What Happens to Student Loan Debt After You Die?

  • Estate Planning
what happens to student loan debt after you die | estate and probate legal group

You may have heard or read the headlines concerning President Biden’s student loan forgiveness plan. This had many people talking, but it also brought up other points. One question people have is, what happens to student loan debt after you die? Many people also asked this question during the height of Covid-19. They were concerned for their lives and made provisions if something happened to them.

When establishing your estate plan, knowing what debts you are still responsible for (even after your death) and how it affects your beneficiaries is good.

Many are Unsure of What Happens to Student Loan Debt After You Die

Of course, there is no easy answer to this question – other than ‘it depends.’ We cannot give you one answer that will cover all styles of student loans. So let’s look at some differences between them.

Generally, your estate is still responsible for your debt when you die. This means your loved ones may have to sell your property to pay off any remaining debt. But the exemption to this is federal loans – such as federal student loans.

Some examples of federal student loans are:

  • Parent PLUS loans
  • Federal Family Education Loan (FFEL)
  • Direct subsidized loans
  • Direct unsubsidized loans
  • Direct consolidated loans
  • Direct PLUS loans

If the student or the parent borrower dies, the federal student loan can be discharged (not forgiven). This can happen when your family presents the loan servicer with a death certificate.

You may have noticed the wording used here was ‘federal student loans.’ There are many private loans that students and parents have taken to pay for a college education.

Are Private Student Loans Discharged After Death?

Again, this is a question that is hard for us to answer. Private loans are an entirely different matter than federal loans. The Department of Education oversees federal student loans. The ED has the policy to discharge the debt in the event of the death of the student or parent who is responsible for the loan.

But private loans differ with each lender. The trustee of your estate or executor of your will has many responsibilities. One is to inquire with the lender if the debt can be discharged due to death. There is no guarantee that they will pardon the student loan debt after you die, but it never hurts to ask.

When working with an experienced Illinois estate planning attorney, they may ask what debts you have. Your attorney will then work with you to write your estate plan and plan a solution to pay off the remaining debt after you are gone.

Do You Need to Talk to An Oak Brook Estate Planning Attorney?

Talk to the experienced probate attorneys at the Estate and Probate Legal Group about protecting your beneficiaries from your student loan debt after you die. Contact us today at 630-864-5835.

AREAS WE SERVE: Cook, DuPage, Kane, Lake and Will counties