Federal law (US Code Title 15, §1681c) controls the behavior of credit reporting agencies. This law is known as the Fair Credit Reporting Act (FCRA). Under FCRA §605 (a) and (b), an account in collection will appear on a consumer's credit report for 7.5 years. The clock starts approximately 180 days after the date of first delinquency on the account. To learn when an account will be removed by the credit reporting agencies (TransUnion, Equifax, and Experian and others), add 7.5 years to the date of first delinquency. Subsequent activity, such as resolving the debt, is irrelevant to the seven-year rule. However, if the debt is a tax lien, that can appear for seven years from the date of payment. A bankruptcy will appear for ten years from the date of the final order. Delinquent federal student loans can be reported indefinitely, i.e. for as long as they are delinquent.
In default, a federal student loan is treated differently than a private loan. In a federal loan, a default as occurs after 270 days of non-payment. The federal government reserves the right to administratively garnish your wages and seize your tax return. By administratively, I mean the Dept. of Education does not need to ask a court for the right to take these actions -- it can take these actions on its own authority.
Several federal and
state agencies offer programs to help you cancel or reduce all or a portion of your student loan debt without filing for bankruptcy. Most programs involve teaching, nursing, or military service. To learn more about available programs and how you can apply, visit the Federal Student Aid Repayment Information Web site.
If your loans are federal, the Department of Education can garnish 15% of your after-tax income, as long as the garnishment does not bring your weekly pay below 30 times the Federal minimum wage. Unlike other creditors, the federal government has the right to garnish wages, levy bank accounts, and seize property without first obtaining a court judgment against the debtor.
To try to stop a garnishment, contact the Department of Education's resource Facing Loan Default. The DOE provides a list of resources available for consumers who have defaulted on their loans.
If your federal student loan payments are causing financial distress, review the Income-Based Repayment (IBR) program, and see the Dept. of Education's IBR calculator.
If you are disabled and are paying a federal student loan, see the Bills.com resources Student Loan Disability and Federal Student Loan Tuition Waiver. If you work in public service and have federal student loans, read Public Service Loan Forgiveness to learn how to have your student loans waived.
I hope this information helps you Find. Learn & Save.