My boyfriend has old student loans dating back to 1990. At some point he stopped paying them and was a 1099 worker so we know they were never garnished on his paycheck.
They don’t show up on his credit reports at all. He has worked on his credit but is still haunted that they are not on his report. Maybe his dad or his family paid for them (now dead).
We want to travel to London to see my daughter play with an orchestra. I have a passport, but his is expired. He’s afraid that if he applies, the student loan thing will come up and he’ll be turned down. I thought this only applied to child support defaulters. Can he get a passport?
Your boyfriend should go ahead and apply for a passport. He is still eligible to receive one, even though he has not repaid his student loans.
You are correct that you can be denied a passport if you owe child support. Parents who owe more than $2,500 cannot get a passport until they pay their obligation. The US State Department may also deny your application or revoke your existing passport if the IRS reports that you owe more than $55,000 in outstanding taxes.
But unpaid student loans, whether federal or private, won’t stop you from getting a passport.
Now for the bad news: your boyfriend probably still owes those loans, even if they don’t show up on his credit reports.
I’m guessing it’s possible his dad or someone in his family paid them if they had access to his account. But that seems quite unlikely. Why wouldn’t they tell your boyfriend they were paying them?
Another long-term possibility is that your boyfriend is one of the hundreds of thousands of borrowers who have qualified for automatic student loan forgiveness. But keep in mind that these borrowers represent only a tiny fraction of the more than 40 million people with student loan debt. Unless very specific circumstances apply — for example, if your boyfriend has a permanent disability or the school he attended defrauded students — he probably still owes that debt.
The most likely explanation is that these debts are so old that they disappeared from his credit reports. Typically, a debt disappears from your credit report about seven years after you default on payment. If your boyfriend’s debt has aged relative to his credit reports, he still owes money, even if the default is no longer hurting his credit score.
If it was private student loans, the debt is unlikely to come back to bite him. Private student loans typically have a statute of limitations of three to 10 years, depending on the state. Although your boyfriend still technically owes the money, a collector couldn’t sue him.
But I guess those are federal loans, which don’t have a statute of limitations. These could very well haunt him in the future, even though three decades have passed.
As long as someone has federal student loan debt in default, their name will appear in the Credit Alert Verification Report System (CAIVRS), a database of people who have defaulted on loans made. by the government. When someone’s name appears there, they will not be able to be approved for a federally backed mortgage, such as an FHA loan or VA loan. No matter how old the debt is, having federal loans in default can cause your tax refund to be garnished. It will also prevent you from getting approved for another student loan.
But perhaps my biggest worry is that your boyfriend’s student loans might affect his social security benefits. When federal loans are in default, the government can seize up to 15% of your retirement benefit, although it must let you keep at least $750 per month.
Unfortunately, accessing information about these old debts may not be easy. Your boyfriend might be able to go to studentaid.gov and create an FSA ID with his social security number to get information about current federal loans and their balances. If he had Perkins loans, he may need to contact the institution he attended directly for this information.
From there, I would recommend that he speak to a student loan lawyer before taking action. Putting a student loan into default can be complicated, especially given how old the debt is. But once he does, he may be able to make low monthly payments or even $0 if he qualifies for an income-driven repayment plan.
While this debt won’t affect your boyfriend’s passport status, it could come back to haunt him when he least expects it. It’s scary to take basic steps, like figuring out how much you owe, when you’ve ignored the debt. But I suspect solving this problem will reassure your boyfriend.
Robin Hartill is a Certified Financial Planner and Senior Writer at The Penny Hoarder. Send your tricky money questions to [email protected].
This was originally published on The Penny Hoarder, a personal finance website that empowers millions of readers across the country to make smart decisions with their money with practical, inspirational advice, and resources on how to to earn, save and manage money.