What happens to student loan debt when you die?

Hands on a casket
Depending on whether a borrower had private or federal student loans, their debt may or may not be discharged upon death. It is critically important for co-signers to understand whether or not the student loans they cosigned are able to be discharged upon the death of primary borrowers.

College debt is not to be taken lightly even if borrowers easily qualify for student loans. After the death of a borrower, funds that were borrowed are still active in some situations. Despite the sadness and frustration that families feel following the death of a loved one, the college debt of the deceased may still be owed by co-signers.

However, this is contingent upon whether the deceased obtained private or federal financing.

Unsurprisingly, the federal government discharges student loans and college debt upon the death of a borrower. Naturally, the federal government will require verification—such as a death certificate—prior to discharging any federally obtained college debt. While this may seem invasive, it is a necessary part in the settling of debts and the estate of the deceased.

It is somewhat common knowledge that the federal government is far more stable when it comes to matters of student loans. Unfortunately, the private lending industry isn’t as accommodating. Due to the variety of non-federal lenders that offer student loans, private lenders have varied and changing policies, protocols, and practices.

Some private lenders may forgive the college debt of a deceased borrower and not hold the co-signer responsible for a deceased borrower’s debt. However, not all private student loan lenders are alike.

A forgiveness policy is neither required by law nor universally practiced by private lenders. Lenders sometimes financially evaluate cosigners before deciding whether or not to demand payments on college debts. Large private lenders, such as Sallie Mae, Citibank, and Wells Fargo typically do require co-signers to pay off the college debt they agreed to pay in the act of co-signing.

Borrowers and cosigners can better educate themselves about the policies of lenders—both private and federal—by speaking to lending representatives about specific policies and asking informed questions. This can significantly reduce the chances of being surprised by payment demands in the unfortunate event that a borrower dies.