Credit Report / Credit Score

What is the Fastest Way to Clear Student Debt From My Credit Report?

Written by Steve Rhode


Dear Steve,

I went to college in 2013. My Mom got very sick with lupus and I had to go back home to care for her. I tried to clear all my accounts but couldn’t finalize housing. They charged me for a semester when I wasn’t living there.

They sent it to collections. And were unreachable every time I emailed or called the school to fix the issue.

Credit Karma gave me 3 options for this debt:
1. Dispute
2. Settle
3. Leave alone and let it drop off in 3 years

Which of those three options will get this debt off my credit report the fastest?

Are there any other better options for handling this?



Dear Ashley,

You have several issues to consider here.

It is quite possible the debt in question is a valid debt. If you did not follow the withdrawal policy or process before you had to leave, they will be entitled to charge you for the tuition and other charges even though you did not attend.

If that is the case, and it is with most in a similar situation, then disputing the debt may have limited success. You can always try it but since they may determine it is a valid debt it could be reported again.

If the debt is affordable to pay off in full, that would close the door on the debt and show it was fully satisfied. In a perfect world that is the best option with the least amount of secondary pain. That is if you don’t consider the knock-on impact of having to pay out a lot of money.

You could settle the debt for less than you owe. The part of the debt that would be written off can be reported on your credit report as written off as a bad debt. If you are not insolvent then you may owe income tax if the forgiven debt is more than $600 since it will be reported to the IRS and you will get a 1099-C tax form.

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The advantage of settling the debt is the matter is now behind you for less than the full amount you owe.

Finally, you can leave it alone and it should fall off your credit report no more than seven years and 180 days from the time the last delinquency period started. It sounds like as of now that was four years ago.

Keep in mind that just because it falls off your credit report does not mean you don’t owe the debt, the collection activity may resume, or that you won’t be sued over the debt. You can still also get a 1099-C tax form and have to pay income tax on the forgiven amount.

So as you can see, the speed at which the account falls off your credit report is secondary to how you want to close the door on the debt and stop it from resurfacing in the future. You either sit tight and wait out the next three years and hope that it doesn’t resurface or you deal with it to end the debt forever.

Only you can make that decision.

Please let me know what you think you will do by posting a comment below.

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About the author

Steve Rhode

Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.


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