On August 4, 2021, SoFi published an article called “Is There a Statute of Limitations on Debt?” (https://www.sofi.com/learn/content/statute-of-limitations-on-debt/). Most would agree that the simple answer is yes because they assume the author is actually referring to lawsuits on debt, not the debt itself. For example, as correctly pointed out in the article, the expiration of the statute of limitation (SOL) does not mean you no longer “owe” the debt. It merely means the debtor can win a lawsuit brought by a creditor if the lawsuit is filed after the expiration of the time identified in the applicable SOL. Simply stated, lawsuits on some debts become “time-barred” based upon the applicable state law.
But SoFi went too far and is wrong when it published this statement: “And some debts, like student loans, are not subject to statutes of limitations”
This is absolutely wrong. Private student loans ARE subject to an SOL. SoFi knows this because they deal exclusively in private loans (be they “student” loans or otherwise- they do not make federal student loans). The fact that private student loans do have an SOL cannot be disputed. Again, SoFi knows this. Yet, they went on to reiterate the fallacy three more times in the article. That’s not a typo. That’s pushing a message. It is misinformation. Here are the other three:
“Some debts, like student loans, are exempt from the statute of limitations on debt.”
“Student loans are not subject to debt statutes of limitations. That means that lenders or debt collectors are not time-barred from suing you in court to collect the money you owe, no matter how long ago you stopped paying on the student loan debt”.
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“Student loan debt does not have a statute of limitations.”
These statements are simply preposterous. At best, they are extremely reckless. At worst, some may say intentionally deceiving. SOLs do not apply to federal student loans because the federal government does not file lawsuits to forcibly collect amounts due (a few exceptions on federal student loans from decades ago). The federal government does not need to file suit to take a debtor’s money forcibly. In addition, the feds can obtain wage assignments and other payment enforcement mechanisms without going to court at all. Hence, lawsuits and SOLs have no application to them.
Private student loan creditors do not have that luxury and therefore must file lawsuits and win a judgment before they garnish wages, attach assets, etc. Thus, SOLs in the student loan context only apply to private student loans. It is only in defense of a lawsuit that the SOL has any application at all. I say all that to explain that any confusion about private vs. federal in this context, by a lender like SoFi, is not to be believed.
The assertion is so obviously false that it seems SoFi would have to acknowledge it is misleading consumers. SoFi spends millions of dollars “educating” its prospective and actual customers. Customers who rely on the representations made by SoFi on its website and elsewhere about the collectability of its loans. An unsuspecting consumer reading their article on their website would believe that private student loans have no SOL. It is not a stretch to say some SoFi customers may be making payments they are not legally obligated to make due to this article. I say it again: BE ADVISED: there are statutes of limitations on private student loans.
Do not be deceived by a lender who makes huge profits (and puts their name on multi-billion-dollar stadiums) by refinancing your student loans and then asks you to believe you do not have one of the most fundamental, long-standing, and indisputable legal rights available to debtors. Debtors who are being crushed by overwhelming student loan debts (that, thanks to financial industry legislative power, can no longer be discharged in bankruptcy as a matter of right). Debtors who have little to no access to competent and affordable legal counsel. Debtors who have precious too few rights as it is.
Trust me, SoFi will pursue you if you default on your loan, and they will likely sue you timely. However, they apparently want you to think they have an unlimited amount of time in which to sue you. So please don’t fall for it. And don’t ask them or any lender what the SOL is as they suggest. That’s like the chicken asking the wolf when is dinner time.
I contend there are other errors in the article (such as when the SOL “clock” begins to run). The topic I really want to dive into is the ability to discharge refinanced student loans in bankruptcy, but we will have to save that for another day. For now, SoFi’s published position appears to be there is no SOL on their private student loans. Don’t believe it.
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