Is There a Student Loans Statute of Limitations

Hoping for a student loans statute of limitations? You're not alone, but your student loans from federally subsidized loan programs won't disappear after a certain time frame. A statute of limitations on a debt is the period of time where legal action on that loan can no longer be initiated. However, regardless of when the loan was taken out, there is no statute of limitations on federal government loans to students. This means that the debt will never legally expire, as other debts do.

Why don't federal student loans have an expiration date?
The most common federal student loans, the Perkins loan and the Stafford loan, are awarded on a first-come, first-serve basis for the school year. No cosigner is needed, and there is no credit check performed on the borrower. Interest rates are low compared to private loans, and the repayment schedule is generous. With student loan consolidation, you might be able to lower your monthly payments.

Since these terms are so good, federal student loans are one of the few debts that cannot be discharged in the event of a bankruptcy. Only in rare occasions, if the borrower can prove undue hardship in making payments, will a student loan debt be discharged as part of bankruptcy proceedings.

What happens if I must default on one of these student loans?
Because there is no statute of limitations on federal student loans, borrowers who default on the loan can suffer expensive consequences. When a student borrower defaults, the loan is due immediately, and any deferment is waived. Unless a repayment agreement can be made, the borrower may suffer from wage garnishments and offset of income tax refunds.

What can I do to prevent defaulting on a student loan?
The US Department of Education is interested in helping people pay back their student loans. If a borrower is facing trouble repaying, he can call to make repayment arrangements that are more affordable; however, interest will still accumulate. A borrower can discuss options such as extended repayment plans, salary-based modifications and even deferment plans if the borrower is qualified. For that reason, as soon as you start falling behind or think you might not be able to make a payment, you need to get in touch with the Department of Education at 1-800-4-FED-AID to find out who your lender is and start working out a new plan.

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