There is lots of misinformation out there about whether or not student loans are subject to state statutes of limitations. The answer is that some are and others are not, and of course the student loan companies have done their best to confuse everyone on this topic. Let's first look at federal law on this issue.
Normally statutes of limitations for debt are governed by state law. But sometimes the federal government will step in and regulate the issue itself. The federal government has removed SOL protections from SOME student loans, but not all. This is important, because what we have to figure out is which student loans the federal law impacts. So let's go right to the statute.
Title 20 of the United States Code, Chapter 28, Subchapter IV, Part F, Section 1091a. Statute of limitations, and State court judgments
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(a) In general
(1) It is the purpose of this subsection to ensure that obligations to repay loans and grant overpayments are enforced without regard to any Federal or State statutory, regulatory, or administrative limitation on the period within which debts may be enforced.
(2) Notwithstanding any other provision of statute, regulation, or administrative limitation, no limitation shall terminate the period within which suit may be filed, a judgment may be enforced, or an offset, garnishment, or other action initiated or taken by —
(A) an institution that receives funds under this subchapter and part C of subchapter I of chapter 34 of title 42 that is seeking to collect a refund due from a student on a grant made, or work assistance awarded, under this subchapter and part C of subchapter I of chapter 34 of title 42;
(B) a guaranty agency that has an agreement with the Secretary under section 1078 (c) of this title that is seeking the repayment of the amount due from a borrower on a loan made under part B of this subchapter after such guaranty agency reimburses the previous holder of the loan for its loss on account of the default of the borrower;
(C) an institution that has an agreement with the Secretary pursuant to section 1087c or 1087cc (a) of this title that is seeking the repayment of the amount due from a borrower on a loan made under part C or D of this subchapter after the default of the borrower on such loan; or
(D) the Secretary, the Attorney General, or the administrative head of another Federal agency, as the case may be, for payment of a refund due from a student on a grant made under this subchapter and part C of subchapter I of chapter 34 of title 42, or for the repayment of the amount due from a borrower on a loan made under this subchapter and part C of subchapter I of chapter 34 of title 42 that has been assigned to the Secretary under this subchapter and part C of subchapter I of chapter 34 of title 42.
Yikes! That's a lot of language. Okay, let's break it down.
1091(a)(2) basically says, "Okay sport, here are all the student loans that SOLs will never apply to!" Then 1091(a)(2) lists four different types of student loans. Let's go through them.
1091(a)(2)(A) basically says that if the school lent you student loan, you're out of luck, it won't be time barred.
1091(a)(2)(B) removes loans "made under part B of this subchapter" from SOL protection.
1091(a)(2)(C) removes loans "made under part C or D of this subchapter" from SOL protection.
1091(a)(2)(D) removes loans made by various government agencies from SOL protection.
Okay, so what do we know? We know that federal law says that state SOLs will not apply if your loan was lent to you by the school, by some governmental institution, or if the loan was made under "parts B or C or D of this subchapter." Well that helps. What the heck is "this subchapter" anyway? Don't you love lawyers?
This is why I'm glad I went to law school. Well, not really. But here goes. Scroll up and look at the title of the law again. Go ahead, scroll up. What is the full title of the law we're reading?
"Title 20 of the United States Code, Chapter 28, Subchapter IV, Part F, Section 1091"
That's right! Sec. 1091 is actually Section 1091 of Subchapter IV, Part F. So when the law says that loans made under Part B, Part C, and Part D of "this subchapter" are removed from SOL protection, it is referring to loans made under Title 20, Chapter 28, Subchapter IV, Parts B, C, and D. So what loans were made under those parts? Let's take a look!
The statute can be found here: http://www.law.cornell.edu/uscode/20..._28_20_IV.html
Note that Subchapter IV, Part B deals with federal loans made under the FFELP program. And Part C deals with federal Direct Loans. And Part D deals with federal Perkins loans.
These are the ONLY loans removed from SOL protection.
There is NO mention of private loans.
There is NO mention of loans from non-profits.
All student loans not expressly removed from SOL protection by this law are still subject to state SOLs. This includes private student loans from private institutions like Citibank, and from non-profits like Access Group.
