As in marriage, student loan debt is a matter of “until death do you part.”
If you’ve got student loan debt, there are lots of options to keep yourself out of default. For some, the debt can be repaid in full before they get to the grave.
Unfortunately, as student loan debt climbs to stratospheric levels, many people ask me about the impact their debt will have on their loved ones after they die.
Morbid, but a valid concern – especially for parents and grandparents who cosign for student loans for their relatives.
Here’s the run-down.
Federal Loans Die With You
The federal loan dies with the borrower, and it’s very simple.
The surviving people (family member or estate representative) fills out a Death Discharge to officially notify the Department of Education that the borrower has passed away. You’ll usually have to send in a certified copy of the death certificate to the school (for a Federal Perkins Loan) or to the loan servicer (for a Direct Loan or FFEL Program loan).
The school or servicer verifies the information and the loan goes away. It should not affect the estate.
Private Student Loans
Private loans are completely different because they are like any other consumer debt and attaches to the estate.
I’m not an estate lawyer, so you’ll need to talk with one to determine the impact of the debt on your assets.
What Happens To A PLUS Loan When The Borrower Dies
When the borrower or the student passes away owing a PLUS Loan, it is still discharged.
If it’s a Parent PLUS Loan and the parent survives but the student or child passes away, that PLUS Loan can be discharged through that Death Discharge application.
What Happens To A Parent PLUS Loan When The Parent Dies
In a Parent PLUS Loan situation, it is the parent – not the student – who is the borrower. When the borrower passes that loan dies as well, again through the Death Discharge application.
The Procedure For Death Discharge
In contrast with some of the other federal student loan repayment, discharge and forgiveness issues, it’s really hard for the lenders and servicers to screw up the process for a death discharge.
If the person died, the person died.
Your death discharge application gets sent to the servicer and/or lender if it’s not the Department of Education. Sending an authenticated Death Certificate with it is really all there is to it because they can’t collect from the person if they’re dead anyway.
If the school or servicer does contact the estate, the estate is going to verify the death and the discharge for the court. There should be no issues with this.
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Wanna bet some scumbag at SLM Corp. or NNI has proposed trying the same crap as the credit card companies? I.E. Calling the deceased’s family and implying they have a “moral obligation” to pay.
If federal loan, it would be a violation of law because the liability dies – moral and legal. If Private, there are state laws that can protect people from creditors and fed laws that protect people from debt collectors.
Or the sleezeballs from CCA in Massachusetts. They love to make money off the misery of others.
Thanks. Interesting info. Does anybody else feel enslaved by their student loans?
Kyle Roos — Yes, absolutely!!! I have my own loans and now two college age kids plus one in middle school. I even make a decent paycheck but it is all just too much. In the early years after college when I barely made enough to get by I had to put the loans in forbearance. It is the capitalization of interest from back then when I couldn’t figure out anything else to do that is the real killer here.
I defaulted big time on my student loan, It was an $8000.00 Loan, and now it’s over $20,000.00. My paychecks have been garnished, and with the interest and penalties my loan will never be payed off. If there anything I can do. The interest just keeps going and going. I know it’s my fault but now I am so burdened by this. They garnish my tax returns, and even my vacation pay.
Peter, there are things you can do. Please contact me by either calling the office of completing the contact form.
there is a new income based repayment plan that can make your payments as low as 5 dollars a month, you just have to ask for it make 6 payments if you want title 4 to go back to school 9 to get out of default as soon as you make arrangements to make payments all the garnishments stop
This response confuses two issues. The income based repayment is for loans NOT in default, and payment can be as low as ZERO! If in default, 6 payments qualifies you for more aid, 9 payments gets you out of default. BUT, it must be an approved repayment plan.
The federal debt is forgiven BUT- if you are a parent signing on a Parent Plus loan then the debt forgiveness is recorded as income on your taxes at your income level. We were charged with having $54,000 extra as income and had to pay taxes all at once on that. It looks like our income was way better than it was and we paid 28% taxes for that as a result all at once. Not what we expected thinking we had 10 years to help our son pay off debt he was accuring. But then life is never as you expect it to be. Death and taxes you can count on! Prepare your family!
I thought that Parent Plus Loan cannot be forgiven, this is confusing. How can the Parent Plus Loan debt be forgiven?
A Parent PLUS loan is a federal loan. If it is being paid on an income driven repayment, it will be forgiven if not paid off in 25 years.
Do you work for Sallie Mae? I need someone to be able to help me lower my payments or do whatever I can. I cannot afford to pay!!!!!
No, I don’t work for Sallie Mae. We can help with fed loans. With private loans there are usually few if any options.
