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. 

The post Federal Student Loans: What Type of Loan You Have and Why it Matters appeared first on The Kim Law Firm, LLC.

All borrowers who have federal student loans should take a look at their credit report. It is crucial that you ensure that the information being reported by lenders is accurate. Any mistakes could cause serious harm to your credit score. Here, our credit report error lawyer provides a more detailed overview of where federal student loan collections stand, why it is so important to make sure your credit report is accurate, and your options if there is an error. 

Where Federal Student Loan Collections Stand as of July 2025

If you are a student loan borrower with questions about how exactly the federal student loan collection system is operating, you are certainly not alone. The federal student loan system has been in flux since the start of the COVID-19 pandemic in March 2020. There have been pauses in payments, attempts at reforms, ongoing litigation, and the gradual resumption of collection efforts. Even as we enter the Summer of 2025, there is still a lack of clarity on many key issues. Here is an overview of where federal student loan collections stand as of July 2025: 

• Reporting and Collection of Delinquent Federal Student Loans has Resumed: Federal student loan collections officially resumed in May of 2025. In doing so, the agency ended the multi‑year moratorium tied to the pandemic. As of June 2025, the Department of Education and the Treasury have restarted the Treasury Offset Program to reclaim defaulted balances via tax refund and Social Security offsets. Wage garnishments (up to 15% of a delinquent borrower’s disposable income) are set to begin later this summer. Notably, nearly 5 million borrowers are in default. TransUnion reports that 31% of borrowers are 90 (or more) days delinquent on their federal student loans. Reporting of student loan delinquencies has restarted as well. The restarting of federal collections has triggered credit score damage to more than 2.2 million people nationwide.  
• Many Student Loan Borrowers are Still in Forbearance (SAVE Plan Litigation): To be clear, there are currently many student loan borrowers who have no federal payments due. As of July 2025, millions of borrowers remain in forbearance because they are enrolled in the SAVE (Saving on a Valuable Education) repayment plan that was created by the Biden Administration. That repayment plan has not actually taken effect and almost certainly will not take effect. It is subject to ongoing litigation and is widely expected to be ruled illegal. Unlike collections against borrowers who are in default, these borrowers (SAVE enrolled) face no immediate garnishment. Instead, these borrowers are currently left in a state of limbo. If you are a borrower of federal student loans who is covered by the SAVE forbearance, you should carefully watch for any updates on when your payments will resume and under what specific terms. 
• GOP Lawmakers are Considering Major Reforms to Student Loan Repayment Plans: Republican lawmakers in both the House and Senate have proposed sweeping reforms. The proposed reforms have targeted repayment plans and federal borrowing limits. Key proposals include eliminating Grad PLUS and unsubsidized graduate loans, setting hard annual and lifetime caps ($20,500 per graduate year; $50,000 total for professional degrees), and limiting Parent PLUS borrowing. They also aim to consolidate multiple income-driven repayment plans into just two: a standard 10–25-year plan based on the principal borrowed, and a “Repayment Assistance Plan” or “RAP” tied to 1–10% of income, with a minimum payment of $10 and 30-year forgiveness. To be clear, it is still unclear if any of the GOP’s proposals for student loan reforms will become law. Changes could be made to the current proposal in the House bill and/or the Senate bill before they are passed. 

Student loan policies impact an enormous number of people and families. For reference, the Education Data Institute estimates that there are approximately 42.7 million Americans who have student loan debt. More than 15% of those borrowers are already in default as classified by the federal government. Many millions more are at serious risk of going into delinquency (and, potentially, default) in the coming months and years. 

As Reporting and Collection Resume, Serious Questions About Accuracy of Credit Reports

As federal student loan reporting and collections resume in 2025, borrowers are confronting serious issues with credit report accuracy. After years of paused payments and shifting policies, many servicers are now misreporting delinquency dates, payment statuses, or even incorrectly labeling accounts as in default. It is particularly concerning because inaccurate negative marks can drop credit scores by 100 points or more. Along with other things, that can adversely impact a person’s access to housing, car loans, favorable interest rates, and even jobs. An error on a person’s credit report is a big problem that requires immediate action. 

