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What happens to your student loans if you die?

It’s not a fun thing to talk about, but if you haven’t paid off all of your student loan debt when you die, what happens to it? The answer ranges from simple to complicated, and it depends on a number of factors.

If you have federal student loans, they’ll be forgiven as long as someone provides the servicer with a death certificate or other qualified proof of death.

Parent PLUS loans are also eligible to be discharged, and since it’s the parent who took on the loan burden, the debt will be discharged if either the parent or the student dies before it’s paid back. Keep in mind, if the student dies, the forgiven loan amount is considered taxable income, which could lead to a hefty tax bill next April. Parents will receive a 1099-C form after the debt is canceled. 

Cosigners could be in deep trouble if you have one since they’ve agreed to be responsible for your loan in the event you can’t pay it back. The death of a borrower can trigger a default, which makes everything due immediately, and this can happen even if you’ve always made payments on time. There might be a way for you to remove your cosigner’s responsibility through what’s called a cosigner release. A cosigner release allows you to remove the cosigner from your loan if you meet certain criteria — usually several months of years of consistent payment proving you can handle the loan on your own. Not all loan servicers allow this, so be sure to check with yours.

Loans issued by private loan issuers are where this issue can get thorny. The largest private student loan issuer, Sallie Mae, forgives debt if you die, but not every lender has such leniency. Since private student loans are treated more like traditional loans than federal student loans, lenders may come after your estate when you die, but if the loans are in your name only, your children should be fine.

Check with your loan company. Check the National Student Loan Data System to find your lender, then call them to figure out whether your loans will be discharged.