I am literally drowning in student loan debt…I’m $200,000 in debt ($40,000 of which is federal). The federal loans I am able to keep up with, but the privates are killing me! I have currently defaulted on two and I’m sure many more will follow. I originally had 17 through AES. I don’t need to hear about how stupid it was to take these out, because I tell myself that literally every single day. I have absolutely nothing to show for it! I WANT to pay back every penny I owe, but I can’t dig myself out! I’m making $30,000 a year right now, and I’m literally barely making it. My phone rings all day with collectors and I don’t know what to say to them! I desperately need help and advice! My main worry right now is my granddad cosigned for about $40,000 of the private loans. He passed away about 3 years ago. I’m terrified they are going to start harrassing my grandmother!
Please fill out my contact form or call my office.
i cosigned on a loan and the borrower passed away and wells fargo forgave the loan however now im faced with the possibility of being hit with a huge bill by the IRS is there anything i can do?
Nothing you can do about the tax bill, though consulting with a CPA is advised.
Hello-
I have so much debt, I can’t see straight- over $200,000. I made a huge mistake of over-borrowing and graduated in California during the Recession.
I deferred and deferred, and am almost 6 months late on all my private student loans – I just pay one month to keep it out of default. The payments are killing me. I need to contact the federal one because I just stopped paying it- I need to rehabilitate it.
My parents are consigned and I cannot believe I got them into this mess. My dad is supposed to retire in 5 years, my mom is retired. They have a mortgage. They are already paying other loans down for me. My loans are my own issue. They lend me money occasionally, but have little extra money themselves.
I’m now a flight attendant with full benefits and I waitress as well. The flight attendant job pays less than $30,000/year, but has the potential to be a huge money maker eventually (pay goes up each year- after 5 years, I’ll make $36/hr).
My rent is only $375,
I only spend money on food (and occasionally yarn to knit, creative items).
Phone bill is $115.
I pay this amount each month
ACS-$432
AES-$275
Sallie Mae-$376
And all are delinquent by 5-6 months.
I just got a call from National Enterprise Systems – I think for Sallie Mae bc they haven’t withdrawn the amount from my bank and it may have missed the date.
Please help!!!
My office will contact you.
To Nicole:
I have sallie Mae loans I can’t pay also. National Enterprise Systems is a collector for Sallie Mae, BUT! Even though Sallie Mae does not have to abide by the fair debt collection act, National Enterprise does! Any collector hired by the bastards at Sallie must abide by the law. RECORD ALL THE PHONE CALLS! And if the collector says they can’t talk to you if your recording, then DON’T TELL THEM YOUR RECORDING! Even if they’re not admissable in court, you’ll still be able to listen to the recording later, take notes in it, and list how many violations of the fair debt collection act they make, if they make enough, you may be able to sue or get some debt forgiven. These people violate this law DAILY! I had some fool cal me at 5:55 am the other day!
Let me make sure I understand this….I am 68 with my daughter starting college at $55,000 a year…..I have significant assets and am capable of paying ( not eligible for aid)…..I can no longer get life insurance…..if I borrow on a parent plus loan….and die the debt is forgiven…like credit life insurance…….Is there tax liability to my estate? Will my wife have to sign also??
Doesn’t affect estate, forgiven at death.
my husband had a student plus loan for our daqughter. he passed away and they have cancelled the debt. I have however received a 1099C addressed to my husband for the amount of debt Do I have to file a return for my husband even though he passed away?
Contact a CPA or tax attorney for this issue.
I am co-executor for my father who passed away in Oct, 2013. My dad was savvy and helped three of my younger sisters by taking PLUS loans in his name, which at the time of his death, totaled over 100,000. My brother, the other co-executor, contacted the two loan servicing co,’s and had the loans discharged, however should we expect 1099-C forms? if these discharges were non-taxable, as we believe they were, will there be any documentation provided to that effect? Thank you very much!
If non-taxable, you won’t receive anything.
My brother in law is default on his student loan and can not be located. We believe his mother may have co signed on his loans and she has recently passed away. How can we find this out and how is it going to impact her estate? There is no will.
Sounds like this is a private student loan. The lender can move to collect from the estate, if there is anything to collect.
My mother passed away this past December. She was the borrower for two parent plus loans but my grandmother consigned. Will my grandmother have to still repay or can she get discharged? Thank you
Hello Joshua,
I have a question/dilemma. After a two year battle with colon cancer, my husband recently passed away, leaving an insolvent state of financial affairs. I’m having to move from our home and it’s just the worst on top of losing him. Years ago, he’d taken out a student loan for me for undergraduate school because I wasn’t able to qualify at the time. If he didn’t get the loan, I would have had to find alternate avenues to pay for college and essentially wouldn’t have that loan at all. When I contacted Sallie Mae about a death discharge, since this particular loan was in his name alone (believe me, I have my share that are all mine), they took the liberty of rolling it over to me and make me responsible for it, since I was the student. I know its slightly a gray area, since this can’t happen for any other type of loan, and yes I was the student, but can they legally do that? Any help or insight would be greatly appreciated.
