Many people receive student loans to cover school expenses during their school life, or they have to get student loans for their parent child. After setting up payment plans for student loans, people ask this question; ‘If I die, will student loan debt continue or who will continue to pay?’
The answer will vary depending on the type of student loan you receive and how you receive it. Federal student loans and private student loans also differ in this regard. Both types of credit may even have exceptions within themselves.
In terms of federal student loans;
Without a cosigner;
If you have received federal student loans without a cosigner, this loan is discharged and you will not have to pay this debt with your assets. Federal Perkins Loans, Direct Subsidized Loans, Direct Consolidation Loans and Direct Unsubsidized Loans also have this feature. However, in order to benefit from this situation, the following evidence of the owner of the debt is required;
1- A certified copy of the death certificate,
2- The original death certificate,
3- An accurate and complete photocopy of either of the above.
This evidence must be given to the credit service provider, but since Federal Perkins Loans is taken from the school, evidence must be submitted to the school. In this case it may be an exception. The exception would be a loan servicer where the school has been appointed for student loans and in such a case the evidence is given to the loan issuer.
With a cosigner;
Federal student loans usually do not require a cosigner, and even credit score and credit history are not important, but there is an exception. You must not have a negative credit history to receive direct PLUS loans. Therefore you may need a cosigner. If you have a direct PLUS loan or even a cosigner, your student loan debt will be discharged.
Parent PLUS Loans;
It is a form of federal student loans, but it is the parent responsible for student loan debt in this type of loan. If the parent receiving student loans dies or the student dies, the debt is discharged. However, if both parents have received student loans and only one parent is dead, the surviving parent (if the student lives) must pay the student loan. In both cases, evidence of death must be forwarded.
In terms of private student loans;
Without a cosigner;
Private student loans are not like federal student loans. Discharge of private student loans is subject to private student loan agreements. If such a clause is not included in the contract, student loan debt cannot be discharged. However, no one is responsible for your private student loans unless you are a cosigner or in some cases your partner.
With a cosigner;
If you need a cosigner for private student loans, you must comply with the lender’s terms. Your cosigner is obliged to pay the loan debt unless there is a clause for discharging the student loan debt after you die under special student loan terms.
If borrowers of student loans die, are their spouses obliged to pay the loan?
This differs in federal student loans and private loans.
According to federal student loans, the debt is paid by the government after the borrower dies and the debtor’s spouse is not responsible for the loan.
For special student loans, this should be stated in the credit terms. If such a provision is not included in the loan terms, the debtor’s spouse is obliged to pay the student loan debt. Examples of those offering a policy of forgiveness of death and disability include; New York HESC’s NYHELPs loans, Sallie Mae’s Smart Option Student Loan and WellsFargo private student loans.