Student Loans After a Borrower Dies: Forgiveness Rules

Student loans are among the most misunderstood debts when it comes to what happens after a borrower dies. The rules differ dramatically depending on whether the loans are federal or private — and the stakes are high, because some private lenders have pursued co-signers aggressively after a primary borrower's death. Here's what you need to know.

Federal Student Loans: Discharged at Death

All federal student loans — Direct Loans, FFEL Loans, and Perkins Loans — are discharged (cancelled) upon the borrower's death. This is true regardless of how much is owed, how long the loans have been outstanding, or whether payments were current.

The discharge also extends to Parent PLUS Loans:

• If the student dies, the Parent PLUS Loan is discharged
• If the parent borrower dies, the Parent PLUS Loan is discharged

How to Apply for a Federal Loan Discharge

1. Contact the loan servicer (Nelnet, Mohela, Aidvantage, etc.) — or the Department of Education directly if the servicer is unknown
2. Provide an official death certificate (the servicer will specify whether they accept a photocopy or require a certified copy)
3. The servicer processes the discharge and notifies you in writing

The discharge is not automatic — you must contact the servicer. Until it is processed, interest may continue to accrue. Request an administrative forbearance while the discharge is being processed.

Tax Implications of Federal Loan Discharge

As of January 1, 2018 (and through 2025 under current law), federal student loan discharges due to death are not taxable income to the borrower's estate or family. (This is different from income-driven repayment forgiveness, which may be taxable.) The American Rescue Plan Act of 2021 extended this treatment through 2025; check current IRS guidance for later years.

Private Student Loans: It Depends on the Lender

Private student loans are governed by the loan agreement — not federal law — and the rules vary significantly by lender. The two key questions are:

1. Does the lender discharge the loan upon the borrower's death?
2. If there is a co-signer, is the co-signer released from liability?

Lenders That Typically Discharge at Death

Many major private lenders do discharge loans upon the primary borrower's death:

• Sallie Mae — discharges upon death of borrower, releases co-signer
• College Ave — discharges upon death
• Earnest — discharges upon death
• Discover Student Loans — discharges upon death
• SoFi — discharges upon death

Policies can change. Always verify directly with the lender.

What Can Happen to Co-Signers

This is the most critical point for families: even if the primary borrower is deceased and the lender would otherwise discharge the loan, some lenders have historically triggered "auto-default" clauses upon the death of the primary borrower — demanding immediate full repayment from the co-signer, regardless of whether payments were current.

The Consumer Financial Protection Bureau has taken action against several lenders for this practice. Many lenders have since reformed their policies, but it is essential to:

• Read the loan agreement carefully before assuming the debt is discharged
• Contact the lender immediately after the death to understand their policy and process
• If a co-signer is being pursued, consult a consumer protection attorney

How to Apply for a Private Loan Discharge

1. Locate all private loan servicers — check bank statements and credit reports for loan payments
2. Contact each servicer and ask specifically: "Does your loan agreement provide for discharge upon the primary borrower's death? What documentation do you need?"
3. Submit required documentation (typically a certified death certificate)
4. Get the discharge confirmed in writing

If the Loan Becomes Part of the Estate

If a private lender does not discharge the loan upon the borrower's death — and there is no co-signer — the debt becomes an obligation of the estate. The lender can file a claim in probate, and the debt is paid from estate assets before heirs receive anything. If the estate is insolvent (can't pay all debts), the lender absorbs the loss. Family members who are not co-signers are not personally responsible.

Locating All Student Loans

To find all of a deceased person's student loans:

• Federal loans: Log in to studentaid.gov — the federal system tracks all federal loans. (You will need the deceased's FSA ID, or contact the FSA ombudsman for assistance without login access.)
• Private loans: Review credit reports (request through annualcreditreport.com), review bank statements for loan payment patterns, and check email for loan servicer communications

For the broader picture of debt responsibilities after a death, see our article on which debts family members are personally responsible for. For the complete bills and debt overview, see our bills and debt guide.