What Happens to My Student Loans Upon Death?

If you went to college and now have significant student loan debt, you may be worried about what might happen to those student loans if you were to pass away before repaying them. Student loan debt has been steadily rising in the United States, with soaring college costs and the ease of obtaining student loans combined with high interest rates contributing to the debt. The treatment of student loan debt depends on the type of student loan and the loan terms.

Private Loans in Your Name Only

If your student loans are not government loans, but instead were originated privately, and they are in your name only (no co-signer) then most likely the student loans will be a debt of your estate upon your death and will be repaid out of your estate assets, if any. It is important to have a probate attorney review the terms of the loan to verify this is the case.

Private Loans Co-Signed

If your student loans are private and you have a co-signer, then the co-signer will likely be held responsible for the balance of the debt after your estate assets are applied to the debt. This is an unfortunate situation and is why it is important for people asked to co-sign loans to reconsider. As a co-signer, you are obligating yourself to the debt even if the student is unable to repay or passes away. Of course, you should review the terms of the loan with your probate attorney to verify there are no releases upon death.

Federal Student Loans

Some Federal student loans permit forgiveness of student loan debt upon death. This is a boon to the decedent’s estate and a compassionate benefit to co-signers and the decedent’s family. To determine whether your decedent’s student loan debt will be extinguished, review the loan agreement with a probate attorney such as the probate attorneys at Johnston Tomei Lenczycki & Goldberg LLC. Not all Federal student loans may have such forgiveness, so it is important to read the loan documents themselves before determining loan treatment.

Review the Loan Documents

 For anyone with a family member who has recently passed away with student loan debt, it is important to review the student loan origination documents to determine how the student loan debt will be treated upon death. A probate attorney’s insight will be crucial in making the final determination on how to proceed with probate. Student loan documents can be quite complicated with pages and pages of terms, and it is easy to misunderstand the loan terms.

Estate Planning with Student Loans

If you have student loan debt and you are considering estate planning, then you will want to alert your estate planning attorney of the existence of the student loan debt. Certain techniques can be employed to alleviate its impact on co-signers and your family. Having money set aside to address the debt, or perhaps even a life insurance policy to repay the loan can turn a terrible situation into a financially repairable situation. The last thing you want is for your legacy to be one of debt rather than financial assistance to the ones you leave behind.

Contact the Libertyville Student Loan Probate Lawyers at Johnston Tomei Lenczycki & Goldberg LLC Today

 If your loved one passed away with student loan debt, or if you are concerned about your student loan debt if you were to pass away, then call the estate planning and probate lawyers at Johnston Tomei Lenczycki & Goldberg LLC today to determine how the student loan debt will be treated in probate. The answer depends on the type of the loan and the terms of the loan. We lawyers at Johnston Tomei Lenczycki & Goldberg LLC will review the loan documents and verify the treatment of the student loan debt upon death. We can also employ certain estate planning techniques to alleviate the debt if you were to pass away. Contact the lawyers at Johnston Tomei Lenczycki & Goldberg LLC today to learn more.