Americans are carrying student loan debt into middle age and beyond – particularly those who went on from college to get a graduate or professional degree. That means the subject of what happens to student loan debt when the borrower dies has become one that many people ask about as they do their estate planning.
The good news is that typically, student loan debt is discharged when the borrower dies. That means that your remaining balance won’t have to be paid from your estate or by surviving family members.
The primary exception would be if someone else, like a parent or spouse, is a co-signer on a student loan. While a co-signer typically isn’t responsible for remaining student loan debt if the primary borrower dies, some private lenders may require that they continue to pay off the loan.
Federal vs. private loans
If you have a federal student loan that is solely in your name, it will be discharged when you pass away. Most private student loan companies also discharge the loan when the borrower dies. However, they aren’t required to. Therefore, it’s wise to look at the terms of your loan as you do your estate planning.
Regardless of whether you have a federal or private student loan, the executor of your estate will need to contact the loan servicer after your death to make them aware of it. They’ll likely need to provide a death certificate as well.
You likely plan to have your student loan paid off well before you die. However, one of the purposes of estate planning is to prepare for the unexpected. Therefore, make sure that information about your student loan (and all of your loans) is included in your estate plan as well as in information you provide your executor to have available immediately when you pass away. This will make it easier for them to carry out your wishes.