What happens to your student loan debt after your death

• Have you ever pondered what happens to your student loan debt upon your demise?
• Here are the options and protections to know about.

What happens to student loan debt when a person dies?

What is the increase in the number of older student loan borrowers?

Life insurance is recommended for families to cover any remaining debt, even for younger borrowers with private or co-signed debt. Additionally, refinancing with a discharge policy may be suggested if your loan doesn't discharge.

Betsy Mayotte, president of The Institute of Student Loan Advisors, a nonprofit, stated that they have assisted numerous families who have experienced the loss of a loved one with student loans.

Here's what you need to know in such cases.

Federal student loans die with you

Mark Kantrowitz, a higher education expert, stated that no one will be responsible for your federal education debt upon your passing.

"Federal student loans die with the borrower," Kantrowitz said.

If the parent or student dies, any Parent PLUS loans will be discharged, and someone who has endorsed the loan will not become responsible for the debt.

To discharge student debt after the loss of a loved one, borrowers should contact their loan servicer and provide a death certificate or a certified copy of the death certificate as proof, according to Mayotte.

Mayotte advised that the borrower's account should be put on hold for 60 days while the family gathers this information. If you're uncertain about the borrower's loan servicer, you can check at Studentaid.gov.

Mayotte stated that since there are no taxes on this discharge, the deceased's estate would be free of debt.

With private student loans, responsibility is murkier

According to Kantrowitz, about half of private student loans have a death discharge, while the other half do not. He maintains a website, PrivateStudentLoanGuru.com, to keep track of different lenders' policies.

If a lender does not provide a death discharge option, anyone who has co-signed on the loan can be held liable, Mayotte stated. Even if there is no co-signer, the deceased person's estate may still be held responsible for the private student loan, she added.

Mayotte stated that family members would not be held liable for any debts or obligations outside of the estate.

If a lender doesn't provide a death discharge, a co-signer may contact the company to discuss repayment difficulties, especially if there are health issues or a fixed income, according to Kantrowitz.

"Kantrowitz advised that the family contact the lender's ombudsman to request a compassionate review, as lenders are not interested in negative publicity."

IRS issues final rules for inherited IRAs.

Experts advise checking the rights you might be entitled to as a co-signer of a private student loan, as several states have passed protections for this group.

In 2019, the Maine Senate Majority Leader Eloise Vitelli, a Democrat, introduced the state's Student Loan Bill of Rights, which was enacted. The legislation was triggered by the death of a woman with student loans, whose parents contacted Vitelli's office for assistance.

"Vitelli stated that they had a horrific tale to share about co-signing their daughter's student loans without fully understanding the implications, only to have their nightmare continue even after their daughter's passing as they were still harassed by the loan servicer."

— Additional reporting by Genna Contino