If you’re in default on your student loans, knowing the statute of limitations is important to protect your rights. Student Loan Statute Of Limitations
Addressing student loan debt is usually best. Federal student loan default can lead to garnished wages, tax refunds, and even garnished social security cheques. And they don’t go away when you ignore them. Student Loan Statute Of Limitations
However, private student loans may be subject to a statute of limitations on debt collection. After several years of default, the debts could become “uncollectable.”. To put it another way, collectors are no longer able to use legal action or lawsuits to collect the debt. Student Loan Statute Of Limitations
If you have old student loans in default, you need to understand the rules governing the statute of limitations on student loan debt in your state and how they apply to you. Below, we break down how the rules work and list the student loan statute of limitations timelines for each state.
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What Is A Statute Of Limitations On Debt?
The statute of limitations on debt refers to the amount of time that a creditor can sue you if you have been in default. Once the creditor reaches the statute of limitations, they are unable to use the legal system to force you to repay the debt. Student Loan Statute Of Limitations
Of course, even after the statute of limitations has passed, you still owe the debt. However, creditors lose all their legal leverage once they reach the statute of limitations. Student Loan Statute Of Limitations
Once the debt is “time-barred” (meaning the statute of limitations has passed), the creditor cannot sue you or use the legal system to garnish payment from you. Any additional demands for payment are ineffective.
Statute Of Limitations On Student Loan Debt Specifically
So is there a statute of limitations on your student debt? Well, it will depend heavily on the kind of student loans that you have. Below you’ll see that the answer is very different for federal borrowers than for those with private student debt. Student Loan Statute Of Limitations
Federal Student Loans
There are no statute of limitations laws on federal student loans. The statute of limitations on federal student loans, which was previously 6 years, was repealed by the Higher Education Technical Amendments of 1991 (P.L. 102-26), effective April 9, 1991. Student Loan Statute Of Limitations
The Higher Education Amendments of 1992 (P.L. 102-325) subsequently made these changes retroactive in effect for all loans made on or after April 7, 1986 and for any lawsuits pending on or after April 9, 1991. Therefore, the collection of federal student loan debt currently has no time limit. Student Loan Statute Of Limitations
The federal government also has enormous powers to compel repayment, even without filing a lawsuit. They can garnish up to 15% of the borrower’s wages administratively. They can also offset federal income tax refunds and up to 15% of Social Security retirement and disability benefit payments. Student Loan Statute Of Limitations
Private Student Loans
Unlike federal loans, private student loans do have a statute of limitations. The time for a debt to become time-barred varies from state to state. Some states have limitations as short as three years (Maryland, DC, Louisiana and others), while others keep debt “active” for up to 20 years (looking at you, Massachusetts…). The most common timeframe is 6 years.
If you have private student loans in default, and you think they may be time-barred, consult a bankruptcy or consumer advocacy attorney in your state. A lawyer can help you figure out whether your private student loan debt is past the statute of limitations. They can also give you legal advice if you’re facing a suit for time-barred debt.
Furthermore, be careful when “resetting the clock”. Making a payment or taking another action (calling, contacting, or speaking with) could reset your debt. It is advisable to consult a lawyer in your state. Student Loan Statute Of Limitations