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Ask Susan Responses
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Student Loans: Statute of Limitations |
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More Ask Susan |
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I am currently being contacted by a collection agency for the US Department of Education for old student loans. Unfortunately, I was unable for years to pay, so these are past due loans. I thought there was a statute of limitations on some debt. I will pay if I have to. I just want to know what my rights are. Is 20 years still collectable?
-Denice |
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Denice,
Twenty years seems like a long time, but the government is tenacious. As far as I know, there is no statue of limitations on a goverment-backed student loan. Most student loan debt will even survive a bankruptcy. It is a good idea to contact the US Department of Education Service Center at 800-621-3115 for advice on being able to establish a repayment schedule. Waiting will result in losing future tax returns and possible wage garnishment.
Good Luck,
Susan |
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My fiancé has a student loan from almost 10 years ago totaling about $13,000. He has never made any payments on the loan but receives letters from the Department of Education all the time asking for payment in full. I don't want my credit messed up because of this but we are not sure where to start. They have never threatened to garnish his wages, but they call all the time. He is under the impression that it is off his credit because it has been over seven years. Also, he thinks that if he starts to make payments then they will report him to the credit bureaus. Can you either dispel or confirm these situations? -Pat |
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Pat,
I am glad you wrote today, because your future husband’s assumptions are incorrect. The government is steadfast in their determination to collect. The government will withhold tax refunds and garnish wages to repay monies owed. It is only a matter of time. After you marry, this may affect your joint tax refunds. It will most likely remain on his credit report for up to seven years after it is fully paid. Please encourage him to call the Department of Education at 800-621-3115 for assistance today.
I applaud your open communication with your future spouse. Too often, this type of issue only surfaces after the wedding, causing unnecessary problems. I encourage you to continue this level good communication throughout your marriage.
Congratulations on your upcoming wedding,
Susan |
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My friend received a letter in the mail today from the Federal Tax Department stating that they were going to keep her tax return because she owes money on a school loan. My question is, does she still owe this money even though it is more than ten years old? She was told that the Statue of Limitations doesn't fall under federal laws and their are no laws about not being able to collect on a debt over ten years old when it's federal, is this right? -Dana |
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Dana,
As far as I know, there is no statute of limiations on government-backed student loan debt. Your friend should make every effort to repay her debt. Continuing to ignore the problem has too many downsides including the risk losing future tax returns, possible wage garnishment and a damaged credit report.
If the problem also includes other debt, such as credit card debt, MMI may be able to help. Trained counselors are standing by at 800-762-2271.
Susan
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