How to Remove Student Loans From Your Credit Report

FT Contributor
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Removing student loans from your credit report is possible if your education is still ongoing, if your report contains any errors, or if your credit ratings are negatively affected by debts not yet paid off.

Student loans allow a wide variety of individuals to pursue higher education. However, removing student loans from a credit report is often a frustrating process, confusing at best and downright discouraging at worst.

Defaulting or Late Payments on Your Student Loans

When borrowers continually make late payments toward student loans, credit ratings can see a parallel decrease. Any payment more than 30 days late is automatically reported to credit bureaus.

Since payment history and reduction of total debt respectively account for 35% and 30% of a borrower’s credit score, students can quickly see credit ratings decrease soon after student loans are late or reach collections.

Student loans that fall into default can also affect a borrower’s credit score. Specifically, missed or late payments on student loans decrease the quality of a borrower’s payment history.

If you don’t make student loan payments, you could see garnished wages, withheld tax returns and benefits, and the possibility of delinquency. Debtors who fail to pay back loans could also lose eligibility for further student aid.

How Long Do Student Loans Stay on Your Credit Report?

Student loans can remain on a borrower’s credit report for several years. In the same way that regular, on-time payments toward student loans can help to improve a student’s credit score, missed or late payments can quickly compromise credit ratings.

Missed or late student loan payments can remain on a borrower’s credit report for up to seven years. After seven years, even though debts are not forgiven, the negative marks will disappear from a consumer’s credit report.

Much like any private loan, students should prioritize payments toward loans before they accrue significant interest, fall into default, or reach collections.

Even though a record of missed payments toward student loans will disappear from your credit report after seven years, each missed payment can have its own seven-year timetable before disappearing.

The best way to remove the negative effects of late or missed student loan payments from your credit score is to repay loans in full, and to contact your credit bureau with proof of full payment.

Can You Remove Student Loans From Your Credit Report?

Depending on which type of student loan you’ve taken out, the negative effects of missed student loan payments can be removed from your credit report once loans have been paid off.

This is either accomplished naturally once you repay loans in full, or sometimes expedited through proof of the fully paid balance sent to your credit bureau.

Depending on a borrower’s loan type, overall interest, regular income, and other personal financial factors, they might be repaying loans for years after classes conclude.

Timetables for student loan repayment can also affect the removal of student loans from a credit report, and can have positive or negative effects on overall credit score based on a borrower’s willingness to make complete, timely payments.

Federal Student Loans

Issued by the government, federal student loans help students cover educational costs through financing with fixed monthly rates. Students with active federal student loans are also eligible to apply for income-based repayment plans, which help students to make reasonable payments according to monthly wages.

There are several distinctive types of federal students loans, including:

  • Direct subsidized loans, which offer interest-free financing to undergraduate students while their education remains active. Borrowers can qualify for direct subsidized loans based on need, as is determined by the Free Application for Federal Student Aid (FAFSA).
  • Direct unsubsidized loans — sometimes known as Stafford loans — are available to both undergraduate and graduate students. Even when students are still receiving an active education, direct unsubsidized loans begin to accrue interest. These loans are allocated based on the cost of attendance, minus any other tuition assistance already received.
  • Direct PLUS loans can be used by both graduate students and their parents — after a successful credit check — to offset any costs not already covered by financial aid.

Except for Perkins loans — a subsidized federal student loan program that could negatively affect a borrower’s credit score past the traditional seven-year window — federal student loans can be removed from a credit report once loans have been successfully satisfied.

Private Student Loans

Unlike federal loans, private loans are offered from private lenders like banks or state-affiliated institutions. Exact loan terms will vary from one individual lender to another, though rates are generally less favorable than what students can experience with federal loans.

Since private loans are unsubsidized, interest begins to build as soon as loans are accepted. Interest rates on these student loans can also fluctuate over time, unlike the fixed rates which characterize federal loans.

Because of the additional interest and typically higher required monthly payments, private loan options should only be pursued after other options are exhausted.

Typically, defaulted or unpaid student loans will remain on your credit report for seven years, after which point they will disappear and will no longer affect your credit score.

Disputing Student Loans on Your Credit Report

Sometimes, errors or other inaccuracies require that borrowers dispute the effects that student loans have on a credit report. Borrowers have several options if they’re looking to dispute or remove student loans from a credit report.

Disputing if You Are Still in School

Students who are still in school can dispute the effects of student loans on a credit report, if their loan type is not scheduled to begin accruing interest until after education concludes.

Specifically, subsidized federal loans and certain private loan types should not begin to affect a borrower’s credit report until a period of time after that student’s classes conclude.

Deferment or Forbearance

Borrowers can also dispute the effects of a credit balance on a credit score if they have successfully obtained deferment or forbearance of a student loan. Loan deferment — the postponement of a loan for up to six-month intervals, can push back the loan due dates for up to three years.

If borrowers experience particular financial stress, temporary student loan deferment can help them improve their financial situation without the added burden of student loan payments. However, loans are deferred with the understanding that payments will immediately resume as soon as the deferment period concludes.

If borrowers are denied deferment, loan forbearance is sometimes an option. A one-time extension of loan payments of up to 12 months, loan forbearance causes borrowers to accrue interest on current loans, but does not require them to make any new payments during that time.

Disputing Inaccuracies

Debtors who notice the negative effects of unpaid student loans on a credit report while still in school should contact their credit bureau to pursue credit repair. Often after filling out a dispute form through your credit bureau, erroneous credit score influences can be removed.

If inaccurately reported deferment or forbearance is also negatively affecting your credit score or credit reports, submit a dispute through your credit company or financial institution to address the issue before it escalates.

Refinancing Your Student Loans

Students looking to ease the negative effects of unpaid debts on credit reports, or simply negotiate more favorable loan repayment terms, should consider refinancing student loans. Refinancing or consolidating student loans allows students to make fewer overall payments.

Student loan consolidation will not remove loans and their effects — positive or negative — from your credit report. However, student debt consolidation does offer you an easier avenue to repay balances under a single loan, and can even feature better-negotiated loan terms.

When considering whether to consolidate terms, you should weigh the benefits against the drawbacks. While loan terms can improve and loan payment is often made more convenient, you can lose out on loan repayment perks like interest rate discounts.

Even though debt consolidation can lead to lower monthly payments, it can also mean that student debts will take longer to pay off, and will accrue more interest along the way.


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