What Happens to Student Loans When You Die?

Student loan debt can be a significant financial concern in life, and for some, it can also be a burden in death.

In most cases, student loans are discharged upon death, which means your spouse or heirs don't have to worry about footing the bill. But some private lenders may make it more difficult.

Here's what to know about what happens to student loans when you die.

If you took out federal student loans as a college student or as the parent of a student, the U.S. Department of Education will discharge your loans upon your death or upon the death of the student for whom you took out a Parent PLUS Loan.[1] 

Cancellation doesn't occur automatically, though. The Education Department requires that you or your loved ones provide proof of death in the form of an original death certificate, a certified copy of the death certificate or an accurate and complete photocopy of the original or certified copy.[1]

You or your loved ones will submit the proof directly to your loan servicer.[1]

"The burden of this debt could be detrimental to the family finances," says Teresa Arrigo, a financial advisor with GenWealth Financial Advisors, "So taking time to complete the discharge process protects the long-term finances of the surviving family members."

While all federal student loans are eligible for discharge upon the death of the borrower or the child for which a parent took out loans, that's not always true for private student loan borrowers.

For the most part, the debt is forgiven if the primary borrower dies, but if the loan has a cosigner, that person may or may not need to keep making payments, particularly if the loan was disbursed prior to Nov. 20, 2018.

All loans disbursed after that date are required by law to release the cosigner from the loan upon the primary borrower's death, thanks to the Economic Growth, Regulatory Relief and Consumer Protection Act.[2]

For loans disbursed before that date, here's a quick summary of what to expect with some of the most popular private student loan companies:[3-8]

Note that discharge is generally not available if the cosigner dies but the primary borrower is still alive.[4-7]

"Many [lenders that] don’t have an official discharge policy have a compassion review process families can use to receive loan forgiveness," says Arrigo. "Taking the time now to review your provider’s policy allows you the opportunity to put measures in place if needed to protect your family from the burden of your private loans."[9]

Student loan debt can be an oppressive financial burden for many borrowers, and if yours has resulted in suicidal thoughts, you're not alone. 

In fact, student loans have become a leading cause of mental health struggles, and 1 in 16 borrowers have considered suicide due to their education debt, according to a survey by Student Loan Planner.[10]

Whether you're experiencing mental health issues due to your student loans or for other reasons, you can call the 988 Suicide and Crisis Lifeline by calling 988. Alternatively, you can reach the Crisis Text Line by texting HOME to 741741.

You can also contact your loan servicer or lender to learn about potential relief options, such as:

• Income-driven repayment plans

• Forbearance or deferment

• Modified payment plans

• Student loan refinancing

While it's incredibly difficult to include student loans in a bankruptcy, there can be exceptions in extreme circumstances.