What Happens to Parent PLUS Loans if a Parent Dies?

Parent PLUS Loans are federal student loans designed to help parents finance their child’s undergraduate education expenses. These loans are issued in the parent’s name, making the parent solely responsible for repayment. Understanding how these loans are handled during significant life events is important for financial planning.

Discharge Due to Parent Borrower’s Death

If the parent borrower of a Parent PLUS Loan passes away, the outstanding balance is eligible for discharge. This means the loan will be forgiven, and no further payments will be required from the borrower’s estate or the student. The U.S. Department of Education will dissolve the loan.

This is a complete discharge, bringing the loan balance to zero. The loan is automatically dissolved once the death is confirmed, provided it is a federal Parent PLUS Loan. If a federal Parent PLUS loan was refinanced into a private loan, the discharge policy depends on the private lender’s terms, which may not include a death discharge.

Required Documentation for Discharge

To initiate the loan discharge process, specific documentation must be provided. The primary document required is typically an original death certificate or a certified copy. This document officially verifies the borrower’s passing and is crucial for the loan servicer to process the discharge.

Families can obtain death certificates from their state’s vital records office, the county clerk, or sometimes directly from the funeral home that handled the services. The death certificate should clearly state the date of death and bear official certification to be acceptable.

Submitting a Discharge Application

Once the necessary documentation, such as the death certificate, has been secured, the next step involves submitting the discharge application. A family member or representative of the deceased borrower must contact the loan servicer to inform them of the parent borrower’s death and initiate the process. This can typically be done by phone, mail, or through an online portal.

The death certificate, or other approved documentation, should then be submitted to the loan servicer. This can involve mailing an original or certified copy, uploading a high-resolution photo or scanned copy through a secure online portal, or faxing it. Payments made after the confirmed date of death will typically be returned to the estate.

Discharge Due to Student’s Death

Parent PLUS Loans are also eligible for discharge if the student on whose behalf the loan was taken out passes away. This situation also results in the forgiveness of the loan balance, meaning the parent borrower is no longer obligated to pay.

The same principle of discharge applies as with the parent borrower’s death, ensuring the loan is forgiven. Documentation in the form of the student’s death certificate will be required to process this discharge. Additionally, federal student loan discharges due to death, including Parent PLUS loans, are not considered taxable income for federal tax purposes for discharges occurring between January 1, 2018, and December 31, 2025.