Federal Student Loans vs. Private Student Loans: Statute of Limitations
An Age-Old Battle for Graduates with Debt!
Many of us are bombarded with loans of all sorts, and many of us are well versed on how the Statute of limitations tie in to old derogatory accounts after charged off accounts.
Statute of limitations is a law which sets out the maximum time that parties have to initiate legal proceedings from the date of an alleged offense. The precise form of a statute of limitations differs from one jurisdiction to the next. All states have a body of statutes in their codes of law called “limitation of Actions”, commonly referred to as statute of limitations. Every state has its own length of time to sue for the debt.
Overall, neither us or the creditor wants lingering accounts, so that’s why these laws are set in place.
One of the MAIN loans that SOL does not necessarily work for is student loans. Statute of limitations applies to private student loans, but not to federal student loans, such as Stafford, Perkins, Parent PLUS and federal consolidation loans.
Federal student loans include many benefits; not typically offered with private loans. In contrast, private loans are generally more expensive than federal student loans.
Private loans, which are heavily advertised, do not have the forbearance and deferral options available with federal loans (which are never advertised)
As mentioned above, federal student loans have no statute of limitations. This means that even if the loan is 30 or 40 years old, for example, and you have made no payments, the federal government can sue for payment.
*Remember: The passing of the SOL does not mean that a creditor cannot sue you. It means if a lawsuit is filed you should have an absolute defense against the lawsuit if you raise the defense. Also, keep in mind that the passage of the Sol does not prevent a creditor from calling you to collect on the debt; it simply provides you can absolute defense in court in the creditor file suit.*
Have more questions?
Give Y2K Credit Solutions a call at (877) 552-1377 to speak to one of our credit experts today!