Cordially,
Sarah
They can’t transfer a loan into your name unless you signed the original note. Find an attorney in your area, QUICKLY!
I co sign for two of my kids they are in debt $140,000 combined for college tuition for the private student loan my question is if my kids loan goes under default can they go after the assets that I have with my husband we currently own are home but we still have mortgage our home is value $225.000.00 to 250.000.00h we owe 150.000.00 we also owned a retal property that is pay off and we have savings in both of are names my husband think they will go after everythings that has my name on it, and he is suggesting removing my name from everything that we have our names together and probably get a divorce. I am willing to sign everything to him that way i won’t owned anything that they can take from me. Im willing to do all this. I don’t want the lenders to end up with everything that my husband work hard for it. I made the stupid decision why should he have to paid for my mistake. Help i need some advise.
You need to find a student loan lawyer local to you to answer your question. You can find one on my site.
My parents cosigned a NJClass Loan for my daughter. My father passed away last winter and my mother passed away several weeks ago. My brother is now the executor of their estate and is concerned that if somewhere down the road my daughter should get behind on payments or default that the loan would be his responsibility. Is there any way to get my parents taken off as a cosigner and would they look to the estate to pay this loan? She is still in college and has at least 4 more years until she finishes and we make monthly interest payments only.
You need to contact an attorney in your state. Many times, the death of a signer or co-signer is a default trigger. That would allow them to collect from the estate. Your brother will never be personally liable, but again, the estate may be attachable.
Hey,
I’m $20,000 and some of dollars in debt and I would like to know how can I get forgiven for some of it. I’m unemployed at the moment due to injury and I think I may have exhausted all of my options besides repayment. What programs are out our
Thank you
what legal help can you offer in my situation.
Cherie,
Contact my office to learn about options for your specific situation.
I have been told I only have a few months to live. I have a unsub consolidation loan I signed for years ago and have been paying on. When I die, will it be paid off or will my estate have to go toward it. It is with AES.
Federal loans do not attach to your estate.
So what happens if you have Federal loans consolidated already w/ the federal program but some are subsidized and some are unsubsidized, and that’s not paid off when I die. Are both Sub/Unsub forgiven? or is it different once it’s consolidated??
Every fed loan is discharged upon death. It doesn’t matter if consolidated, sub, unsub or whatever status.
I signed a student loan for my son and owe about 60,000. He has been unable to find a job and I’m stuck with this huge bill. Is there a way to transfer this to him? I’m almost over my head with this. I have a security job that could be in jeopardy if I get a blemish on my record.
No, the loan is yours. If you didn’t want to get stuck with the tab, you should not have taken the loan. It’s a harsh lesson, but that’s how it works. If this is a Parent PLUS loan, ask your servicer for more affordable payment options.
I currently have a parent plus loan for my daughter. I just got diagnosed with pancreatic cancer and am looking to have chemotherapy. I am unable to work due to my health, and I am not sure for how long the treatment will last. At this point, it seems that I will be out of work for a very long time due to the poor prognosis of this cancer. What is the best option I can take to alleviate the financial burden? Is there an government aid for cancer patients in regards to federal loans? My family is in need of help. We’re even thinking of applying for food stamps. My children are all fulltime students are unable to provide financially.
If you can’t work and it will be long term, you can apply to have the loans forgiven. It’s called Total and Permanent Disability Discharge.
Do federal loans go away when the borrower dies even if there is money in the estate that they can go after? (That is, if I have enough life insurance to pay off my house, etc. for my husband, but not enough to cover my student loan debt, should I be purchasing more life insurance if my loans are all federal?) Thanks!
Yes – federal loans don’t chase the estate.
Hello i am a freshman in college and i have a full ride at my current college however i will be transferring soon and this new school is not willing to give me as much scholarship money. I have a 3.6 and had a 3.8 in HS and got a 25 on the ACT. I don’t have the money for school but according to the FASFSA my parents make “too much money” to receive financial aid, but my parents are drowning in bills. I need to find a way to pay for school and living! Is it wise for me to take out a loan under my name?
Why transfer? You have a free ride, don’t give that up – especially if you can’t get federal aid. Under no circumstance should you consider private loans. Don’t give up a free ride – that’s just ridiculous!
Josh, you say fed loans die with the borrower, does that include fed loans that are in default?
Yes.
