Education Debt II

Student loansNovember 20, 2014, The NL Insider published a guest blog, written by Lori J Frank PC, titled Education Debt? In that first discussion, she focused on how to determine the type of education debt the client wants to enforce. In this entry, she discusses how much time a party has to enforce the student debt obligation. Her purpose in these and in subsequent entries is to help the reader better understand the complex nature of collecting education debt. 

Relevant Affirmative Defenses

In general, a defendant in any litigation may assert what are known as “affirmative defenses.” The affirmative defenses relevant to a student debt are statute of limitations, laches, bankruptcy, lack of venue or jurisdiction, infancy, and fraud. Even if the student acknowledges the debt, it does not mean the court will grant judgment. The school may have waited too long. The two affirmative defenses discussed here are statute of limitations (created by statute) and laches (request for fairness).

Statute of Limitations

In order to determine the relevant statute of limitations, the school must first determine the category of student debt. If the obligation arises out of a loan made under the Higher Education Act of 19651 (“HEA”), there is NO statute of limitations [20 USC 1091a]. Please note that HEA is reviewed every four to six years and is subject to change.

If the student debt arose because of a promissory note (breach of contract) or tuition/fee debt (called an open account), the cause of action is based upon STATE contract law. Each state’s statute is different. In Michigan the statute of limitations for breach of contract is six years2 from the date of default or last payment. For open accounts, the time period begins to run at the date of last payment or last item proved3. If a party waited too long to file suit, and if the defendant asserted this affirmative defense, even if the obligation is owed, it will not be lawfully enforced.


In state court, although a debt may be within the statutory time period to file suit, a student can still assert the affirmative defense of laches. If the obligation is still enforceable under applicable statute of limitations, the Judge can determine that the plaintiff waited too long to file suit. In order for the student to prevail on the defense of laches, s/he must show that:

(1) there was an unreasonable delay in bringing the enforcement action, and

(2) the delay materially prejudiced the defendant.

Federal loans are treated differently. When enforcing its rights, the government typically is not subject to the defense of laches.4 However, there are cases in which the courts will allow the student to prevail. For example, if the school and lender go out of business and the records are no longer available, then the client may not prevail. The sooner the action is brought, the greater the chance the necessary proofs will be available to prove the case. 

Disclaimer: these comments are not meant to be legal advice. They are my opinions sprinkled in with some statutory, regulatory or case law. This blog simply represents my view, and you should do your own research.

By Lori J Frank PC

Ms. Frank received her law degree from Michigan State U. College of Law. She began her career as a collection lawyer. She has been a licensed attorney throughout the State of Michigan since 1990. She has been a National List Member for 15 years. She can be reached at:

16155 W 12 Mile Rd. Ste. 6, Southfield, MI 48076

(888) 670-6801 (Toll-free)

(248) 424-9777 (Local)

(248) 424-8396 (Fax)

1 P.L. 89-329, 11/8/1965 See also 20 USC 28 Subchapter 4 and 34 CFR

2MCL 600.5807(8)

3MCL 600.5831 and see below.

4 United States v. Summerlin, 310 U.S. 414, 416, 60 S. Ct. 1019, 84 L. Ed. 1283, 1940-2 C.B. 435 (1940)

Categories: Compliance, Debt Collection, Guest Blogs, NL Insider, student loan collection

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