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Student loan debt is a familiar problem for many Americans, with Pew Research reporting that they collectively owed approximately $1.6 trillion in educational debt as of June 2024 (1).
Most people who owe took out loans themselves or cosigned for others who borrowed. But what if you end up getting surprised with a student loan-sized debt you were not expecting?
Let’s imagine, for example, that Dave went to an expensive four-year college, covering his first year on his own. For this, he took out around $30,000 in student loans while his parents paid for the rest. Now, four years after graduating, Dave’s dad died and his mom, who didn’t handle the family finances, got a notice in the mail saying dad owes $90,000 for Dave’s education.
Is Dave going to be responsible for paying this debt and suddenly saddled with a burden worth almost $100,000, or did the debt die with his dad? Here’s what you need to know.
The first step is understanding that there are student loans for parents and student loans for students. This is true of both federal and private student loans.
When Dave’s dad took out loans, he could have taken them out in his son’s name, undoubtedly requiring Dave’s knowledge and agreement (this isn’t the case here). He also might have borrowed money from the Department of Education in the form of Parent PLUS Loans (2) or from a private student lender in the form of parent loans.
Parents who take out these last two types of loans are solely responsible for them. So, Dave won’t be responsible for the debt directly as the loans were not taken out in his name and Dave also did not cosign for them.
However, this doesn’t necessarily mean the debt just disappears. Depending on the kind of loans Dave’s Dad took out, the debt could be gone for good, or the lender could try to collect from his dad’s estate.
When someone dies with debt, usually the creditors cannot collect from surviving family members unless those family members:
Cosigned for the loans or were joint borrowers.
Live in a community property state, were married to the borrower and the law says surviving spouses are responsible for certain kinds of debt acquired during the marriage (3).
However, creditors can try to collect from the estate or the assets that the deceased person left behind.
This means, for example, that if Dave’s dad had $150,000 in a bank account when he passed away, the creditors could go after the estate, make a claim and potentially collect the $90,000 they were owed out of the money left in dad’s bank account (that Dave might have inherited otherwise).
If there’s no money in the estate, then the creditors are going to be out of luck.
However, if there are assets, then they are usually up for grabs unless the deceased person did some estate planning during their lifetime to try to shield assets from creditors by passing them outside the probate process.
And while creditors can normally try to collect from an estate, that may not be the case here, depending on whether dad took out private student loans or loans from the Department of Education.
The good news is that the Department of Education discharges Parent PLUS Loans upon the death of the parent, or upon the death of the student (4). So if dad took out federal loans, the government isn’t going to come after the estate to try to get the money back.
But that’s not necessarily the case with private student loans. As Earnest explains, sometimes private lenders offer a death discharge. But in other cases, the lender will try to get the money back from the estate of the deceased (5).
So, while Dave isn’t responsible for the debt either way, the fate of his inheritance (or his mom’s inheritance — and current financial well-being) will hinge upon whether the lender decides to attempt collecting from the estate and what assets remain. In this case, Dave’s dad’s individual lender’s policy would determine what happens next.
In any case, it may come down to whether the court orders the loans paid. If that happens, Dave may want to try to help out, despite a lack of legal obligation to repay the unpaid balance.
While Dave may be off the hook, his question highlights the importance of understanding the contractual agreements you take on when you sign a student loan agreement.
With 11.3% of federal student loan borrowers and 1.61% of private student loan borrowers delinquent on their payments as of early 2025 (6), understanding the rules of repayment can help keep your debt manageable, and also potentially save you from negative impacts like a low credit score.
If you find yourself struggling with debt — whether from student loans or consumer debts like high credit card balances, Freedom Debt Relief can help negotiate settlements with your creditors until all of your enrolled debt is resolved. Speak with a certified debt relief consultant for free today to find out how much you can save.
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