As the number of older student loan borrowers continues to rise, many people are left wondering what happens to the debt when the borrower passes away. According to data from the U.S. Department of Education, there were 2.8 million people aged 62 and older still carrying student loan debt in 2024, up from 1.7 million in 2017.
For federal student loans, the debt dies with the borrower, ensuring that no one else is responsible for the remaining balance. Parent PLUS loans will be discharged if the parent or student for whom the loan was borrowed passes away. However, with private student loans, the responsibility is less clear. While some lenders may cancel the debt in the event of the borrower's death, it is not guaranteed. In cases where the lender does not offer a death discharge option, co-signers may be held liable, or the deceased person's estate may be responsible for the loan.
It is recommended that families gather the necessary documentation and contact the loan servicer to initiate the discharge process. In some cases, lenders may offer a compassionate review, especially if the borrower had health issues or was on a fixed income. Additionally, some states have passed protections for co-signers of private student loans, providing additional rights for those involved.
Overall, it is important for borrowers and their families to understand the implications of student loan debt in the event of the borrower's death. By being proactive and seeking assistance from the loan servicer, families can navigate this difficult situation with more clarity and support.