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What will happen to your student loan debt if you die?

September 5, 2014 by · Leave a Comment 

Student loan debt is making headlines lately. Not only the total debt exceeds trillions but also many students are finding it difficult to pay their student loan debt. Student loan debt cannot be wiped out in a bankruptcy. Have you ever thought of what will happen to the unpaid balance of the student loan debt if the borrower dies?

Most students carry Federal student loans and if the borrower dies without paying off the debt, the balance or the entire debt will be cancelled. Since most Federal student loan programs do not require co-signer for the borrowing, there will be no one responsible for the unpaid debt. How about those Federal student loans known as Parent PLUS loans? If the student borrower dies, most loans will also be cancelled. However, the picture is completely different for private student loans. They usually require a signature of a co-signer. Most of the time co-signers are parents, spouse of the borrower or another close family friend. In the event of the borrower’s death, the co-signer may be responsible for the repayment of the student loan. Not only that, the lender may require the total balance to be paid in full immediately.