That's a great question, and one that not many people will ask at the point of signing on the dotted line for a student loan. The answer is that it depends on the type of loan you have. The good news is that if a student has a federal loan and dies (which is not good news), the loan is discharged. Here's what the federal student aid website says about the death of a student or parent signor:
"If you, the borrower, die, then your federal student loans will be discharged. If you are a parent PLUS loan borrower, then the loan may be discharged if you die, or if the student on whose behalf you obtained the loan dies.
The loan will be discharged if a family member or other representative provides a certified copy of the death certificate to the school (for a Federal Perkins Loan) or to the loan servicer (for a Direct Loan or FFEL Program loan)."
In terms of student loans, death is the only way to not have to pay them off. Even filing bankruptcy will usually not allow someone to get a discharge on a loan. It's important to read the fine print on your loan if it's not a federal loan since different terms may apply for private and state loans. For instance, the state of NJ requires on the death of a student, the loan to still be paid off by the cosigner. There is a bill being submitted that would forgive the loan if the student dies even with a cosigner, but it is not the law yet. Read the fine print.
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