With the cost of college and graduate school being as high as it is, many Americans take out student loans to attend school. It is not uncommon for people to struggle to keep up with their payments. According to a recent report from the Urban Institute, approximately 25% of student loans are delinquent. If you fall behind on your student loans, that information can be reported to the three major credit bureaus (Experian, TransUnion, and Equifax). There is a popular misconception that all derogatory student loan information ages off your credit report in approximately seven years. Unfortunately, that is not entirely true.  

While negative information on your private student loans does age off after approximately seven years, like any other account, the story is different when it comes to Federal student loans.  The grace period for a Federal student loan depends on whether it is a Federal Family Education Loan (FFEL), a Direct Student Loan, or a Perkins Loan. At The Kim Law Firm, LLC, our credit report attorney helps borrowers understand their rights and protect their best interests. 

The Different Types of Credit Reports and Student Loans

Private Student Loans

Private student loans were relatively common prior to major federal reforms in 2010. After that time, there were still many private student loan issues, though they were somewhat less common. However, the One Big Beautiful Bill Act (OBBBA) is bringing big changes to the student loan system in 2026, including putting new statutory caps on federal student loans per year for parents, graduate students, and professional students. Many experts expect a significant increase in the number of new private student loans issued this year. Of course, there are also already many billions in outstanding private student loan debt. 

For credit reports, private student loan debt is treated the same as other private loan debt. Credit reporting agencies generally follow the credit bureaus’ reporting standards. A private student loan account will typically remain on your credit report for as long as the account is active and in good standing. Even after the loan is paid in full, the account may continue to appear on your credit history for a period of time as a positive or closed account. If a private student loan becomes delinquent or goes into default, negative information can be reported. In most cases, delinquency, charge-offs, and collection accounts related to private student loans may remain on a credit report for up to seven years from the date of the first missed payment that led to the default. The key date is the Date of First Delinquency (DOFD) that led to the default and charge-off. The seven-year reporting period runs from that date, not from the later charge-off.

Direct Student Loans and (FFEL) Loans

Direct student loans are treated the same way as FFELs (which include guaranteed student or Stafford Loans, SLS Loans, and PLUS Loans) on credit reports. FFELs are loans owed to a lender, guaranteed by a guaranty agency, and reinsured by the United States. In contrast, a Direct Student Loan is a loan directly between a student and the United States. However, Federal Student Aid explains that the FFEL program was eliminated as of 2010. Still, the United States Department of Education estimates that there is still more than $100 billion in FFEL debt outstanding. The Direct Student Loan program is much larger. The Higher Education Act provides how long derogatory information relating to these different types of Federal loans can be credit reported. For instance, FFEL and Direct Student Loans may only be reported seven years from the latest of the three dates: 

• When the Secretary of Education or the guaranty agency pays a claim to the loan holder on the guaranty. This can take place months or even years after default, and, in effect, is the date the guaranty agency of the United States takes over the loan; 
• When the Secretary of Education, guaranty agency, lender, or any other loan holder first reported the account to a credit reporting agency; and 
• If a borrower re-enters repayment after defaulting on a loan, and subsequently goes into default on the loan. See 20 U.S.C. § 1080a(f).  

In other words, the reporting period for defaulted federal student loans does not always start when the borrower first misses a payment. Instead, the law allows the seven-year clock to begin based on certain later events tied to how the federal loan system works. For example, the period may start when the government or a guaranty agency pays a claim on the loan after default, or when the account is first reported to a credit bureau. If a borrower later rehabilitates the loan and then defaults again, the clock may restart based on that later default. 

As a result, the timing for when negative information falls off a credit report can be more complicated for federal student loans than for most other types of debt. Unfortunately, it is also generally less borrower-friendly. The reason is that the seven-year reporting clock for many debts starts from the date of first delinquency. For federal student loans, the statute allows the reporting period to run from later events. Those events can occur months or even years after the borrower initially defaults. In practical terms, that means the negative entry can remain on a credit report for more than seven years after the borrower first stopped making payments. 

Perkins Loans

A Perkins Loan is an obligation owed to a school as a lender that may be assigned to the United States if the student does not repay the loan. Perkins Loans, however, are not subject to any limit on the amount of time that they may be negatively reported.  Perkins Loans may be reported until the loans are paid in full. See 20 U.S.C. § 1087cc(c)(3).  Importantly, however, the Third Circuit has held that once a loan that has derogatory credit information is finally paid off, the creditor can only report negative account information seven years from the date of first delinquency.  See Seamans v. Temple Univ., 744 F.3d 853, 863 (3d Cir. 2014). In other words, the negative information does not stay on your credit report forever.  The obvious policy objective is to incentivize borrowers to pay off their student loans with the eventual benefit of having their credit report corrected. 

