If I Die, Are My Student Loans Forgiven?

If a student loan borrower dies, the fate of their outstanding debt depends on the loan type. Federal student loans typically offer discharge upon death, providing relief to the borrower’s estate and family. Private student loans are generally not discharged, and their treatment upon death can vary based on the specific lender’s policies and loan terms. Understanding these distinctions is important for borrowers and their families to manage financial obligations.

Federal Student Loan Forgiveness

Most federal student loans are discharged when the borrower passes away. The remaining balance is forgiven, and the borrower’s estate and family are not responsible for repayment. This policy applies to Direct Subsidized Loans, Direct Unsubsidized Loans, Federal Family Education Loan (FFEL) Program loans, and Federal Perkins Loans.

The discharge process for federal loans is not automatic; it occurs once the death is confirmed and appropriate documentation is submitted to the loan servicer. The U.S. Department of Education cancels the debt, ensuring that the financial burden does not transfer to family members or the estate. There are generally no tax consequences for the discharged federal loan amount for federal income tax purposes through December 31, 2025, due to the Tax Cuts and Jobs Act of 2017.

Parent and Graduate PLUS Loan Forgiveness

Parent PLUS Loans and Graduate PLUS Loans, while federal, have specific rules regarding death discharge. A Parent PLUS Loan is discharged if the parent borrower dies. This loan is also discharged if the student on whose behalf the loan was taken passes away.

For Graduate PLUS Loans, the debt is discharged upon the death of the graduate student borrower. If an endorser (similar to a co-signer) was involved, their obligation is typically released upon the death of the primary borrower or the student. This prevents endorsers from being responsible for repayment during a period of loss.

Private Student Loans and Death

Private student loans differ from federal loans regarding death discharge. These loans are contracts between the borrower and a private lender, typically not automatically discharged upon the borrower’s death. Terms for handling the loan after death are dictated by the loan agreement.

The borrower’s estate is usually responsible for repaying the outstanding private loan balance. The debt may need to be paid from the estate’s assets before inheritance is distributed. Co-signers often become fully responsible for the balance if the primary borrower dies, unless the lender has a specific policy for discharge.

While not universal, some private lenders may offer death discharge. Borrowers and their families should review the loan agreement or contact the private lender to inquire about their policies on death discharge and co-signer release. For private loans taken out after November 20, 2018, an amendment to the federal Truth in Lending Act (TILA) stipulates that lenders must release co-signers and the estate from financial obligation if the student borrower dies.

Steps for Loan Discharge

Initiating the loan discharge process requires documentation. The primary document is an original or certified copy of the death certificate, or an accurate photocopy. In some instances, for federal loans, alternative documentation may be accepted if a death certificate is unavailable, such as verification from a county clerk’s office, a letter from a clergyman or funeral director, or an announcement of death from a local newspaper.

The family or estate representative should identify the loan servicer(s) for the deceased’s loans. For federal loans, this information can often be found by logging into the borrower’s Federal Student Aid (FSA) account or by contacting the Federal Student Aid Information Center. Once identified, contact the loan servicer by phone or through their website to report the death and inquire about their submission process.

The required documentation, typically the death certificate, should be submitted to the loan servicer via mail, online upload, or fax, depending on the servicer’s instructions. After submission, the servicer will verify the death and process the discharge, confirming the cancellation of the debt. For private loans, contact the private lender to understand their policies and the documentation require, though discharge is not guaranteed.