There’s no statute of limitations for federal student loan debt. So even if your loans no longer show in your credit history, you still owe your loans. They didn’t go away. And that means the U.S. Department of Education can still garnish your wages, take your tax refund, and offset your Social Security Benefits.
In addition, your defaulted federal student loans will remain on the CAIVRS database, and that will stop you from getting a federally backed mortgage (FHA, VA, etc.) and qualifying for new Federal Student Aid.
You can avoid these consequences by getting out of default by:
negotiating a federal student loan settlement
applying for a Direct Consolidation Loan
entering into the loan rehabilitation program
Neither option will put the payment history back on your report if it’s already been removed from your credit report after 7.5 years. However, loan consolidation and rehabilitation will put the loan amount back on your credit report. Adding the loan balances back to your report shouldn’t hurt your FICO score.
Plus, you qualify for affordable repayment options, loan forgiveness, and new Federal Student Aid to go back to school once you’re out of default.
Note: Private student loans do have a statute of limitations. A private lender could still sue you if the time limit runs out. But you would have a defense that the time to collect has passed.