A 2019 Haven Life survey found that 73% of student loan borrowers did not know what would happen to their student loan debt if they died. Although death is a morbid topic, you must understand what happens to student loans after passing away, so you don’t leave your family confused while mourning their loss.
If you borrowed federal student loans and you die, family members may request for loan discharge. Student loan forgiveness applies to a few federal student loan services. Meanwhile, if you took out private student loans, the terms that describe what happens to your student loans if you die may vary per lender.
Here is all the information about student loans after passing away that you need to know.
Federal Student Loans
Your parents or a family member can apply for a loan discharge for your federal student loans if you die. A loan discharge is debt cancellation, meaning your family can cite your uneventful death as a reason to forgive the remaining education debt balance.
Your family member must provide supporting documentation to your lender to qualify for federal student loan discharge. Lenders typically accept original death certificates and certified true copies of the original death certificate. Other lenders may accept clear photocopies of the original death certificate.
Federal student loan discharge is applicable to the following federal student loans:
- Subsidized Federal Stafford Loans: If you took a direct subsidized loan as an undergraduate with financial need, your family may apply for a loan discharge if you die.
- Unsubsidized Federal Stafford Loans: If you took a direct unsubsidized loan as an undergraduate or graduate student, your family may request student loan forgiveness if you die.
- Direct Grad PLUS Loans: If you took a PLUS loan as a graduate or professional to pay for education fees, your family may apply for student loan forgiveness if you die.
- Direct Consolidation Loans: If you combined multiple federal student loans into one loan, your family may apply for federal education loan discharge if you pass away.
If your parent took out a parent PLUS loan, the lender discharges the loan of the parent who took out the loan. Your surviving parent will not have to pay off the rest of the loan if they are not listed as the borrower.
Private Student Loans
Private student loan lenders have different policies when it comes to what happens to your student loans after passing away. Be sure to review the policy terms and conditions that you signed when taking out a loan with a private lender.
Although there is no universal rule for private lenders in handling your student debt in case you die, some private loan organizations explicitly offer private loan discharge after passing away. Among these private student loan lenders are:
- Ascent Funding Student Loans
- College Ave Student Loans
- Earnest Refinancing and Private Student Loans
- Rhode Island Student Loan Authority (RISLA)
- Sallie Mae Private Education Loans
- SoFi Private Student Loans
Most people do not know what happens to their student loans if they die. If you took out a federal student loan to help pay for school, your family may apply for loan discharge and cancel the remaining education debt you leave behind.
Meanwhile, private lenders have unique terms for how they handle student debt if you die. Still, there are some companies that offer private student loan discharge due to death.