of limitations by searching a list like the one on Nolo. The statute of limitations periods that apply to student loans are those for written contracts.
Statute of limitation start dates also depend on state law and can be subject to interpretation. Typically, the clock starts with the last payment you made.
For example, say you live in a state with a six-year statute of limitations. If you made your last loan payment in July 2018, your lender would have until July 2024 to sue you for the debt balance.
Be very careful about restarting the clock. Some actions, such as making a payment or even admitting to owing the debt, can reset the statute of limitations and put you back at ground zero.
For example, if you pay on the hypothetical debt in July 2022, you’ll resurrect the debt. The lender now has until July 2026 to sue you for the total amount of unpaid debt. Plus, you could be liable for any past interest and fees that accumulated in the two years prior.
That’s where consulting a student loan attorney for advice pays dividends. Although hiring a lawyer costs money, it could be worth it in the long run to avoid a more costly mistake.
What Happens After the Statute of Limitations Expires?
According to 2021 changes to the Fair Debt Collections Practices Act, debt collectors aren’t allowed to sue you for time-barred debt. But if your lender doesn’t know the statute of limitations has expired, it might still try to sue you for the loan balance.
If it does, don’t ignore a summons. One of the ways you can respond to a lawsuit for debt collection is to present a defense that your student loan debt is time-barred.
But if you don’t appear in court to prove the statute of limitations has expired, the judge could issue a default judgment in the lender’s favor, potentially resulting in wage garnishment. It will take a lot of work to stop the garnishment and reverse the judgment.
Even if your lender never sues you or a court agrees the statute of limitations has expired, that doesn’t mean your debt is canceled. The only ways to truly eliminate your debt are through repayment or for the lender or legal system to forgive, cancel, or discharge it. Unfortunately, ignoring it won’t make it go away.
The expiration of the statute of limitations only means your lender can no longer take legal action.
However, depending on your state’s laws, a lender may still be able to contact you about the debt, including calling you or sending you letters or reporting it to the credit bureaus. But it won’t have access to court-enabled collection tactics like wage garnishment or placing liens on your property.
Also know that all credit collection agencies must comply with the Fair Debt Collection Practices Act, whether the statute of limitations has expired or not. That means they can’t do things like lie to you. So they can’t threaten to sue you if the statute of limitations has expired, and they must provide an honest answer about whether it’s expired if you ask.
FAQs About the Statute of Limitations on Student Loans
A private student loan lender can’t sue you after the statute of limitations has expired. But there are a lot of nuances to student loans and the statute of limitations that can be confusing. That leaves most borrowers with some questions.
Should I Stop Paying My Student Loans While I Wait for the Statute of Limitations to Expire?
Don’t stop paying your student loans and try to run out the statute of limitations. It takes years of default to wait it out, and there’s a huge risk the lender will sue.
In fact, the closer it gets to the time limit in your state, the more likely it is a lender will sue you before it loses the chance. Lenders are aware of the timelines, and banks don’t like to lose money. Thus, they’ll do whatever they can to recoup their losses.
Moreover, you’re technically still obligated to repay the debt, even after the statute has expired. Only a repayment plan, the lender’s forgiveness of the debt, or a court ruling (such as a bankruptcy or a judgment against the lender like a class-action suit), can absolve you of the debt.
But if a default has already happened, understanding how the statute of limitations works can protect you from debt collectors.
Can You Restart the Statute of Limitations on Student Loans?
It’s possible to restart the clock on the statute of limitations accidentally. Actions that could do so include anything that affirms you owe the debt, such as:
- Paying any amount toward your debt
- Promising to repay verbally or in writing
- Acknowledging you owe the debt
Another thing to be aware of: If you move overseas or file for bankruptcy, it can place a pause on the statute of limitations. The statute’s clock will restart once you return to the U.S. or have finished the bankruptcy process.
Once your student loan is in default, your lender contracts with a collection agency. Credit collectors typically receive payment based on the number of accounts and amount of money they recover. Thus, they often use aggressive tactics, including harassing you, threatening you, and attempting to trick you into renewing the statute of limitations.
The Fair Debt Collection Practices Act prohibits debt collectors from threatening and harassing you. It also prohibits collectors from tricking you into restarting the statute of limitations. If you feel a loan servicer or collection agency has tricked you, contact a consumer protection attorney and file a formal complaint with the Federal Trade Commission.
Whatever you do, never agree to make payments after a debt has passed your state’s statute of limitations period. You can resurrect time-barred debt, often referred to as “zombie debt.” And if you bring the debt back to life, you also resurrect the lender’s legal means to collect on it — meaning they can once again sue you.
What Should I Do When Debt Collectors Call About My Student Loan Debt?
Even if you only just defaulted on your student loans yesterday, rule No. 1 when a debt collector calls you: Never give any information over the phone, including your name. That helps avoid potential scammers and any possibility you might accidentally affirm the debt.
Do not under any circumstances affirm the debt as your own or agree to make any payments. If you determine you’re nowhere near the statute of limitations, you may decide to attempt to settle your student loan debt. But that’s not the best first step.
Instead, request a debt verification letter. Tell the caller you don’t give any information over the phone and request they send you a debt verification letter within 30 days by certified mail.
If a debt collector sends you a letter instead of contacting you by phone, you should still request debt verification. Don’t just ignore the collection letter hoping they’ll go away. They won’t, especially if the collection agency is a lawyer or legal firm. And if you fail to respond to a lawsuit, they could get a default judgment.
You can find form letters to ask for debt verification on the Consumer Financial Protection Bureau website.
The lender’s debt verification letter should include:
- Proof you owe the debt
- The name of the original lender
- The loan account numbers
- The original name and address of the borrower
- The borrower’s payment history, including the amount and date of the last payment
This information can help you determine how old your debt is and whether the statute of limitations has expired. Remember: In most cases, you need to count from the date of your last payment, but check the governing state’s law.