While Perkins Loans can stay on a credit report for longer than seven years, they also have some additional options for rehabilitation. Federal regulations allow borrowers who have defaulted on a Perkins Loan to restore the loan to good standing by making a series of voluntary, on-time payments under a rehabilitation agreement. If the borrower successfully completes the required payments, the default designation may be removed from the credit report, and the loan may be returned to normal repayment status. The borrower must still repay the balance owed, but rehabilitation can substantially reduce the long-term credit damage associated with a defaulted Perkins Loan.

An Overview of How the Fair Credit Reporting Act (FCRA) Protects Student Loan Borrowers

Student loan debt, public and private, can be reported to credit report companies. When the information reported is accurate, that reporting is generally lawful. However, when a lender, loan servicer, debt collector, or credit bureau reports inaccurate or misleading information, the Fair Credit Reporting Act (FCRA) provides important legal protections for borrowers. The FCRA is a federal law that regulates how credit information is collected, reported, investigated, and corrected. Here is an overview of how the FCRA protects student loan borrowers: 

• You Have the Right to Accurate Credit Reporting: What is on your credit report matters. The information should always be fair, updated, and accurate. The FCRA requires that all information reported to credit bureaus must be accurate and not misleading. Lenders and loan servicers that report student loan accounts are considered “furnishers” of information under federal law. These entities must take reasonable steps to ensure that the information they provide is correct. For example, a loan servicer cannot lawfully report a borrower as delinquent if the borrower is current on his or her payments or he or she is enrolled in an approved repayment program. 
• You Have the Right to Dispute Incorrect Student Loan Information: If there is a student loan-related error on your credit report, you are not without legal options. Quite the contrary, borrowers have the right to dispute inaccurate or incomplete credit information. Your notice of dispute under the FCRA can be filed directly with the credit reporting agency. You can and should generally also notify a responsible student loan servicer, lender, and/or debt collector. Once the credit bureau receives the dispute, it must also notify the company that furnished the information and initiate a reinvestigation. 
• Credit Bureaus have a Duty Conduct a Reasonable Investigation: Credit reporting agencies have a legal obligation to conduct a comprehensive, reasonable investigation once a dispute from a consumer is received. That means that they cannot simply ignore the borrower’s complaint or rely entirely on automated responses from the loan servicer. The investigation must evaluate the specific issues raised by the consumer. A cursory review of the records is not sufficient to comply with the law. If the bureau determines that the information is inaccurate or cannot be verified, it must delete or correct the entry. To be clear, the duty applies whether you have a private student loan or any type of federal student loan. 
• Student Loan Services and Lenders Have a Duty to Investigate Disputed Information: The FCRA requires student loan servicers and lenders to also have independent responsibilities once they receive notice of a dispute. Under the law, furnishers must review the information provided by the credit bureau and conduct their own investigation into the accuracy of the account. They must report the results of that investigation to the credit bureau and correct any information that is inaccurate or incomplete. A servicer cannot continue reporting information it knows, or should know, is incorrect. If they do so, they are in violation of the FCRA and may be held legally liable. 
• You Have the Right to Seek Damages for FCRA Violations: An error on your credit report can cause you tangible financial harm. It could lead to higher interest rates, a denial of credit, and a wide range of other problems. When lenders, loan servicers, or credit reporting agencies fail to comply with the FCRA, borrowers may have the right to pursue legal remedies. The statute allows consumers to recover damages if inaccurate information remains on their credit report after a proper dispute was initiated. In some cases, borrowers may be entitled to compensation for actual damages, statutory damages, attorney’s fees, and court costs. If you have any questions about what type of damages you can seek, an experienced FCRA lawyer can help. 

How Attorney Richard H. Kim Can Help

For student loan borrowers, navigating issues related to late payments, delinquencies, forbearance, defaults, and credit reports can be complicated. Richard H. Kim is a consumer rights lawyer with the knowledge, skills, and professional experience people can trust. With extensive experience handling FCRA claims, Attorney Kim is prepared to review your case and help you take action to correct any adverse information that is improperly included on your credit report. In some cases, student loan borrowers may even be entitled to recover financial compensation because of an error. 

Contact Our Consumer Rights Attorney Today

At The Kim Law Firm, LLC, we are committed to protecting the legal rights and financial interests of consumers, including student loan borrowers. If you have any specific questions or concerns about adverse student loan information and your credit report, we are here as a legal resource. Call us today or contact us online for a fully confidential initial consultation. Our firm provides nationwide legal representation to student loan borrowers in credit report error cases.