Credible takeaways
- Private student loans have a statute of limitations that typically ranges from 3 to 10 years, depending on your state.
- Once the statute of limitations expires, lenders can't sue you to collect the debt, but they can still attempt to contact you for repayment.
- Defaulted private student loans typically disappear from your credit report seven years after your last payment.
- Private student loan forgiveness doesn't exist, but refinancing could help lower your interest rate and make repayment more manageable.
Missing payments on student loans can severely impact your credit. However, the more time passes, the less of an effect these missed payments should have on your credit overall.
Current private student loan refinance rates
How the statute of limitations affects private student loan debt
While there's no statute of limitations for federal student loans, a private student loan that has passed the statute of limitations is considered a time-barred debt — meaning the lender can't sue you to collect the money.
“In some cases, the statute begins when the borrower first defaults. But if the lender hasn't accelerated the loan (i.e., declared the full balance due), the statute might apply separately to each missed payment. That means part of the debt could be time-barred, while other payments remain collectible,” says Stanley Tate, student loan lawyer and founder of Tate Esq LLC.
Good to know:
The statute of limitations for private student loans generally ranges from three to 10 years, depending on your state.
Just keep in mind that if you do anything to acknowledge the old debt — even making one payment or acknowledging the debt as yours — the clock can restart, and the statute of limitations will begin again.
Do private student loans go away after seven years?
Private student loans don't go away unless you pay them off, but in most cases, they'll fall off your credit report after seven years.
Keep in mind that lenders can still contact you to collect an old debt, even if it's decades old, but they can no longer take you to court over it.
Are private student loans forgiven after 20 years?
Unfortunately, only federal student loans are eligible for student loan forgiveness programs — private student loans don't qualify.
While private student loan forgiveness doesn't exist, other options could help you repay your private student loans more easily. For example, you might be able to lower your student loan interest rate through refinancing, which could save you money on interest charges and even help you pay off your loan faster.
Learn More: When Should You Refinance Your Student Loans?
State-by-state statute of limitations on debt collection
Every state has its own statute of limitations for private student loans and other debts.
“Borrowers should consult a lawyer in their state rather than assuming a statute of limitations period applies the way they expect. Misinterpreting the rules can lead to unintended legal consequences,” advises Tate.
Here are the statutes of limitations for each state:
What happens if you default on student loans?
Student loans are considered delinquent immediately after a payment is missed. After missing enough payments in a row, you could end up in student loan default.
Most federal student loans go into default after 270 days. For private student loans, the default terms can vary depending on the loan — many private lenders will consider a loan to be in default after 120 days.
Defaulting on your student loans causes a range of issues, including:
- Repayment acceleration: If your loans are in default, the entire unpaid balance could become due rather than your usual monthly payments.
- Damage to your credit score: Your payment history is one of the biggest factors that make up your credit score. If you miss a student loan payment or miss enough payments to end up in default, your credit score could be severely damaged.
- Limited access to credit in the future: Defaulting on a student loan could make it difficult to get approved for other types of credit, such as auto loans or mortgages. Additionally, being in default on a federal student loan will make you ineligible for federal financial aid.
- Debt sent to collections: Your lender could send your loan to collections, after which debt collectors will start contacting you in an attempt to collect. You might also be charged collection fees, adding to your overall loan cost.
- Lawsuit risk: If you default on a private student loan, your lender could take you to court, charge you the unpaid balance, and require you to pay any associated court costs.
- Consequences for your cosigner: A cosigner shares responsibility for the loan — so if you miss payments or end up in default, your cosigner’s credit could be damaged, and they’ll likely be on the hook for repayment.
Can wages be garnished for private student loans?
Yes, your wages can be garnished if you default on private or federal student loans.
- Private student loans: To garnish your wages, private lenders have to sue you and obtain a court judgment. If the wage garnishment is approved, you could have up to 25% of your pay withheld. Lenders might also get a court judgment to seize your assets or place liens on your property.
- Federal student loans: The government can withhold up to 15% of your pay to send to your loan holder.
In general, wage garnishment lasts until your student loan is paid off, settled, discharged, or otherwise removed from default status. In the case of private student loans, you might also be able to ask the court to stop the wage garnishment if you’re eligible for an exemption.
Can you discharge student loans through bankruptcy?
Getting your student loans discharged through bankruptcy is difficult but not impossible. To potentially have your loans discharged, you must:
- File for Chapter 7 or Chapter 13 bankruptcy
- File a separate action called an “adversary proceeding”
The court will then decide whether repaying your student loans would impose an undue hardship on you and your dependents. If the court rules in your favor, then some or all of your student loans could be discharged or modified with different terms — such as a lower interest rate.
“I strongly recommend exploring all available options before considering bankruptcy as a way to manage your student loan debt. Bankruptcy can have long-lasting effects on your financial stability and credit score and should be seen only as a last resort.”
— Richard Richtmyer, Senior Student Loans Editor, Credible
Learn More: How to Pay off Student Loans in 10 Years or Less
Should you refinance your student loans to save money?
Refinancing can be a smart way to lower your interest rate or simplify repayment. When you refinance, you take out a new loan to replace one or more existing student loans, leaving you with a single loan and payment.
If you qualify for a lower interest rate, you could save money over time and potentially pay off your loan faster. You can also choose a longer repayment term to reduce your monthly payment, though this usually means paying more interest overall.
Tip:
You don’t need perfect credit to refinance. Many borrowers apply with a cosigner who has strong credit and steady income. In 2024, about one-third of people who refinanced did so with a cosigner, according to Credible marketplace data.
Keep in mind that refinancing federal loans turns them into private loans. You’ll lose access to federal protections like income-driven repayment plans and student loan forgiveness.
Before refinancing, compare offers from multiple lenders to find the best rate and terms for your situation.
FAQ
Do student loans have a statute of limitations?
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Which loans have a statute of limitations?
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What is the 7-year rule for student loans?
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