What Happens to Student Loans After you Die?

What Happens to student loans when you die?

Many times people will ask me about what happens to student loans when they die.

Changes in Student Loans have Made the Question More Important

It is becoming increasingly important as student loans are becoming a larger and larger influence on the financial state of the public. Last year, the total national debt is getting close to a trillion and a half dollars and about eighty billion of this debt are in parent PLUS Loans, meaning that this debt doesn’t just affect the newly graduated.

There is no simple answer to what happens to student loans. The true answer is: depends, but to give you some guidance on what will happen there are different categories of student loans. The different categories as well as the specific terms of the contract that you signed when taking on the student loan debt all factor into whether the debt is discharged or not when someone passes.

Types of Student loans and how they affect what happens

Federal student loans

Federally backed student loans are pretty simple at death. When the borrower dies, the government discharges, meaning forgives, the debt. These loans do not have cosigners which makes them even simpler. When the student dies the debt disappears.

Private student loans

Private student loans are less simple. When the student dies the debt may or may not be forgiven. Whether the debt disappears all depends on the lender’s policies and the contract that you signed when you got the student loan.

Refinanced student loans

The original loan terms will not control if you have refinanced the student loan. If you did have a student loan that fell in either of the above two categories and then you refinanced the loan with a new lender. The terms of the agreement that you signed with the new lender along with the new lender’s policies are the ones that control.

Parent PLUS loans

Much like the federal student loans, the Parent PLUS loans are discharged when the student dies, there is added complexity here, though because there is a parent who is borrowing for the child. With parent PLUS loans if the parent or the child pass, the debt will be forgiven, but there may be a 1099-C form issued to you, treating the forgiven loan as if it were income to the borrower.

Cosigned student loans

A co-signed student loan, unlike the Parent PLUS loan, is still enforceable if either cosigner on the loan is still living. So if one cosigner passes, it is still the responsibility of the surviving cosigner to pay the loan. It is important to look at the terms of the agreement to see what happens to the debt when the surviving borrower passes.

Find a professional: If you are in the process of planning your estate, it is important that you take all of these intricacies into account when you are creating the documents and financial plans to make sure your family is well taken care of in the event of your passing or the passing of a loved one.

Featured Posts
Follow Me
  • Grey LinkedIn Icon
  • Grey Facebook Icon
  • Grey Twitter Icon
Palm Trees

29970 Technology Drive, Suite 217

Murrieta, CA 92563

Tel: 951-304-3431

  • LinkedIn
  • Facebook
  • Yelp

© 2020 by The Ashcraft Firm

This is Attorney Advertising

Nothing contained herein should be considered legal advice.


Note: In accordance with Section 528(b)(2) of the United States Bankruptcy Code, readers of this message are advised that THE ASHCRAFT FIRM is a DEBT RELIEF AGENCY whose services may include helping people file for relief under the Bankruptcy Code.


IRS Circular 230 Disclosure: To ensure compliance with IRS's requirements, please be advised that any tax advice contained in this communication (including any attachments) is not intended or written to be used or relied upon, and cannot be used or relied upon, for the purpose of (i) avoiding penalties under the Internal Revenue Code, or (ii) promoting, marketing or recommending to another party any transaction or matter addressed herein.