It’s a well-known fact that student loan debt can feel like a heavy load. To give you a clearer picture, Americans together owe more than $1.9 trillion in student loans. So, it’s completely understandable if you’ve been asking yourself, “Can these student loans ever just go away?”
Here’s a bit of good news. Whether you’ve been making regular payments or haven’t dealt with them in years, there’s a chance that your student loan debt could be wiped clean.
But, there’s a step you need to take first. To make use of loan forgiveness programs or other options, you’ll need to move your loans from default into good standing.
Let’s explore when and how your student loans could go away, and what to do if you’ve not paid your student loans in years.
Ready to lighten that financial load? Let’s get started.
Do Student Loans Go Away After 7 Years?
You might have heard or read somewhere that student loans go away after seven years. But let’s clear up that misunderstanding right away. Student loans don’t just go away after seven years. There’s no magic program that wipes clean your loan debt after this period.
But here’s where the confusion might come from. If you’ve recently checked your credit report and noticed that your student loans have disappeared, it’s likely because you have defaulted student loans.
The big credit bureaus — Equifax, Experian, TransUnion — remove the default status and late payments from your report seven years after the first missed payment that led to the loan defaulting.
Seeing a jump in your credit score the following month after your student loans fall off your report might feel like a victory. And yes, it’s a positive step. But it doesn’t erase your 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.
So, while it might feel like your student loans have disappeared after seven years, they’re still there, waiting to be addressed. It’s crucial to understand this to avoid any surprises down the line.
Do Student Loans Go Away After 10 Years?
Now, let’s talk about the 10-year mark. There’s a glimmer of hope here. Eligible borrowers can indeed have their loans forgiven after 10 years, but it comes with certain conditions.
To qualify, you 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. The range of qualifying positions is broad, from nonprofit work to teaching in a charter or public school, to law enforcement, and even providing medical care at a public hospital.
Here’s a quick checklist for tax-free loan forgiveness:
1. Make 120 on-time monthly payments while working full-time in an eligible public service position.
2. Have the right loan — only federal Direct Loans qualify, not Perkins loans or the old Federal Family Education Loans.
3. Be in the right payment plan — the income-driven repayment plans Congress designed to help lower-income borrowers.
The Public Service Loan Forgiveness Program had its challenges for years, with few borrowers getting relief due to the eligibility requirements. However, the Biden administration recently introduced changes that are fixing this program — at least temporarily.
As a result of the coronavirus pandemic, the Education Department is counting payments borrowers made on nonqualifying FFELP Loans retroactively. This change is expected to benefit around 550,000 borrowers. So, if you’ve been working in public service and making payments, there’s a light at the end of the tunnel.
Do Student Loans Ever Go Away?
Now, you might be wondering, “Do student loans ever completely disappear?” The answer is yes, but it depends on certain circumstances.
Student loans will stick around on your credit reports and in your life until they’re paid in full or you qualify for a specific type of forgiveness or discharge.
Here’s when federal student loans can go away:
1. After 10 years — If you qualify for Public Service Loan Forgiveness.
2. After at least 20 years — If you’ve made student loan payments under an income-driven repayment plan.
3. After 25 years — If you borrowed loans for graduate school.
4. When you die, or a parent dies — Through Parent PLUS Loan Forgiveness.
5. When you suffer a severe and permanent disability — Through Total and Permanent Disability Discharge.
6. When you teach for five consecutive years in a Title I school district — Through Teacher Loan Forgiveness.
7. If you went to a school that acted fraudulently — Through Borrower Defense to Repayment.
8. When you file student loan bankruptcy and prove that repaying your debt would cause you and your dependents undue hardship.
So, while it might seem like student loans are forever, there are several paths to making them go away. It’s all about finding the right one for your situation.
How Long Until a Student Loan is Discharged?
In contrast to the UK, where student loans are automatically discharged after 30 years, the US system operates differently. The US Department of Education doesn’t have a set timeframe after which federal loans are automatically discharged. This means that, without a specific time limit, borrowers can find themselves in a position where they are repaying their loans indefinitely.
This ongoing student loan debt issue has escalated to a national level, prompting actions and promises from our leaders. President Joe Biden, during his campaign, pledged to bring relief to American borrowers. His promises included forgiving $10,000 of student loan debt and increasing the availability of Pell Grants for those with lower incomes.
In an effort to fulfill his promise, President Biden signed an executive order last year that offered up to $20,000 in loan forgiveness. However, legal hurdles have temporarily halted this initiative.
Currently, the administration has escalated the matter to the Supreme Court and has put a pause on federal student loan payments until a verdict is reached. This means that the question of when a student loan is discharged remains a complex issue, subject to ongoing legal and political discussions. As we navigate these waters, it’s crucial to stay informed and updated on these developments.
When Does a Student Loan Get Written Off?
In the US, federal student loans are not automatically written off due to age or expiration. However, there are circumstances where banks and loan holders may decide to write off their debts. This typically happens when they lose the right to sue borrowers for missed payments.
