Do Student Loans Go Away After 7 Years?

Americans are drowning in debt and a significant percentage of this is student loan debt. It’s a problem that’s often compounded by misinformation and misunderstandings, a lot of which concerns what will happen to these loans after payments are missed and several years have passed.

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So, will student loans go away after 7 years, will they ever disappear, and what will happen if you decide to stop making those payments?

Will Student Loans Go Away After 7 Years?

In most cases, your student loans will not disappear after 7 years. But there are exceptions, and as you might have anticipated, it’s not a simple matter.

The main consideration is whether you have federal student loans or private student loans. If it’s the former, then we have bad news for you: your debt is not going anywhere. If you have private student loans, a statute of limitations applies. This is typically fixed at between 3 and 10 years and once that period has passed then you are no longer legally responsible for that debt.

It’s not always that cut-and-dry, though, as you can be sued and the debt can also be reactivated if you agree to a repayment plan, but generally, if your state’s statute of limitations has passed, you have a few more options.

The average statute of limitations in the United States is 6 years. So, where does the “7 years” come from?

It’s likely that this stems from a misunderstanding concerning how long negative marks stay on your credit report. If you miss one of your monthly payments, a negative mark may appear on your credit report, reducing your score and your chances of acquiring credit in the future. 

After 7 years, this negative remark is removed. If your debt hasn’t been repaid in full, it will remain, as will any additional negative marks acquired after this fact, but that initial mark will disappear.

What Happens if I Ignore My Student Loans?

Student loans won’t go away just because you ignore them. Even if you have private loans (which account for a very small percentage of total student loan debts) you’ll suffer considerably before that statute of limitation hits and your responsibility lifts. As for federal loans, avoid them at your peril—the last thing you want is to have the government breathing down your neck.

You’ll risk all of the following consequences if you decide to stop making your payments:

Your Credit Score Will Take a Hit

Every late payment, missed payment, and default impacts your credit score. It will stay on your credit report for years and could significantly reduce your score.

Your credit report is incredibly important, especially when you’re young, fresh out of college, and looking forward to a new career. It’s easy to adopt a blasé attitude when you’re young, assuming that everything will correct itself in time. But the more damage you do now, the harder it will be to fix it in the future. 

The Balance Will Grow

Every payment you miss sends the balance higher, increasing the interest and potentially accumulating additional fees and charges. It might feel like you’re buying yourself a little extra breathing space, but in actual fact, you’re just kicking the can down the road. 

Make it Harder to Get Credit

The higher your debt and the lower your score, the harder it will be to acquire future credit. This is important at any age, but it’s especially important when you’re young and don’t have many positive marks on your credit report.

Mortgage lenders and auto lenders are generally not interested in students with low credit scores and reports riddled with negative marks. Imagine where you’ll be in five years. Will you be ready to apply for a mortgage, will you be getting your first auto loan? If so, you’ll need all of the help you can get.

If you’ve ever suffered the ignominy of trying to get a credit card without any credit, you’ll understand just how valuable a clean and positive credit report can be.

You Will Default

In most cases, your federal student loan will default when you have not made a payment for 270 days. When this happens, the government will use its powers to collect that money. They may reject a tax refund and could even start garnishing your wages, taking as much as 15%.

A private lender doesn’t have the same power as the government, but that doesn’t mean your debt will be forgotten about. A private lender can hire the services of a debt collection agency (with or without selling your debt) and can also take you to court. At the very least, the lender will make your life a misery by harassing you for the next few years.

A default also has a massive impact on your credit report and will remain for 7 years. It will not have a major impact on your score for all of that time, but for the first few years, it could prevent you from getting a mortgage or substantial personal loan.

Your Cosigners Will Suffer as Well

If your parent or grandparent co-signed your loan, they will suffer when those payments stop and the loan defaults. When they co-sign, they automatically become responsible for the loan and will be chased for the full balance.

You Might be Sued

Private lenders, like the government, can sue you for a defaulted debt and, if successful, they can start garnishing your wages and utilize other means of collecting the money you owe. 

Don’t assume that your debt is too small for them to bother with. You’re dealing with financial institutions that generate hundreds of millions, if not billions of dollars—every debt is too small. They chase debts not because they have to, but because they can.

What Happens to Student Loan Debt When You Die?

Generally speaking, debt will stay with you until you die. If it’s a secured debt, the lender will try to claim the asset or wait for the responsibility to shift to an heir. If it’s an unsecured debt, it will be covered by your estate, with a hierarchy dictating which lender gets first pickings.

It sounds pretty harsh to think that debtors will chase you to your grave, but if that wasn’t the case, they would think twice about giving credit cards and loans to older people, approaching it more like they do life insurance and creating a big and complicated mess. They’re also in it to make money, and if that means picking through your possessions post-mortem, then so be it.

The good news amongst all this morbidity is that these rules typically don’t apply to student loans. Federal student loans will be cleared as soon as the debtor dies, and this is true even if the debt was co-signed and the student (the actual beneficiary) is still alive. Many private lenders adopt the same practice, although this isn’t true for all of them.

What Happens to Debt You Can’t Afford?

Lenders come down pretty hard on borrowers who refuse to pay their debts. They don’t care if you claim to have forgotten and will do everything in their power to help you remember. However, if you can no longer afford to make your repayments and have a genuine excuse (as opposed to simply not wanting to dig into your vacation fund or preferring to buy a new gaming console) they will be a little more sympathetic.

All student loan lenders offer some kind of hardship program—a grace period, a repayment program, or anything else that will help. Contact them in the first instance, discuss your options, and work with them to find a solution. 

If all else fails, and you find yourself with more debts than you can handle, look into debt settlement, debt consolidation, or bankruptcy. There are more debt relief options than ever before, and things are never as bad or as hopeless as they seem.

Summary: Can I Make My Student Loans Disappear in 7 Years?

The only realistic way to clear your student loans in this timeframe is to pay them off. As noted above, simply waiting for the statute of limitations to pass won’t help, as it’s not possible with federal loans and will lead to endless hassle with private loans.

If your debts are dragging you down, here are a few tips to help you clear them quickly:

  • Debt Strategies: Look into debt strategies like Debt Avalanche and Debt Snowball to increase payment frequency and go debt-free. These strategies are not fool proof, nor will they clear your debts in one fell swoop, but they can help you to gain some control over your finances.
  • Budgeting: While some debtors struggle to rub two cents together, others are sitting on substantial savings accounts and vacation funds, and wasting huge sums of money on luxury purchases. Financial freedom begins with a sensible budget, so stop spending frivolously and start focusing on your debts.
  • Forgiveness: Depending on your profession and experience, you may qualify for a student loan forgiveness program, which will allow you to cancel some or all of your debts. Our guide to student loan forgiveness by profession provides more info.
  • Refinancing: A student loan refinancing program will restructure your debts and could potentially make them more manageable.