Canadian Foundation for
Development & Empowerment
STUDENT LOANS: Did You Know?
Does student loans ever go away? Unless you qualify and file for formal loan forgiveness through a bankruptcy or proposal, the student debt itself never goes away. Whether collection can be enforced depends on whether your creditor is the federal or provincial government or a private lender. Private student loans are subject to provincial statute of limitations laws. that means if there has been no activity on your student credit card or bank loan for two years, your defense to a lawsuit or wage garnishment action would be that the debt is too old. These same debts would fall off your credit report after six years. You will continue to receive collection calls during this time. Government Student Loans are not subject to a limitation period for collection action.
Under current law, student loans can't be claimed in a bankruptcy except in certain circumstances. The only way these loans can be discharged is if they're found to cause “undue hardship” on the borrower or the borrower's dependents.