What Happens to a Student Loan if the Borrower Dies Before Paying it Off?

Students who obtained their loans through programs authorized by Title IV, of the Higher Education Act are eligible for cancellation of the debt once they're are deceased. Cancellation or discharge of the loan releases the borrower from any payment obligations or other conditions required in the original terms and condition of the loan.

When Loans are Canceled

Government student loans are canceled if the borrower dies prior to paying off the loan. The Department of Education further states that student loans taken out by parents under the PLUS Loans program can be discharged in the event of the student's death. An original or certified copy of the student's death certificate must be submitted to the school, or to the holder of the loan for verification purposes. If more than one parent is obligated on the loan and one parent dies the living borrower will still be required to pay the loan in full.

Private Student Loans

Borrowers who have obtained student loans from private lenders may still be obligated on the debt. The lender may try to collect the debt in full through the borrower's estate, if one was left. The manner in which debts are collected from the estate of a deceased person varies from state to state.

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