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What Happens to Your Student Loan Debt When You Die?



With two daughters graduating this year, this post is extremely personal. Regrettably, some this did not apply when they began.

There are two issues many people prefer to avoid thinking about: death and debt. Unfortunately, both of these seem to be inevitable. Student loan debt is a part of life nowadays, particular for students obtaining advanced or professional degrees. As of 2017, the total national student debt was over $1.4 trillion and the average student loan debt for the Class of 2017 graduates was $39,400, up six percent from the previous year. To put that figure in perspective, that was about $620 billion more than the total U.S. credit card debt.

And presently, many students who graduated this past spring, are confronting the reality of having to begin paying off their own share of this massive student loan debt. Students are not alone in their debt load. Approximately $81 billion of the debt are in Parent PLUS loans. Whether it is worth it, or if the system is broken are conversations for another day. This conversation is about student loan debt and estate planning.

So what happens to your student loan debt when you die? Below are the different types of loans and what happens to the debt in the event the borrower passes away. Although it may not be a pleasant topic, it is imperative you consider your student loan debt as you work on your financial and estate plans.

Types of Student Loans

  • Federal student loans. If the debt is a federally backed education loan the student took on by him or herself, then the loan is automatically canceled when the student dies, and the government discharges the debt. These loans have no co-signer, and the legal terms governing the loans specify the debt is canceled upon the death of the student.

  • Private student loans. Whether a private student loan is canceled after the