If you have student loans, it can sometimes feel like this debt will be stalking you for life. You might worry that your student debt will even outlive you—or wonder what would happen to it if you died.
While it’s a bit of a morbid topic, you should understand what happens to student loans after death. Armed with this knowledge, you can protect yourself, and your loved ones, who might share responsibility for your student loans, against the unthinkable.
Student Debt After Death
So what does happen to student loans after death?
The answer might be different for student loans than how the other debt is handled after death, but it ultimately depends on the type of student loans you have.
Federal Student Loans
All federal student loans are dischargeable upon a borrower’s death, which is an important benefit of federal student loans.
Federal student loans are not passed on to anyone in your family or even your estate. If you die, your federal student debt is instead fully forgiven and is no longer owned or owed by anyone.
Someone will need to provide proof of death to the student loan servicer managing the debt to get it discharged after death.
This same protection applies to parent PLUS loans, too. This student debt is discharged if the parent who owns these loans dies. Additionally, parent PLUS loans are also discharged in the case of the death of the student whose education was funded by those loans.
Private Student Loans
Private student loans provide far fewer borrower protections. This includes protections for borrowers’ student loans after a death, as private lenders have no legal obligation to cancel or discharge student loans if a borrower dies.
Some private lenders, including Sallie Mae, will discharge or waive the current balance of the student debt after a borrower’s death. Review your lending agreement to see if it provides any details about how private student loans are handled in the case of a death.
If the lender doesn't discharge the loan, the balance won’t go away. Instead, debts that are outstanding are passed to the estate, or the collection of assets, liabilities, and debts formerly owned by the deceased.
The estate is settled through a probate process, which includes a step to pay off and settle outstanding student loans, debt, or liabilities. If there’s not enough money in the estate to settle all of the debt, typically the debt remains unpaid. But it is not passed on to someone who is not otherwise legally responsible for the debt.
Co-signed Student Loans
In some cases, however, a living person might have a legal obligation to repay a student loan. This is most common for co-signed private student loans, for which both the primary borrower and the co-signer have a legal responsibility to repay.
In the eyes of a private lender, both the borrower and the co-signer are equally responsible for repaying a student loan.
Typically, the primary borrower will be the one repaying a loan—but if they don’t, settling this debt falls to the co-signer. This can include when a primary borrower is unable to repay the student loan because they are deceased.
The death of a student loan co-signer can cause problems as well. Some private student loan agreements include provisions for the lender to automatically put a student loan into default if the co-signer dies—even if the borrower is making consistent payments. The lender can then demand the payment of the full loan balance immediately, causing hardship for the borrower.
These clauses have become less common, but are still something to watch out for if you have co-signed student loans.
A Spouse’s Student Loans
Generally, a living spouse will not be held legally responsible for repaying student loans that belonged to the deceased spouse. However, there are some exceptions, such as when the spouse has co-signed the loan.
A spouse might also be required to repay a deceased partner’s private student loans if they reside in a community property state. These states include Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, and Wisconsin.
In community property states, the surviving spouse might have to use community property or shared assets to repay the deceased spouse’s student loans.
How To Report a Death to a Student Lender
After the death of a loved one, there are many steps required to settle the deceased person’s affairs. This includes the step of reporting the death to student lenders, other creditors, and even credit reporting bureaus.
In the case of federal student loans, for example, a family member or another authorized person must provide proof of death to the student loan servicer to discharge the debt. Acceptable proof of death may include:
- A death certificate
- Verification from an official of the county clerk's office
- A letter from a funeral director or member of the clergy
- Confirmation through a credit bureau or the Social Security Administration
Debtors and credit agencies might require different documents or have their own policies and process for recording borrower deaths, however. Credit reporting agency Experian, for example, requires both proof of death and proof that the individual reporting the death is authorized to act on behalf of the deceased person.
Reach out to the student lender or servicer to learn more about its process for recording the death of a borrower. It’s also wise to work with the executor of the estate to ensure that these steps are appropriately carried out by a person with the authority to do so.