Americans are drowning in debt, with student loan debt accounting for a sizable portion of the total. It’s a problem that’s frequently exacerbated by misunderstandings and misinformation, much of which concerns what will happen to these loans after payments are missed and several years have passed.
In most cases, your student loans will not be forgiven after seven years. However, there are exceptions, and as you might expect, it is not a simple matter.
The primary consideration is whether you have federal or private student loans. If it’s the former, we’ve got bad news: your debt isn’t going away. A statute of limitations applies if you have private student loans. This is usually set at between three and ten years, after which you are no longer legally responsible for the debt.
This negative remark has been removed after 7 years. If your debt has not been paid in full, it will remain, as will any subsequent negative marks, but the initial mark will be removed.
What Happens If I Forget About My Student Loans?
Student loans will not disappear simply because you ignore them. Even if you have private loans (which make up a very small portion of total student loan debts), you will suffer significantly before the statute of limitations kicks in and your responsibility is lifted. Avoid federal loans at all costs—the last thing you want is the government breathing down your neck.
Your credit score will suffer as a result
Each late payment, missed payment, and default has an effect on your credit score. It will remain on your credit report for years and may significantly lower your credit score.
Your credit report is crucial, especially if you’re young, fresh out of college, and looking for a new job. When you’re young, it’s easy to adopt a carefree attitude, assuming that everything will work out in the end. However, the more damage you cause now, the more difficult it will be to repair later.
The Balance Will Increase
Every missed payment raises the balance, increasing the interest and potentially accruing additional fees and charges. It may appear that you’re giving yourself some breathing room, but in reality, you’re just kicking the can down the road.
What Happens to Student Loan Debt After Death?
In general, debt follows you until the day you die. If the debt is secured, the lender will try to seize the asset or wait for the responsibility to pass to an heir. If the debt is unsecured, it will be covered by your estate, with a hierarchy determining which lender gets first pick.
It sounds harsh to think that debtors will pursue you to your grave, but if that weren’t the case, they would think twice about giving credit cards and loans to seniors, treating it more like life insurance and causing a big and complicated mess. They’re also in it to make money, and if that means going through your belongings after you’ve died, so be it.
What Happens to Unaffordable Debt?
Debtors who failed to pay their debts face strict punishments from lenders. They don’t care if you claim to have forgotten and will do everything they can to assist you in remembering. They will be a little more sympathetic if you can no longer afford to make your repayments and have a genuine reason (rather than simply not wanting to dip into your vacation fund or preferring to buy a new gaming console).