My brother went to a very expensive private college. My parents co-signed for a private loan for part of his schooling. I recommended to them that they should get a life insurance policy in the event that something happens to my brother. That would b horrible if they had to pay that debt back. It’s over $45,000!
I have an interesting dilemma…in the mid 90’s, I took out a couple of student loans. I do not remember the type or amounts, but it was not that much….my wife at the time had been a full time student using student loans. In 2000, we separated and prior to the divorce being finalized, I learned she consolidated our student loans. By that I mean she forged my signature on the paperwork. I did notify law enforcement and a police report was generated. I also spoke with Sallie Mae and was left with the impression that it would be taken care of. I went on with my life and forgot about it. I did check my credit report every so often over the last 14 years and there was an active account for 33k and change and listed as a joint obligation, however I never heard anything from Sallie Mae. I checked my credit in April of this year when I was buying a house and noticed the account for Sallie Mae was reported on two of the 3 CRA’s as closed, no entry at all for the 3rd. The notations stated account sold or transferred and the last activity was reported in 2010. I started checking my credit monthly since April and no change until a few days ago. There are now two open accounts for AES/SunTrust for the amounts of 86K and 9K respectively! I asked my ex if she knew about it and was told she went through some program to to get out of default ( guessing a loan rehab based on frantic Googling). Not sure where to go with this. I concede that I should have been a little more vigilant over the years about the status, but I also was more focused on other things and did not expect this. That being said, do I have any recourse? Obviously, I do not feel I owe that amount and am a little concerned that my relatively sound financial health is in jeopardy. Any insight would be appreciated. Thank you in advance.
I can’t answer your questions on this forum. Please contact my firm direct for assistance.
I have been a single parent for six years. At the time of my divorce I still had five of our eight children still at home. Now at this point seven are raised and one is still at home (11th gr). I have always been a stay at home mom for the 23 years of marriage . Having only a GED I decided to go back to school in Fall 2009. I needed remedial math and English so elementary that it took me three semesters to make it into the 101 classes. In Spring 2014 I received an AA degree. Which is a two year degree that took me three and a half years to compleat because of being placed in wrong classes by the Tech school. I owe an obscene amount of student loans. Nearly $40,000. Honestly, I do not know how. Last year it was $22,000…. Anyways, I received a letter from the Fed Gov via email notifying me that come this Dec I will owe $495 each months. The only income I have is alimony of $2,100 a month with a court order to continue to pay $1,500 each month to mortgage (inex’s name). I am now 57 yr old. I have applied for work to no avail. I can not collect any social security until age 70 when my ex retires; because my ex is seven yrs younger than me. I do not have any health care and I have applied for ‘Obama Care’ but i cant afford it. What are my options regarding my horrid student loans? Can they take my house away? I am sending this from my phone so it might have a good many mistakes. Please, can you help give me info about the student loans? Please contact me via email. Thank you so much.
Okay so I just found out my loans are in default. I had no idea I had an agreement to pay them back at $50 a month where they were taking it out of my bank account and apparently just stopped unbeknown to me. I know I should pay closer attention to my bank statement. So they passed it on to a creditor who is calling me and saying I have to pay 900 a month. I do not even make that in a month. They will go by my income but are adding my husbands in on it. How do I get them to just go by my income and get this payment lowered? Please help.
If this is a Federal loan, the only way for them to ignore your husband’s income is if you file your taxes separately.
Joshua, my father consigned on my son’s federal and private loans. My son passed away. Is my father also released from the federal loans? Can the private loans come after him for payment? Someone is calling him daily but we are not sure if it’s the federal or the private. I did not notify the federal loans that he has died yet.
There is rarely a co-signer required for a fed loan. Are you sure he co-singed on a federal loan? If he co-singed a private loan, he owes it. It doesn’t go away just because the student died. That being said, some lenders will release the co-signer, but that is at the discretion of the lender.
I now owe over $250k to sallie mae after deferring and using forbearance for the last 20 years. My mom wants me to get a life insurance policy to help care for my minor son in case anything happens to me. Would sallie mae be able to get the insurance proceeds to pay off my loans? Thank you
No. Federal loans die with you.
My grandfather cosigned a private sallie Mae student loan. He died last year. I just received notice that it is in default and to be written off as bad debt. The person he signed for is still alive and not a family member. What will happen if I notify them that he is deceased?
Could we lose his house?
That’s a matter of state law. I cannot answer that.
Nothing. SM will chase the surviving borrower.
I consolidated my student loans. Form 1098-E reported student loan interest received by lender in the amount of $15,582.33 and the second form reported $1,157.45 interest received. Is it possible to adjust my income by the total amount reported paid? If the income can’t be adjusted is there anyway it can be claimed as an itemized deduction. The loans were to further my career as an educator.
You need to talk to a tax professional for this question.