If there is still interest in this subject, I'll go through some cases in a second post on the issue.
Normally statutes of limitations for debt are governed by state law. But sometimes the federal government will step in and regulate the issue itself. The federal government has removed SOL protections from SOME student loans, but not all. This is important, because what we have to figure out is which student loans the federal law impacts. So let's go right to the statute.
Title 20 of the United States Code, Chapter 28, Subchapter IV, Part F, Section 1091a. Statute of limitations, and State court judgments
------------------------------------------------------------------------
(a) In general
(1) It is the purpose of this subsection to ensure that obligations to repay loans and grant overpayments are enforced without regard to any Federal or State statutory, regulatory, or administrative limitation on the period within which debts may be enforced.
(2) Notwithstanding any other provision of statute, regulation, or administrative limitation, no limitation shall terminate the period within which suit may be filed, a judgment may be enforced, or an offset, garnishment, or other action initiated or taken by —
(A) an institution that receives funds under this subchapter and part C of subchapter I of chapter 34 of title 42 that is seeking to collect a refund due from a student on a grant made, or work assistance awarded, under this subchapter and part C of subchapter I of chapter 34 of title 42;
(B) a guaranty agency that has an agreement with the Secretary under section 1078 (c) of this title that is seeking the repayment of the amount due from a borrower on a loan made under part B of this subchapter after such guaranty agency reimburses the previous holder of the loan for its loss on account of the default of the borrower;
(C) an institution that has an agreement with the Secretary pursuant to section 1087c or 1087cc (a) of this title that is seeking the repayment of the amount due from a borrower on a loan made under part C or D of this subchapter after the default of the borrower on such loan; or
(D) the Secretary, the Attorney General, or the administrative head of another Federal agency, as the case may be, for payment of a refund due from a student on a grant made under this subchapter and part C of subchapter I of chapter 34 of title 42, or for the repayment of the amount due from a borrower on a loan made under this subchapter and part C of subchapter I of chapter 34 of title 42 that has been assigned to the Secretary under this subchapter and part C of subchapter I of chapter 34 of title 42.
Yikes! That's a lot of language. Okay, let's break it down.
1091(a)(2) basically says, "Okay sport, here are all the student loans that SOLs will never apply to!" Then 1091(a)(2) lists four different types of student loans. Let's go through them.
1091(a)(2)(A) basically says that if the school lent you student loan, you're out of luck, it won't be time barred.
1091(a)(2)(B) removes loans "made under part B of this subchapter" from SOL protection.
1091(a)(2)(C) removes loans "made under part C or D of this subchapter" from SOL protection.
1091(a)(2)(D) removes loans made by various government agencies from SOL protection.
Okay, so what do we know? We know that federal law says that state SOLs will not apply if your loan was lent to you by the school, by some governmental institution, or if the loan was made under "parts B or C or D of this subchapter." Well that helps. What the heck is "this subchapter" anyway? Don't you love lawyers?
This is why I'm glad I went to law school. Well, not really. But here goes. Scroll up and look at the title of the law again. Go ahead, scroll up. What is the full title of the law we're reading?
"Title 20 of the United States Code, Chapter 28, Subchapter IV, Part F, Section 1091"
That's right! Sec. 1091 is actually Section 1091 of Subchapter IV, Part F. So when the law says that loans made under Part B, Part C, and Part D of "this subchapter" are removed from SOL protection, it is referring to loans made under Title 20, Chapter 28, Subchapter IV, Parts B, C, and D. So what loans were made under those parts? Let's take a look!
The statute can be found here: http://www.law.cornell.edu/uscode/20..._28_20_IV.html
Note that Subchapter IV, Part B deals with federal loans made under the FFELP program. And Part C deals with federal Direct Loans. And Part D deals with federal Perkins loans.
These are the ONLY loans removed from SOL protection.
There is NO mention of private loans.
There is NO mention of loans from non-profits.
All student loans not expressly removed from SOL protection by this law are still subject to state SOLs. This includes private student loans from private institutions like Citibank, and from non-profits like Access Group.
If there is still interest in this subject, I'll go through some cases in a second post on the issue.
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