If you believe your student loans have passed the statute of limitations, your next step is to contact a lawyer who specializes in student loans to ensure the debt truly is time-barred. Find one by searching the American Bar Association’s Find Legal Aid tool or the National Association of Consumer Advocates.
Once you’ve verified your debt is past the statute of limitations, inform the creditor the debt is time-barred, and send them a cease and desist letter via certified mail. Your attorney can help you draft the letter, or you can find a form letter online like the one on Debt.com.
This letter should tell the creditor not to contact you again except to confirm they received the letter or to let you know of any legal action they plan to take.
Again, whatever you do, do not affirm the debt, agree to make payments, or make any partial payments on time-barred debt.
If it is important to you to repay the debt, wait until you can repay it in full and craft a settlement plan with the help of an attorney to avoid resurrecting the debt and associated penalties.
Can You Get Student Loan Debt Discharged?
While you can discharge most debts through bankruptcy as long as you meet the requirements, it’s much more difficult to get rid of student loan debt through bankruptcy.
Fortunately, it’s become easier for private student loan debt, especially if you can prove the debt wasn’t a traditional education loan. But it’s still borderline impossible to discharge federal student loans in bankruptcy.
To have them discharged, you need to prove repaying them would be an undue hardship. Most federal courts use the Brunner Test to prove undue hardship, which means demonstrating that repaying your loans would mean:
- You’d be unable to maintain a minimal standard of living
- Repaying the loan would cause you to remain in that state for the majority of the repayment term
- You made a good-faith effort to repay the loan before filing for bankruptcy
Since the federal government has so many loan repayment plans, including income-driven repayment, which can calculate your monthly payment as low as $0, it’s a rare individual who can meet this standard.
It’s easier with private lenders who offer fewer repayment options. But it’s still a difficult test to meet.
But bankruptcy isn’t the only option for getting your loans discharged. If you meet the eligibility requirements, you could also have your federal student loans discharged for these reasons:
- Closed School. If your school closes while you’re enrolled or within 120 to 180 days after you withdrew (depending on when you took out your loans), you could be eligible for a discharge.
- Total and Permanent Disability. If you become so disabled you can no longer work, you may be eligible to have your loans canceled.
- Death. If you die, your descendants won’t inherit your loans. And if you’re a parent PLUS loan borrower and the child on whose behalf you borrowed the loan dies, you can have your debt discharged.
- Borrower Defense to Repayment. If your school lies to you about your ability to benefit from their program, you may be able to have your loans discharged.
- False Certification. If you’re the victim of identity theft or your loans are falsely certified on your behalf, you’re entitled to have them canceled.
- Unpaid Refund. If your school never pays you the leftover loan balance after paying tuition and fees and doesn’t send it back to the Department of Education, you’re entitled to have that amount discharged.
Does the Statute of Limitations Affect How My Student Loan Impacts My Credit Report?
Defaulted student loans can negatively impact your credit score. But how much the default dings your score lessens over time. What takes longer to fall off are the defaulted accounts themselves.
The Fair Credit Reporting Act limits how long most types of negative information can remain on your credit report. In most cases, negative marks like defaulted debts or collections accounts can stay on your credit report for up to seven years.
That’s longer than the statute of limitations of three to six years in most states, but it’s shorter than in states with a 10-year statute of limitations.
Also, Mississippi and Wisconsin both have state laws requiring the removal of negative information once the statute of limitations has passed. Mississippi has a three-year statute of limitations, and Wisconsin has a six-year time frame.
However, unlike private loans, defaulted federal student loans can remain on your credit report indefinitely. The only way to remove the default is to pay them off entirely or go through the process of student loan rehabilitation.
To rehabilitate your federal student loans, you must make nine on-time monthly payments within 10 consecutive months. The payment amount is typically 15% of your income, although it’s possible to negotiate a lower amount.
Do Student Loans Expire or Gain Forgiveness After 25 Years?
Although the statute of limitations can expire, your debt never does. The only way to make it go away is to do something about it.
That’s even the case when it comes to student loan forgiveness. Although you may have heard it’s possible to get the balance of your federal student loans forgiven after 25 years, it’s not an automatic process. You must meet specific criteria for federal student loan forgiveness programs.
The primary requirement is enrollment in an income-driven repayment plan. Depending on the plan and your loan types, you could have your balance forgiven in 20 to 25 years, but only if you have anything left to forgive after making the required number of qualifying payments on your income-driven plan. Most borrowers don’t.
Also be forewarned: Those who do could face an income tax bill from the IRS. The American Rescue Plan, passed into law in March 2021, made all student loan forgiveness tax-free through Dec. 31, 2025. But unless the law becomes permanent, income-driven forgiveness won’t be tax-free beginning Jan. 1, 2026.
However, if you qualify for public service loan forgiveness, you could have your federal student loans forgiven in as few as 10 years of qualifying payments. And forgiveness through this program has always been tax-free.
Final Word
If you’re not yet in default, explore options for making repayment more manageable. Income-driven payment plans can help lower your monthly payments.
And if you only need a few months to deal with a temporary emergency, deferment or forbearance can help, especially when it comes to private student loans, which have fewer repayment options but often have terms for deferment or forbearance.
Refinancing is another option for private student loans. A refinance can lower your interest rate, helping to bring down your monthly payment. It also results in a new loan contract with new terms, which could include extending your loan repayment term to lower your monthly payment.
If you are in student loan default, speak with a student loan attorney about your options. Depending on your type of debt, you could be a good candidate for bankruptcy. If nothing else, most private lenders are open to negotiating a settlement for less than you owe, especially if you’ve been in default for a while and the statute of limitations has or is about to expire.