Consumer protection groups and credit bureaus report a spike in disputes, with the Consumer Financial Protection Bureau (CFPB) warning that loan servicers may be violating the Fair Credit Reporting Act (FCRA). Here is another big part of the problem: Millions of borrowers are unaware of what is being reported about their loans at all. For that reason, it is highly recommended that all student loan borrowers closely monitor their credit reports from all three major bureaus (Equifax, Experian, and TransUnion). If you find problems, you should promptly file a dispute. You have the right to challenge errors. Any mistakes could have long-lasting financial consequences. 

The FCRA Protects Consumers Against Credit Report Errors (Student Loans Count)

The Fair Credit Reporting Act (FCRA) is a very important consumer protection law. The FCRA provides much-needed protections to consumers facing credit report errors, including those related to federal student loans. Under the FCRA, credit reporting agencies and data furnishers, such as student loan servicers, are legally required to report accurate and complete information. If a borrower identifies an error, they have the right to dispute it. Some common examples of errors include a payment wrongly marked as late or a loan incorrectly listed in default. 

Once a dispute is filed, the credit bureau and the furnisher must investigate and correct any inaccuracies within 30 days. If they fail to do so, the consumer (student loan borrower) may be entitled to statutory damages and actual damages through legal action. With the resumption of federal student loan reporting in 2025, FCRA protections are more important than ever for those who have outstanding federal student loans. Borrowers should monitor their credit reports regularly and act quickly to challenge any mistakes that could unfairly damage their credit reports. 

Error Related to Student Loans on Your Credit Report? Know Your Rights and Options 

You pulled your credit report from the major credit reporting agencies, and you discovered that there is indeed a material error. If that error is causing any damage to your credit score, it is imperative that you take immediate action to correct it and protect your rights. The FCRA provides you with very important legal options. Here is an overview of key things to know about the law and what you need to do next: 

• You Have the Right to a Free Annual Credit Report: You are entitled to a free credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) once every 12 months. That credit report can be obtained from AnnualCreditReport.com. Reviewing your credit report is the first step in catching student loan reporting errors and other issues. 
• You Have the Right to Dispute Inaccurate Information: Under the FCRA, you have the right to dispute any incorrect or outdated information. To be clear, that includes student loans that are misclassified as delinquent, in default, or that have the wrong balance. Once you file a dispute, the credit bureau must investigate and respond within 30 days.
• You Have the Right to an Accurate Investigation: Credit bureaus must conduct a “reasonable investigation” of your dispute. They are required to contact the student loan servicer (also known as the furnisher of the data) and verify the accuracy of the information. If the loan servicer fails to prove the information is correct, the credit bureau must remove/correct it. If they fail to do so, the credit bureau may bear liability. 
• You Have the Option to Dispute Errors Directly with a Loan Servicer: In addition to contacting the credit bureau, you can submit a written dispute directly to your loan servicer. Doing so is often a good strategy if you have supporting documents that demonstrate that there is an error on your credit file. That evidence may include payment records, approval of forbearance, or any relevant written communications. 
• You Have the Right to Sue for Damages: If inaccurate student loan information is not corrected and harms you financially, you may be able to file a lawsuit. The FCRA allows for statutory damages, actual damages, and in some cases, punitive damages. You may also recover attorney’s fees if the servicer or credit bureau acted willfully or negligently. Notably, you may be entitled to recover damages from the furnisher (lender, debt collector, etc), the credit reporting agency, or both. 
• You Have the Right to Add a Statement of Dispute: If a dispute does not resolve in your favor, you have the right to add a 100-word statement explaining the issue to your credit file. While this does not remove the negative mark, it gives future lenders or employers context when they review your report. That context can help when parties pull your credit report in the future.

