What Happens To Student Loan Debt When You Die

This same protection applies to parent plus loans too.

Someone will need to provide proof of death to the student loan servicer managing the debt to get it discharged after death. It s worth noting however that the provision is set to. In the past if a federal loan was discharged due to death the student s or the borrower s estate would be responsible for paying taxes on the canceled amount. What happens to your student loan debt if something happens to you.

If the borrower of the loan dies that death can trigger default causing the entire balance of the loan to be due immediately. If the debt is a federally backed education loan that the student took on by him or herself then the loan is automatically canceled when the student dies and the government discharges the debt. After death the process of resolving a student loan is called discharging for the most part many federal student loan debts die with you. Private student loans if you have federal loans your debt will die with you says leslie tayne financial debt attorney of tayne law group p c.

If you have a federal student loan then the federal government will discharge. Private student loans such as those from sallie mae or wells fargo for example often require cosigners. If the co signer dies typically their estate becomes responsible for the debt if the borrower defaults. If you have a cosigned student loan and the primary borrower passes away you are still on the hook for the debt.

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As the cosigner if you die the primary borrower may be required to pay the entire balance of the student loan in full. And author of life debt. Now if a student passes away or suffers a life altering disability their student loan debt is forgiven without any tax consequences. These loans have no cosigner and the legal terms that govern the loans specify that the debt is canceled upon the death of the student.

In determining what happens to your student loans after your death the key question is what type of loan you have. If you die your federal student debt is instead fully forgiven and is no longer owned or owed by anyone. Will your loved ones have to pay it when you re gone.