By Lisa Moran ·October 05, 2023 · 10 minute read
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Editor's Note: For the latest developments regarding federal student loan debt repayment, check out our student debt guide.
Paying student loans on time can have a positive effect on your credit score and help build a good credit history. On the flip side, when you have a late or missed student loan payment, that can be reflected on your credit report as well. Delinquent payments can lower your credit score and have financial repercussions, such as impacting your ability to qualify for a new credit card, car loan, or mortgage.
If you’re wondering how to remove student loans from a credit report, the answer is that it’s only an option if there’s inaccurate information on the report. Student loans are eventually removed from a credit report, however, after they’re paid off or seven years after they’ve been in default. Here’s what to know about student loans on a credit report, what happens when you default on a loan, and how to remove student loans from a credit report if there’s inaccurate information.
What Is a Credit Report?
Before considering the impact of student loans on your credit report, it’s helpful to review what a credit report is. It’s a statement that includes details about your current and prior credit activity, such as your history of loan payments or the status of your credit card accounts.
These statements are compiled by credit reporting companies who collect financial data about you from a range of sources, such as lenders or credit card companies. Lenders use credit reports to make decisions about whether to offer you a loan or what interest rate they will give you. Other companies use credit reports to make decisions about you as well – for example, when you rent an apartment, secure an insurance policy, or sign up for internet service.
💡 Quick Tip: Ready to refinance your student loan? With SoFi’s no-fee loans, you could save thousands.
Defaulting on Student Loans
It’s also worth reviewing what happens when a student loan goes into default. One in ten people in the United States has defaulted on a student loan, and 5% of total student loan debt is in default, according to the Education Data Initiative.
The point when a loan is considered to be in default depends on the type of student loan you have. For a loan made under the William D. Ford Federal Direct Loan Program or the Federal Family Education Loan (FFEL) Program, you’re considered to be in default if you don’t make your scheduled student loan payments for a period of at least 270 days (about nine months).
For a loan made under the Federal Perkins Loan Program, the holder of the loan may declare the loan to be in default if you don’t make any scheduled payment by its due date. The consequences of defaulting on student loans can be severe, including:
• The entire unpaid balance of your student loans, including interest, could be due in full immediately.
• The government can garnish your wages by up to 15%, meaning your employer is required to withhold a portion of your pay and send it directly to your loan holder.
• Your tax return and federal benefits payments may be withheld and applied to cover the costs of your defaulted loan.
• You could lose eligibility for any further federal student aid.
And you don’t have to default on your student loans to experience the consequences of nonpayment. Even if your payment is only a day late, your loan can be considered delinquent and you can be charged a penalty fee.
Temporary Relief for Borrowers Behind on Payments
The pandemic-era pause on federal student loan payments that was established in March 2020 finally came to an end in the fall of 2023. After more than three years of having this financial responsibility off their plates, federal student loan borrowers must now fit payments back into their budgets. However, in order to protect financially vulnerable borrowers from facing the steep consequences of missing payments during this transition, the Biden Administration established a 12-month “on-ramp” program to help them adjust.
From Oct. 1, 2023, to Sept. 30, 2024, borrowers who don’t pay their federal student loans will be free of the usual repercussions. Specifically, this means that:
• Loans will not be considered delinquent or in default.
• Missed payments will not be reported to the credit bureaus.
• Missed payments will not be referred to debt collection agencies.
• Unpaid student loan interest will not capitalize (be rolled into the principal balance) once the on-ramp period ends.
However, payments missed during this period will be due once it ends. Additionally, any missed payments will not count toward forgiveness under income-driven repayment or Public Service Loan Forgiveness (PSLF).
How Long Do Student Loans Remain on a Credit Report?
If you are delinquent on your student loans or go into default, that activity is reported to the credit bureaus. It will remain on your credit report for up to seven years from the original delinquency date.
The good news is that the more time that passes since your missed payment, the less impact it has on your credit score.
The exception to this is a Federal Perkins Loan, which is a low-interest federal student loan for undergraduate and graduate students who have exceptional financial need. This type of loan will remain on your credit report until you pay it off in full or consolidate it.
On the other hand, if you made timely payments on your loan and paid it off in full, it may appear on your credit report for up to 10 years as evidence of your positive payment history and can boost your credit score.
How Do I Dispute a Student Loan on My Credit Report?
It’s a good habit to periodically check your credit report. You can request a free report from each of the three major credit reporting agencies—Equifax, Experian, and TransUnion—by visiting annualcreditreport.com. The bureaus are required by law to give you a free report every 12 months. However, through the end of 2023, you may request your report weekly at no cost.
There are three reasons your student loan might have been wrongly placed in default and reported to the credit bureaus by mistake. Here’s how to begin the process to correct these errors:
1. If You Are Still in School
If you believe your loan was wrongly placed in default and you are attending school, contact your school’s registrar and ask for a record of your school attendance. Then call your loan servicer to ask about your record regarding school attendance.
