The term statute of limitations may sound like legal jargon but it's a concept that's worth understanding, especially if you have private student loans. Any time you borrow a student loan, it's important to understand not only its terms and conditions but your legal rights as well.

In the context of debt collection, the statute of limitations is the amount of time during which a creditor can sue you for an unpaid debt. When the statute of limitations on a debt expires, it does not mean that your lender or a collection agency can't still attempt to collect on the loan or that you are no longer required to pay it back. It simply means that you can no longer be sued as a means of collection.

Which Student Loans Have a Statute of Limitations?

While private student loans have a statute of limitations, most student loans in the U.S. are federal student loans, which have no statute of limitations.

This means that federal student loan borrowers can be sued at any time to collect on unpaid student loan debt. In fact, there are several other tools and mechanisms that the federal government can use to collect on unpaid student loans that are not available to private student lenders, such as wage garnishment and the Treasury Offset Program, which can seize tax refunds.

The good news is that you can prevent any legal or collection action related to your student loan debt by staying current on your payments and avoiding delinquency and default. Whether you have private or federal student loans, if you are ever struggling to make your monthly payments, you should contact your lender or student loan servicer as soon as possible to discuss your options.

You may be able to request a pause on your monthly student loan payment obligation or adjust your repayment plan. If you have federal student loans, numerous repayment plans are available to help you manage your debt, including options that could lower your monthly payment amount to zero if your income is low enough.

Importantly, you should not stop paying your private student loans in the hopes that the statute of limitations will pass. If your loan goes into default, you can be sued at any time before the statute of limitations expires. Your lender is aware of the timeline and very likely will take action within the time frame. What's more, you are still obligated to repay the debt after the statute of limitations expires.

How Long Is the Statute of Limitation on Private Student Loans?

The statute of limitations on your private student loan varies by state and can range from three to 10 years. Six years is most common. For an exact answer, you can check a state-by-state list on the legal website Nolo.com.

Most often, you are subject to the statute of the state in which you live. However, it can be based on the state in which you borrowed the loan or as otherwise noted in your loan contract. If you are unsure, a good place to start is by reviewing your promissory note for more information, although you ultimately may need to consult a lawyer.

What Happens When the Statute of Limitations Expires?

When the statute of limitations expires, you can no longer be sued to collect on the private student loan, but you are still obligated to repay it. That means you can still be subjected to collection calls and other activities, as well as any other consequences of student loan default.

Since having a loan in default eventually affects your credit and future ability to borrow, you may wish to get the loan out of default at some point. You should know that the statute of limitations can be renewed if you make a payment, or if you agree to revive the statute of limitations as part of a repayment agreement. For this reason, you may want to try to seek a settlement with the creditor to pay less than the amount you owe.

Your private student loan may also be sold by the lender to another creditor for pennies on the dollar. These entities often use aggressive tactics to attempt to collect, and some collection methods are allowed because you are still obligated to repay the debt. However, it is illegal for these companies to harass or threaten you, or to try to trick you into renewing the statute of limitations.