What Happens To My Student Loans When I Die?

By: Rudman Winchell Attorney Tracy Roberts

Student loan debt has become a serious and growing problem in the United States.  Although statistically having a college degree increases your lifetime earning potential, that degree often comes with a high cost, which most students and their families are unable to afford without a loan.

A recent study found that approximately two-thirds of college students who graduated in 2010 had student loan debt.  Maine was found to be one of the top “high debt” states for recent graduates with an average debt for college graduates in 2010 of $29,983.  If you add on graduate school the numbers only increase.

With this increase in debt comes the increase in questions pertaining to what happens to your student loans when you die?  Is your estate responsible for repayment of those loans? The answer depends on what kind of student loan you have.

If you received Federal student loans and you die or become totally and permanently disabled, the government discharges your student loan debt. However, this is not true with most private loans, which are often needed by students and their families to offset the cost of college.  Private loans currently account for 25 percent of student loans in private four year colleges and 14 percent of loans in public four year schools.

With the increase in the public awareness regarding the mounting student loan debt students and families are sinking in, some private lenders are looking at loan forgiveness in the event of death or total permanent disability.  However, the vast majority of private lenders do not offer such programs.  Thus, when planning for the unexpected, it is important to discuss with a qualified estate planning attorney opportunities for preserving your assets for the benefit of your family.