If they have the incorrect information on file, provide your loan servicer with your records and request that your student loans be accurately reported to the credit bureaus.
2. If You Were Approved for Deferment or Forbearance
If you believe your loan was wrongly placed in default, but you were approved for (and were supposed to be in) a deferment or forbearance, there is a chance your loan servicer’s files aren’t up to date. You can contact the loan servicer and ask them to confirm the start and end dates of any deferments or forbearances that were applied to your account.
If the loan servicer doesn’t have the correct dates, provide documentation with the correct information and ask that your student loans be accurately reported to the credit bureaus. Under the Fair Credit Reporting Act, a borrower may appeal the accuracy and validity of the information reported to the credit bureau and reflected on their credit report.
Recommended: Student Loan Deferment vs Forbearance: What’s the Difference?
3. Inaccurate Reporting of Payments
If your loan has been reported as delinquent or in default to the credit bureaus, but you believe your payments are current, you can request a statement from your loan servicer that shows all the payments made on your student loan account, which you can compare against your bank records.
If some of your payments are missing from the statement provided by your loan servicer, you can provide proof of payment and request that your account be accurately reported to the credit reporting agencies.
Recommended: How to Build Credit Over Time
In all three cases, if you believe there is any type of error related to your student loan on your credit report, it’s best practice to also send a written copy of your dispute to the credit bureaus so they are aware that you have reported an error.
Why Your Student Loans Should Stay on Your Credit Report
You generally can’t have negative, but accurate, information removed from your credit report. However, you can dispute the student loans on your credit report if they are being reported incorrectly.
On the bright side, if you’re paying your student loans on time each month, that looks good on your credit report. It shows lenders that you are responsible and likely to pay loans back diligently.
💡 Quick Tip: When refinancing a student loan, you may shorten or extend the loan term. Shortening your loan term may result in higher monthly payments but significantly less total interest paid. A longer loan term typically results in lower monthly payments but more total interest paid.
When You’re Having Problems Paying Your Student Loans
If you’re having difficulty making regular payments on your federal or private student loans, there are steps you can take before the consequences of defaulting kick in.
One option is to apply for student loan deferment, which allows you to reduce or pause your federal student loan payments for up to three years. During this time, interest on subsidized loans does not accrue. Or you could pursue student loan forbearance, which allows you to reduce or pause payments for up to a year if you’re facing a temporary financial hardship.
You can also contact your loan servicer to discuss adjusting your repayment plans.
Additionally, if you’re having trouble paying your student loans on time, you may be able to make your loans more affordable through a federal income-based repayment plan. These plans, including the new Saving on a Valuable Education (SAVE) plan, cap your payments at a small percentage of your discretionary income and extend the repayment term out to 20-25 years. Once the repayment period is up, any remaining balance is forgiven (though you may be subject to income taxes on the canceled amount).
Refinancing your student loans may also be an option—if you extend your term length, you may qualify for a lower monthly payment. Note that while these options provide short-term relief, they generally will result in paying more over the life of the loan.
When you start making your payments by the due date each month, you may see that your student loans can become a more positive part of your credit report. Again, while these options provide short-term relief, they generally will result in paying more over the life of the loan.
The Takeaway
While you generally can’t remove student loans from a credit report unless there are errors, it isn’t a bad thing if you make payments on time. If a loan is delinquent, it will be removed from your credit report after seven years, though you will still be responsible for paying back the loan.
If you’re having trouble making loan payments, there are ways to make repayment easier. Borrowers with federal student loans can look into forgiveness, an income-driven repayment plan, or a change to the loan’s terms.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
Is it illegal to remove student loans from a credit report?
There’s no legal way to remove student loans from a credit report unless the information is incorrect. If you think there’s an error on your credit report, you can contact your loan servicer with documentation and ask them to provide accurate information to the credit reporting agencies. It’s also a good idea to send a copy of the dispute to the credit bureaus as well.
How do I get a student loan removed from my credit report?
If you paid your student loan off in full, it may still appear on your credit report for up to 10 years as evidence of your positive payment history. It takes seven years to have a defaulted student loan removed from a credit report. Keep in mind you are still responsible for paying off the defaulted loan and you won’t be able to secure another type of federal loan until you do.
How can I get rid of student loans legally?
If you have federal student loans, options such as federal forgiveness programs or income-driven repayment plans can help decrease the amount of your student loan that you need to pay back. If you have private or federal student loans, refinancing can help lower monthly payments by securing a lower interest rate and/or extending your loan term. If you refinance a federal loan, however, you will no longer have access to federal protections and benefits. And you may pay more interest over the life of the loan if you refinance with an extended term.
SoFi Student Loan Refinance
If you are a federal student loan borrower, you should consider all of your repayment opportunities including the opportunity to refinance your student loan debt at a lower APR or to extend your term to achieve a lower monthly payment. Please note that once you refinance federal student loans you will no longer be eligible for current or future flexible payment options available to federal loan borrowers, including but not limited to income-based repayment plans or extended repayment plans.
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