When this occurs, the lender considers the debt as “stale” or “time-barred” and removes it from their books. However, this doesn’t mean you’re completely free from the debt. Debt collectors can still contact you demanding payment.
Most states allow these debt collectors to call and send letters as long as they adhere to the Fair Debt Collection Practices Act. This act is designed to protect consumers from abusive, unfair, or deceptive practices by debt collectors.
So, while your student loan may be written off from the lender’s perspective, it’s important to remember that you may still be responsible for the debt. Understanding this can help you navigate your financial journey more effectively.
How to get back to Repayment in good standing.
To avoid bad outcomes like wage garnishments and debt collection measures, it’s important to always make your student loan payments on time. This will also help you maintain a good credit score and avoid extra fees for late payments.
Let’s say you have a defaulted student loan from 20 years ago. Maybe life took you abroad, or perhaps the payments were too high, and you chose to ignore the bills. Whatever the reason, it’s been years since you’ve dealt with your student loans. But now, you’re ready to face them. Here’s a more detailed guide on what to do when it’s been years since you paid your student loans:
Step 1: Locate Your Loans
If you’re having trouble finding your old federal student loans, don’t worry. The Department of Education keeps a complete record of all the loans you borrowed on the Federal Student Aid site. Even if your loans have disappeared from your credit report, you can still find them on Studentaid.Gov. If you need assistance navigating the site, you can call FSA customer service at 1-800-433-3243, and a representative will be happy to help you find your loan information.
Finding private student loans can be challenging since there is no central database for them. To locate your loans, review your credit reports from all three bureaus to identify any student loans that are not listed on the FSA website. These are probably private student loans. Additionally, you can contact the top private lenders to inquire if they have an account with your loan information.
Step 2: Explore Your Repayment Options
Once you’ve found your loans, the next step is to understand your repayment options. As a borrower of federal student loans, you have four options to take your loans out of default: repayment in full, settlement, consolidation, and loan rehabilitation. Choosing the best option for you depends on your personal finances and whether you have consolidated your loans before or completed the loan rehabilitation program.
Note: The Education Department has a plan to help those who have defaulted on their loans by providing them with a “fresh start“. This includes access to repayment plans, financial aid, and loan forgiveness programs, without the need for rehabilitation or consolidation.
It’s important to note that private loan holders and collection agencies may not provide the same repayment options. If you’re struggling with delinquent debt, your options may be limited to negotiating a payoff or filing a student loan complaint in bankruptcy, unless you’re able to find a lender who is willing to refinance your debt.
Step 3: Connect with the New Servicer
When you fail to negotiate a payoff, your federal loans will be moved to a new student loan servicer after your default is over. To prevent any issues, it is crucial to update your contact information with the new company. Additionally, it is recommended to review your payment plan to determine if you need a lower monthly payment.
If that’s the case, consider exploring the various income-driven repayment plans available. With these plans, you can ensure that your payments are affordable, based on your family size and discretionary income.
The Loan Simulator can help you estimate your monthly payments based on the repayment options available through the Department of Education.
Will student loans eventually be removed from your credit report?
Credit reports are a significant part of our financial lives, and student loans are a key component of that. Both federal and private student loans can leave a mark on your credit report, but the question is, do they ever disappear from it?
The answer is yes, but it takes time. Both federal and private student loans will be removed from your credit report approximately seven years after your last payment or the date of default.
For federal student loans, you’re considered in default after nine months of non-payment, assuming you’re not in deferment or forbearance. So, you’ll have the negative information for those nine months plus seven years before the loans are removed from your credit report.
Private student loans usually default or are charged off around 120-180 days of non-payment.Once the status is reported on your credit report, it will take another 7.5 years before the loans are removed.
However, it’s important to remember that even if your student loans are removed from your credit report, it doesn’t mean you’re free from them. You’re still responsible for paying back your loans unless they’re forgiven or discharged.
Now, you might wonder, “What does it mean when a student loan shows closed on your credit report?” Your student loan could show as closed on your credit report if you have paid off your student loan in full, settled it through negotiation, refinanced it with a private lender, or merged it into a Direct Consolidation Loan.
Are you looking for guidence in case your student loans don’t get cancelled?
In these uncertain times, President Biden has placed most federal student loans into forbearance and suspended collection activities throughout the coronavirus pandemic. He has also authorized blanket loan cancellation of up to $20,000 of student debt per borrower, but that’s on hold until the Supreme Court decides the plan’s fate this summer.
Navigating the world of student loans can be complex and overwhelming. But remember, you’re not alone in this journey. There are resources and professionals available to help you make sense of it all and guide you towards the best possible outcome.
If your student loans aren’t going away anytime soon, it’s essential to have a plan. Understanding your loans, exploring repayment options, and staying informed about changes in student loan policies can make a significant difference.
However, sometimes you might need a little extra help, and that’s perfectly okay. Contacting a student loan advisor can provide you with professional guidance tailored to your unique situation. They can help you understand your options, make informed decisions, and ultimately, lighten the load of student loan debt.
Remember, it’s never too late to take control of your student loans. So, why not reach out to a student loan advisor today? They’re ready to help you navigate your way to a brighter financial future.