Is There a Statute of Limitations on Private Student Loans?

Yes, there is a statute of limitations on private student loans. Once this statute of limitations is reached, a creditor can no longer sue you. It’s important to know that this time limit applies ONLY to private student loans. Federal student loans are not subject to applies of limitations. The federal government can take steps to recover the money from you at any time. 

What Is A Statute Of Limitations On Debt?

There are a few things you should know about refinancing through private lenders beforehand.A statute of limitations on debt refers to the time within which a creditor can sue you for the outstanding amount if your loans are in default. When your loan crosses this time limit, it is considered ‘time-barred’. Once a loan is time-barred, the creditor cannot engage the legal system or sue you to get the money back from you. 

This does not mean your student loans disappear when the debt becomes time-barred. You will still owe the lender the outstanding after the statute of limitations has expired. The lender can keep on requesting you to make the payments. The only difference, however, is that the lender cannot use the legal system to recover the money. 

If you have private student loans that are in default for several years, it helps to understand how the statute works.

What Is The Statute Of Limitations On Private Student Loans? 

The statute of limitations on private student loans varies from one state to another. Your student loan debt is subject to the laws and guidelines of the state you reside in.  The time frame typically ranges from 3 to 6 years in most states, though a few states do have longer time frames. 

If the statute of limitations in your state is 3 years, it means your lender has only 3 years after you default to sue you for payment. After that, they cannot sue you in court to collect what you owe them, although they can still request you to pay back the outstanding. 

Here’s a look at the private student loan statute of limitations timelines in a few states: 

  • Arizona – 6 years
  • California – 4 years
  • Colorado – 6 years
  • Florida – 5 years
  • Georgia – 6 years 
  • Illinois – 10 years
  • Kansas – 5 years
  • Louisiana – 3 years
  • Maine- 6 years
  • Massachusetts – 20 years
  • Michigan – 6 years
  • Missouri – 10 years
  • Mississippi – 3 years
  • Nebraska – 5 years
  • New York – 6 years
  • Ohio – 8 years
  • Oregon – 6 years
  • Pennsylvania – 4 years
  • South Dakota – 6 years
  • Texas – 4 years
  • Vermont – 6 years
  • Washington – 6 years
  • Wyoming – 10 years
Lendkey company logo.

Reduce monthly payments by up to $191

Fixed rates from 5.49% - 9.75% APR with auto-debit

Learn More

As you can see in this small sampling of states, the timelines can be quite different among states. 

When Does The Statute Of Limitations Start?

Besides the timelines, the rules governing the start date on statute of limitations also vary from one state to another. 

In some states, the statute of limitations starts from the date you made the last payment. In other states, the date starts on the day you miss your first payment.

In still others, it starts from the day your loans go into default. This is generally 120 days after your missed payment but sometimes a loan may enter default after a single missed payment. 

What Happens After The Statute Of Limitations Expires?

After your state’s statute of limitations passes, your lender can no longer take you to court and sue you for repayment of your loan. However, the lender is not likely to let you off the hook easily. There are several scenarios that could ensue after the time limit passes.  

A creditor may not realize that the statute has expired and decide to sue you after the time limit has lapsed. If you receive a court summons about your debt after the statute has expired, don’t ignore it. You still have to go to court and raise a defense that your student loans should be considered time-barred based on the statute of limitations. Under these circumstances, they are no longer collectible. 

If you don’t show up in court and present this defense, the judge may not know that the debt is time-barred and could pass judgment against you. If the judge rules in favor of your lender, the debt becomes collectible. If you’re not comfortable with representing yourself, enlist the help of a lawyer to advocate on your behalf. 

Even if the judge rules in your favor, your creditor will not let the outstanding debt go so easily. Depending on your state’s laws, they may still be able to contact you and pressure you to pay back the debt. But they can no longer threaten you with a lawsuit nor will they be able to use other collection tactics such as garnishing your wages or placing a lien on your property. 

Be Careful About Re-Starting The Statute Of Limitations

Lenders may still legally contact a borrower even after the statute of limitation on student loan debt has expired. Sometimes, the loan holder may not realize that the time limit has lapsed. Or they may feel pressured or harassed into making a payment even though the loan is time-barred. This is something you must be very careful about. 

If your state’s statute of limitation on private student loans has expired, don’t make the mistake of agreeing to make payments on that debt. If you make any payment on time-barred debt, it restarts the statute of limitation. With that first payment, the clock re-starts, and the collection will suddenly have legal means to collect the outstanding debt for another 3 to 6 years. This could be longer in some states.   

In some states, the statute of limitations may restart when you promise in writing to repay the debt. Even if you don’t actually make any payments, the written promise will restart the clock on the time limit. 

In a few states, the time limit restarts even if you acknowledge that you owe the debt. 

You must be very careful about how you proceed after the statute of limitations on private student loans in your state expires. 

How To Proceed After Your State’s Statute Of Limitations Expires

Very often, lenders are open to accepting a settlement for less than you owe after the statute passes. They know they have no legal recourse and prefer to cut their losses. However, there may not be much upside in doing so for you. It’s best to speak to a lawyer before responding to any communication from a lender after the time limit has expired. In doing so you may inadvertently restart the statute. 

If you’re absolutely certain that a private student loan has passed the time limit, send the collector a formal notification. Inform them that the loan is time-barred and you will not be making any further payments on that debt. 

The next step is to send them a cease and desist letter via certified mail. The letter should include a couple of important components. It must inform them not to contact you regarding collection on any debt. They should however confirm receipt of the letter and inform you of any legal action they intend to take. 

Meanwhile, do not make or even promise to make full or partial payments on the time-barred debt. If you feel morally obliged to make the payments, wait until such time that you can afford to make the full payment. Making or promising to make a partial payment may force you to pay the debt before you have the funds to do so. 

Final Thoughts On Statute Of Limitations On Private Student Loans

Waiting for the statute of limitations to pass may sound like an easy way to get out of paying back your student loan debt. It isn’t. You’ll be several years in student loan default before your debt becomes time-barred. Within that period of time, the lender will have plenty of time to sue you and collect their debt. 

If you can’t afford to make payments on your private student loans, the best option is to refinance the loans. Choosing lower monthly payments on your new loan will make them more affordable, minimizing the risk of entering default.  Use College Raptor’s Student Loan Finder tool to quickly and quickly find and compare loans from reputed lenders. 

Subscribe to Our Newsletter

Join thousands of students and parents learning about finding the right college, admissions secrets, scholarships, financial aid, and more.