I have over $10K in outstanding debt to my old college. Due to an issue with my parents' tax return my final year of attending, my FAFSA was invalidated, and all financial aid (loans, grants, and scholarships) were pulled, leaving me with the full year's tuition for a private university owed in mid-2010.
Since that time, the school has apparently taken out a federal loan to "back" the debt (discovered during the process of getting a home loan, which disqualified me from getting approved for an FHA loan).
- I know that federal student loans I take out never "go away" if unpaid and sent to collections, but what about this case?
- Should this drop off my credit after 7 years, or is it here for good since the school took out a federal loan to back it? (2019 Edit: This did drop off my credit reports after the 7 year mark, shortly after posting this - credit score went through the roof. Its presence on my credit report was what started the "digging" process revealing the debt's federal backing, so I would actually expect to be able to get an FHA loan on my next home purchase at this point)
- If the 7-year statute of limitations (Oklahoma) does apply to this (preventing them from coming after me with legal action), what marks the beginning of that 7-year period?
- If the school is (incorrectly) reporting "late payment" on my account (when no payment has ever been made at all) to credit bureaus, is it a bad idea to file disputes to get this data corrected for credit score improvement?
The account status on my credit report still shows as "open". I did get contacts from 3rd party debt collection several years back (giving me only the option to pay half or all - no payment plan available), but the debt is still owned by the school and accruing interest.