What Happens to Student Loans When the Borrower Dies

The Short Answer — and Why the Details Still Matter

If the person who died had federal student loans, those loans are discharged (forgiven) upon death. The estate owes nothing, and family members have no personal obligation to repay them. For private student loans, the answer depends on the lender — and in some cases, the difference matters a great deal.

It's worth understanding the full picture, especially if there was a co-signer involved or if the deceased had Parent PLUS loans.

Federal Student Loans: Full Discharge Upon Death

All federal student loans — Direct Loans (Subsidized, Unsubsidized, and PLUS), Perkins Loans, and FFEL Loans — are discharged when the borrower dies. This applies whether the loans were in repayment, in deferment, in forbearance, or still in school.

Importantly: this discharge is not automatic. You must apply for it.

### How to Apply for Federal Loan Discharge

1. Identify the loan servicer. The loan servicer is the company that managed the borrower's federal loan payments. Common servicers include MOHELA, Nelnet, and Aidvantage. If you don't know the servicer, log in to studentaid.gov (or call 1-800-4-FED-AID) with the deceased's information — the website lists all federal loan accounts and their servicers.

2. Contact the servicer's bereavement or discharge department. Most major servicers have a dedicated process for death discharges.

3. Submit documentation. You will need to provide an original or certified copy of the death certificate. The servicer will typically send a discharge application form. Complete and return it promptly.

4. Confirm discharge in writing. Once the servicer processes the discharge, ask for written confirmation. Keep this for your records — it documents that the debt has been eliminated.

Tax note: Under current federal law, student loan discharges due to death are not treated as taxable income to the estate or the borrower's survivors through 2025. As of 2026, this exclusion has continued — but it is worth confirming with a tax professional if you're dealing with a large loan balance, as tax law can change.

Parent PLUS Loans: The Often-Overlooked Case

Parent PLUS loans are federal loans taken out by a parent to pay for their child's education — the parent is the borrower, not the student. These loans are discharged under two circumstances:

1. The parent borrower dies: The loan is discharged just like any other federal loan — the child owes nothing and the estate owes nothing.

2. The student for whom the loan was taken out dies: This is the part many people don't know. If the student dies, even though they were not the borrower, the Parent PLUS loan is still discharged. The parent does not have to keep paying.

To apply for a PLUS loan discharge due to the student's death, the parent (borrower) submits the student's death certificate to the loan servicer, following the same process described above.

Private Student Loans: It Depends

Private student loans — those taken out through banks, credit unions, or private lenders rather than the federal government — do not follow a uniform rule. Each lender sets its own policy, and policies have changed over time.

Many major private lenders now discharge loans upon the borrower's death, particularly after public pressure following high-profile cases where lenders pursued deceased borrowers' families. Lenders like Sallie Mae, Discover, College Ave, and SoFi have published death discharge policies.

However, some private lenders do not automatically discharge the loan, especially older loans or loans from smaller institutions. In those cases, the debt becomes a claim against the estate.

The critical co-signer issue: If a private student loan had a co-signer — common for undergraduate loans taken out by young students without established credit — the situation gets complicated. Even if the lender discharges the loan for the estate, some lenders may still hold the co-signer responsible. Co-signers should review their loan agreement carefully and contact the lender directly.

Conversely, if the co-signer dies (rather than the primary borrower), some private lenders will declare the loan in "default" and demand immediate repayment from the primary borrower. This is a known, documented practice — and it's one more reason to read private loan agreements carefully.

### Steps for Private Loans

1. Locate all private student loan documents or look through bank statements for lenders you don't recognize 2. Contact each lender's customer service or bereavement line 3. Ask specifically about their death discharge policy and what documentation they require 4. Submit the death certificate and any required forms 5. Get the discharge confirmation in writing, and if there is a co-signer, make sure they are notified of the outcome

What You Should Not Do

Do not make any payments on student loans from estate funds before you have confirmed the discharge policy. For federal loans, payment is unnecessary — the debt will be forgiven. For private loans, pause and confirm the lender's policy first. Making payments when you didn't have to, or when a discharge was available, means money that should have gone to heirs went to a lender instead.

Also: family members who are not co-signers are never personally liable for the deceased's student loans. If a debt collector implies otherwise, that is false. You can report such collectors to the Consumer Financial Protection Bureau (CFPB).