How Do I Handle Student Loans?

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Student Loans?

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If your loved one borrowed money to pay for his or her college education,
or for that of a child, you’re probably wondering what to do about those payments. The first thing to do is determine what type of loan your loved one was repaying. There are, generally, four sources of student loans: federal government programs, state government programs, college/university programs, and private loans made by a bank or other financial institution.

Second, find out if there were any co-signers on the loan. If your loved one was repaying a federal government loan, such as a Stafford or Perkins, for his or her own education, and there were no co-signers, no further payments are required. In the case of a joint consolidation loan, in which both spouses combine their student loans and make one payment, the portion of the loan owed by the person who died may be cancelled, but the surviving spouse must continue to make payments on his or her portion.

Parent Loans for Undergraduate Students, better known as PLUS loans, are another type of federal student loan. Payments can be cancelled on these loans if the student/former student dies or if the parent who takes out the loan dies. If both parents are listed on the PLUS loan, however, the surviving spouse must continue to make payments. To have a federal loan cancelled, contact the bank, credit union, or school that sends the bill. They will probably request a copy of the death certificate.

Payments on student loans from the other three sources—state, college or university, and private programs—will continue to be due in most cases. (Some states and colleges will cancel loans of former students who die.) Payments can be made from your loved one's estate. No one else is responsible for payment unless he or she is a cosigner on the student loan. Check with your state's department of higher education or loan provider for specific policies.