Dealing with student loan credit errors can be deeply frustrating. It is normal to feel stressed out and overwhelmed. Here is the good news: You are not powerless. Know your rights, take prompt action, and do not hesitate to seek legal help if you are getting nowhere. Your credit score matters. Fixing errors now can protect your financial future. Our FCRA lawyer can help. 

How FCRA Attorney Richard H. Kim Can Help Student Loan Borrowers

An error on your credit report can cause you serious financial harm. If there is any type of inaccurate information about your student loans—whether it is a misstatement about how much you owe, false representations of missed payments, or other flaws—it is imperative that you take immediate action to correct the problem. The Fair Credit Reporting Act (FCRA) requires both furnishers of information and credit reporting agencies to ensure that they review, investigate, and correct any errors in a timely manner. They can be held legally responsible for their failure to do so. 

Richard H. Kim is a credit report error lawyer with extensive experience handling FCRA cases. A strong, aggressive advocate for consumer rights, Attorney Kim has the knowledge and legal expertise to protect the rights of student loan borrowers who have had incorrect information cause damage to their credit score. Attorney Kim also handles debt collector harassment cases. If you are a student loan borrower with any questions about your rights or options under the FCRA or another state or federal law, we encourage you to contact our office for a confidential initial case review. 

Contact Our Credit Report Error Attorney Today

At The Kim Law Firm, LLC, our credit report error lawyer has the knowledge, skills, and legal experience that you can rely on. If you are a student loan borrower with any questions about an error on your credit report, we are here to help. Contact us for a completely confidential, no-obligation initial consultation. We represent consumers in credit report error cases nationwide. 

The post The Federal Government Has Resumed Collection Efforts on Delinquent Student Loans (Make Sure Your Credit Report is Accurate)  appeared first on The Kim Law Firm, LLC.

Lenders Must Provide Accurate and Timely Information

The FCRA requires that lenders, loan servicers, and third party debt collectors report credit information accurately. Unfortunately, some student loan servicers have struggled with the transition out of the pandemic-era repayment pause. There have been far too many errors on credit reports. If your credit score has dropped significantly due to a supposed delinquency that you believe is incorrect, it is important to act quickly. The first step is to contact your loan servicer to request clarification and, if necessary, a correction. If the servicer does not respond appropriately, you have the right to file a formal complaint. 

You Have the Right to Dispute Inaccurate Information on Your Credit Report

One of the most important protections under the Fair Credit Reporting Act (FCRA) is your right to dispute inaccurate or unfair information on your credit report. If you believe your student loan servicer or credit bureau has reported incorrect details—such as a missed payment that you actually made or an account that does not belong to you—you can take action. Borrowers should request a free copy of their credit report from each of the three major credit bureaus (Equifax, Experian, and TransUnion) through AnnualCreditReport.com. If an error is found, the FCRA allows you to file a dispute with the credit bureau and the entity that reported the information. They are legally required to investigate your claim within 30 days and correct any inaccurate information. 

You Have the Right to Take Legal Action if Your Credit Rights Are Violated

If a credit bureau or student loan servicer fails to comply with the FCRA, you have the right to seek legal remedies. Along with other things, this includes the ability to recover damages for financial harm caused by an incorrect credit report. For instance, if a misreported delinquency leads to a denied mortgage application, a higher interest rate on a loan, or any other tangible financial harm, you may be entitled to compensation. 

Contact Our FCRA Attorney for a Confidential Consultation

At The Kim Law Firm, LLC, our credit report error lawyer has the knowledge and legal experience that you can trust. If you are a student loan borrower with questions about your rights under the FCRA, please do not hesitate to contact us today for a fully confidential consultation. We provide solutions-focused advocacy to clients. 

The post With Pandemic Era Student Loan Protections Fading, Borrowers Should Know their Rights Under the FCRA appeared first on The Kim Law Firm, LLC.