Will Private Student Loan Debt Expire?
Updated: Apr 23
The question if student loan debt expires depends on is it a federal student loan or a private student loan. Federal student loans issued by the U.S. government do not have a statute of limitations and therefore do not expire. However. Private student loans like most unsecured debts have a statute of limitations.
Federal Student Loan Options
Federal student loans are all over the news recently. Many students have accumulated large amounts of debt through their college education. Most students are looking for solutions in dealing with their current federal student loan payments.
The good news is that in my experience when it comes to the U.S. government, they will work with you. It's essential to keep an open line of communication with your loan servicer. Be aware of when all your payments are coming due and keep track of your student loan paperwork.
Not Making Your Federal Student Loan Payments
If you stop making payments on your student loans, your federal taxes will get taken without your consent. Also, any co-signers for your student loans will have their credit impacted when you stop making payments. Again I recommend you speak with your loan servicer to avoid delinquency on your account.
If Your Federal Taxes Become Garnished
Sometimes "life happens" and we are unable to pay our debts. You may think that your federal school loan is not as urgent as your monthly living expenses. This challenge is what everyone goes through when they are young, unemployed, or just starting out.
So if you decide not to make payments on your student loans, eventually they will put the account in default. Now, this doesn't mean it will be "written off" or "discharged like a private student loan. Only that if you are due a tax refund, the government will keep it and apply it towards your student debts.
This situation is not the "end of the world" as I said earlier, loan servicers are willing to work with you if you keep a line of communication open. So even when times are tough, don't ignore the situation.
When behind in your payments, contact your loan servicer. Then go online and sign up for a payment plan to rejuvenate your account. In under a year you will be back on track and no longer have your taxes garnished.
Federal Loan Forgiveness Programs
Also, you will hear about public service loan forgiveness (PSLF), as well as other types of debt relief programs. The "pitch" is that you can get your loans discharged. You might believe that because you had to leave school early or were receiving federal student aid that this "hardship" would allow you to forgo paying your debts.
This assumption is not correct, in challenging to get your debt discharged, most people don't qualify, and the government isn't in the business of forgiving your debts. There are exceptions, such as total and permanent disability which needs to be proven but rarely are most debts forgiven.
The Education Department denied 99% of requests for relief processed under the newly expanded Public Service Loan Forgiveness program, (TPSLF) last year. If you think you qualify for a forgiveness program, make sure you read all requirements carefully. The majority of disqualifications are based on minor technicalities, so read the fine print.
Source: Government Accountability Office
Here is a recent quote to give you an understanding of what challenges lie ahead, if loan forgiveness is your strategy:
"The current Public Service Loan Forgiveness program is a bureaucratic nightmare, and the Department Of Education is failing to meet its obligation to help ease the student debt burden for our nation's public servants,"
Source: Democratic Sen. Kristen Gillibrand
Not very encouraging but you need to know the facts. It’s better to be aware of your situation so you can be proactive in getting your debts in order.
Beware Of Scams
Be cautious of "student loan debt relief" scams. Many companies offer to file "discharge" papers for 500-1000 dollars with almost no chance of success. When it comes to federal student loan paperwork, if you think you qualify, complete the documents yourself. This exercise will allow you to become more familiar with your debts, the loan servicer, and the overall process.
Best Option For Federal Student Loans
Usually, your best options for dealing with your federal student loans are either having them suspended in a forbearance program or utilize a Federal income-driven repayment plan. These plans cap monthly payments at 10% to 20% of discretionary income and forgive the balance remaining after 20 or 25 years, depending on the program.
No Quick Fix
There is no easy solution if you have large, small, or medium Federal student loans. At some point, you will have to pay them back but compared to other types of debt, the interest rate is extremely low, usually around 4%. So make sure you know what types of loans you have, who the servicer is and when any payment obligations are due. All debts are stressful, but federal debts can be managed if you do a little research and stay in communication with the loan servicer.
Private Student Loans
Private student loan debts unlike Federal student loans, are issued through banks such as well Fargo student loans or discover private student loans. Discover private student loans is currently the largest issuer of college loans in the country.
One of the significant differences between Federal and Private student loans is that you can not default on a Federal student loan. That money one way or another will get paid back to the Federal government.
