Attack of the Zombies: How to Deal with Federal Student Loan Debt When It Rises from the Grave

Federal student loans have no statute of limitations – meaning unpaid federal student loan debt from decades ago can come back to haunt you, even long after you have retired.

By Jennifer Parker | Pacific Collection Group | September 17th, 2019

Back in June 2019, when Democratic presidential candidate Bernie Sanders revealed a plan to cancel all $1.6 trillion dollars of student loan debt in the United States, 45 million Americans cheered – particularly those who had taken on federal student loan debt.

American students have long carried the burden of their education; while some have the fortune to pay it off in their younger years, there’s no denying that the debt has spiraled to crisis levels. Rather than only being a millennial issue, seniors are also feeling the pressure.

According to the Consumer Financial Protection Bureau (CFPB), Americans over 60 owe more than $86 billion in unpaid college debt – and as a result, some are seeing their Social Security benefits slashed.

The result?

A debt from youth that follows people to their grave – and worse, many of these seniors, they may have thought their loans were long gone. But just like in a horror movie, the zombie debt rises when you least expect it.


What Is Zombie Debt?

The majority of debts are covered by a statute of limitations, which essentially fixes a time period during which creditors are allowed to collect on their debt. Once that time period expires, the debt is forgiven.

However, federal student loans are not subject to this statute – which means that those with federal student loan debt are on the hook forever. This often comes as a shock, particularly to seniors, as they may have believed that there was a statute of limitations.

They’re not wrong – there was until 1991, when Higher Technical Amendments of 1991 was passed. Since then many courts have ruled that the law applies retroactively: in other words, pre-1991 federal student loan debt is still collectible.


Planning Your Attack Against Zombie Federal Student Loan Debt

The last thing you should do is ignore your debt as you will default, impacting your credit score. If that wasn’t punishment enough, as noted above, the federal government can collect its debt from your Social Security benefits. But that’s not all: your salary and tax returns are also at risk.

Because the statute of limitations doesn’t exist for federal student loan debt, there’s little that you can do about this but start paying. While there are programs to defer or forbear, these don’t whittle down your debt but give you more time.

After decades, it’s likely you don’t remember much about the debt – but you can track down your loan at the Department of Education’s online portal, MyEdDebt. From here on out, you can look at payment plans, such as income-driven ones which can last 20 to 25 years and let you pay a percentage.

With only Sanders providing a glimmer of hope for federal student loan debt relief on the horizon, graduate millennials and seniors alive are well-advised to stay on top of their debt and avoid defaulting.

Zombie debt – especially retroactive zombie federal student loan debt – cannot be considered fair, but nevertheless, it is something that can and will affect you, which means you will need to prioritize it to minimize its effect on your life.


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