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My boyfriend has old student loans from like 1990. At some point he quit paying them and was a 1099 worker, so we know they were never garnished from his pay.
They do not show up on his credit reports at all. He has been working on his credit but is still haunted that they are not on his report. Maybe his dad or family paid them (deceased now).
We want to travel to London to see my daughter perform with an orchestra. I have a passport, but his has expired. He is afraid if he applies, the student loan thing will come up and he will be denied. I thought this only applied to deadbeat child support people. Can he get a passport?
-H.
Dear H.,
Your boyfriend should go ahead and apply for a passport. He’s still eligible to receive one, even though he’s defaulted on his student loans.
You’re correct that you can be denied for a passport if you owe child support. Parents who owe more than $2,500 can’t get a passport until they’ve paid off their obligation. The U.S. State Department can also deny your application or revoke your existing passport if the IRS reports that you owe more than $55,000 in delinquent taxes.
But unpaid student loans, whether they’re federal or private, won’t stop you from getting a passport.
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Now for the bad news: Your boyfriend probably still owes those loans, even if they’re not showing up on his credit reports.
I suppose it’s possible that his father or a family member could have paid them off if they’d had access to his account. But it seems pretty unlikely. Why wouldn’t they have told your boyfriend that they were paying them off?
Another long-shot possibility is that your boyfriend is among the hundreds of thousands of borrowers who have qualified for automatic student loan forgiveness. But keep in mind that those borrowers make up a tiny fraction of the more than 40 million people with student loan debt. Unless very specific circumstances apply — for instance, if your boyfriend has a permanent disability or the school that he attended defrauded students — he probably still owes this debt.
The likelier explanation is that these debts are so old that they’ve fallen off his credit reports. Typically, a debt falls off your credit report about seven years after you default. If your boyfriend’s debt has aged off of his credit reports, he still owes the money, even if the default is no longer hurting his credit score.
If these were private student loans, it’s unlikely that the debt would come back to bite him. Private student loans typically have a statute of limitations of three to 10 years, depending on the state. Though your boyfriend would still technically owe the money, a collector couldn’t sue him for it.
But I’m guessing these are federal loans, which have no statute of limitations. These very well could 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 Reporting System (CAIVRS), a database of people who have defaulted on loans made by the government. When someone’s name appears there, they won’t be able to be approved for a federally backed mortgage, like an FHA loan or VA loan. No matter how old the debt, having federal loans in default can result in garnishment of your tax refund. It will also prevent you from getting approved for another student loan.
But perhaps my biggest worry is that your boyfriend’s student loans could affect his Social Security benefits. When federal loans are in default, the government can seize up to 15% of your retirement benefit, though they have to let you keep at least $750 a month.
Unfortunately, accessing information about such old debt may not be easy. Your boyfriend may be able to go to studentaid.gov and create an FSA ID with his Social Security number to obtain information about outstanding 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’d recommend that he talk to an attorney who specializes in student loans before taking action. Bringing a student loan out of default can be complicated, especially given the age of this debt. But once he does so, he may be able to make low or even $0 monthly payments 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’s not expecting it. It’s scary to take basic steps, like figuring out how much you owe, when you’ve been ignoring debt. But I suspect that resolving this matter will buy your boyfriend peace of mind.
Robin Hartill is a certified financial planner and a senior writer at The Penny Hoarder. Send your tricky money questions to AskPenny@thepennyhoarder.com.
This was originally published on The Penny Hoarder, which helps millions of readers worldwide earn and save money by sharing unique job opportunities, personal stories, freebies and more. The Inc. 5000 ranked The Penny Hoarder as the fastest-growing private media company in the U.S. in 2017.