Also, private student loans tend to have a much higher interest rate than government loans. The government wants to get paid back but at a much more reasonable rate, typically around 4%. Discover student loans you're dealing with a publicly-traded company, and the goal is profits to the shareholder. So interest rates will tend to be substantially higher.
There is no such thing as private student loan forgiveness. Private companies are not governed by federal law in regards to your student loans. There is no incentive for private companies to allow the primary borrowers "off the hook."
Some companies in times of high "defaults" will offer repayment options through an in-house repayment program provided to clients in extreme hardship. However, this is a best-case scenario, and you should never expect the same treatment from a private lender as a federal loan servicer.
Real World Private Student Loan Options
You may have received discover offers for a college loan and accumulated overwhelming amounts of debt. Unlike federal loans if necessary, these can be held in default. If it is a loan from a private company and is an unsecured debt, you have options. There are some legal strategies to get out of your private student loan debts.
This program is not a recommendation to stop paying your obligations only that in certain circumstances, there are legal options.
Sometimes borrowers will postpone private student loan payments via deferment or forbearance, but interest always accrues regardless of whether the borrower is making payments. These options are not always available, but you can try and see if your loan service provider will work with you.
What's Going On With All This Debt?
The economy is at its lowest unemployment rate in 50 years. So why are so many students burdened with "mountains" of student loan debt? Why is everyone "googling" help with student loans?
After all, we go to college to educate ourselves and hopefully learn the skills necessary to have a successful career. Getting a college degree requires a sacrifice of time and financial resources. Unfortunately, the reality is that college has become big business and your education "monetized."
No longer can you expect to receive a degree with modest debts and a strong possibility of stable employment. The student loan debts have exponentially increased over the last 20 years as the "real-world" value has decreased. Many students received financial aid and now have acquired too much student loan debt to enjoy their lives.
How to get out of private student loan debt
In doing research, I always take into account several factors. My personal 25 years in business, 23 in finance. The needs and objectives of my clients. The motivations of the "experts" in this industry, their advice, and how this lines up with the real-world solutions.
90% of the time, I find complete contradictions if not outright misinformation in regards to practical answers for resolving a client's debt issues.
This observation is unfortunate as there are legitimate strategies to get clients out of debt at a reasonable cost in a reasonable time.However, there is so much debt; it has become a "feeding frenzy" for companies selling programs not beneficial to the consumer. Now let's get down to business and explain how to get you out of this mess.
The most obvious solution, ask a friend or family member for a personal loan. NOBODY wants to do this but it is often the best option.
However, if that is not an option, then I will explain the standard recommendations from the “experts and why they are non-effective most of the time.
Your debt to income ratio will most likely disqualify you. Also a poor Credit Score due to a high debt load.
Same as above, still possible, although will be paying high interest and fees, years of repayments. (Think 10-20 years).
Restructure Your Loan, No Interest
Unlikely but at best does not "attack" the principal. Still, expect to pay on loans for 10-20 years.
An option but "shady companies," do your due diligence. Have to default on the loan, negligible to your credit as already impacted by high debt load. Typically pay .80 cents on the dollar of total debt after fees.
“The Nuclear Option”, 7-10 years on your credit 20 years on your public record. Banks changed laws in 2005 much more difficult to qualify, potentially be put under a court-mandated receivership and forced to pay off all debts.
Debt Assessment and Conclusion
The reality of the situation is this:
You have been taken advantage of through "predatory" lending practices.
You no longer have the resources to continue paying your principal and interest on these debts.
The advised options outlined above, you do not qualify for or resolve your current debt issues.
These debts are impacting your happiness and health.
My advice in this situation, contact me and discuss a consumer-based program built upon federal law. This program maximizes debt reduction and savings. The goal, to execute a debt relief strategy built on pragmatic solutions.
Get you out of debt as soon as possible, typically within 18-24 months and start rehabilitating your credit. The program is comprehensive and well-executed.
Through the program, you can avoid bankruptcy and substantially reduce your debts. The plans do not require upfront fees but are broken up over the term of the entire program. So they are manageable for the client.
The company is so confident in its results that it offers a money-back guarantee on any debts it can not dispute.
If you are interested in resolving your debts, click any link and I will get back to you as soon as I am available. I look forward to earning your business, cleaning up your debts, and helping you start enjoying your life again. Best regards,
Revolution Debt Relief LLC
752 South Main Street
Los Angeles, California