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July 1 2007

Repayment of Student Loans

By Neil L. Kimball

Did you know that the burden is upon you to prove that you have repaid your student loans, and that the government is not subject to any statute of limitations in its efforts to recover payments it believes are due? This means that if the government's records are inaccurate, they can pursue you 30 years later for a loan that you have fully repaid according to the terms of your promissory note. They may attempt to collect the original amount, plus interest from the date of the loan. Our firm had a client who not only paid her student loan, but also those of her grandchildren. The government's records were incomplete at best, and they alleged that she had never paid back her student loans and that in addition to the original loan amount, she also owed interest for over 30 years. Through an appeals process, we were able to show that her very incomplete records (whose would not be after 30 years) were better evidence of what really occurred then the government's, since their records do not reflect that she made any payments. In short, on appeal, the government acquiesced. Nevertheless, given the government's ability to bring an action indefinitely, you should retain payment records, including the official letter from the government indicating that the loan has been repaid in full.