As many students pursue their education in New York, they may accumulate debt in the form of student loans. A previous blog discussed what might happen if someone dies while he or she is still in debt. This week’s blog will focus on student loans after a person’s death.
The type of loans a student has determines what happens to this debt after death. According to Federal Student Aid , people usually do not need to repay federal student loans if someone dies. People typically need to submit proof that the person who took out the loan died. This can include either a copy of the death certificate or the original document. Sometimes a parent may take out loans for his or her child’s education. If this parent dies before repaying this debt, these federal student loans are also generally discharged.
If someone has private student loans, the situation is usually different. ABC News says that people may still need to repay a private student loan, even after the student’s death. Some lenders may take the money they are owed from the estate or turn to anyone who might have co-signed this loan. This means that a student’s spouse or parents may sometimes need to pay back student loans even though the student is no longer alive.
Sometimes, though, people may not need to repay private student loans. Some lenders may have a forgiveness policy to cover situations when a student dies before he or she has repaid this debt. If people have private student loans, it is a good idea for them to look into the fine details so they know whether their lender offers a forgiveness policy. Additionally, it is important to remember that even though a student loan might be discharged, this debt may still affect the taxes of the deceased.