Student debts are a burden. Getting it off your shoulder in the soonest time possible is what’s best for you. You can start by reading up on the ways to eliminate student debt. But what happens if, God forbid, you die, leaving your loan unpaid? This is a practical question that many of us take for granted or don’t know the answer to. Here are some of the things you need to know as to what will happen to your loan debt when you die:
Will My Student Loan Debt Passed to Someone Else?
This is most people’s primary concern. There’s no definite answer to this. The answer depends on the type of the student loan you have. It will also depend on the state you live in, if you have a co-signer, if it’s a joint account, or some other related factors.
Federal Student Loan
If your student loan debt is federal, you’re in luck. This is because when you die and you still have an unpaid federally-backed education loan, such loan will be cancelled automatically. The debt will be discharged by the Government. This means that it won’t be passed on to your spouse or a member of your family. The loan dies with you.
Private Student Loan
Will the loan be discharged or passed on to someone else? The answer depends on the independent policies of your private lender. Generally, in a private student loan, if you die, the lender will go after your estate. In the absence of which, they will collect from the co-signer, if any, or the surviving spouse. However, all these will depend on the community property laws of the state you live in. Some states have exceptions especially for education-related debts. It is also important to check first if the private lender offers death discharge protection.
However, you must know that, in some cases, cancelled loans due to death do not automatically mean cancelled taxes. There may be tax repercussions for loans that have been discharged or cancelled.
Other Important Things
Needless to say, you must not let your student loan debt age in time. If you don’t die young and reach old age with such debt, you will have a lot on your plate. You must know that there are many ways on how student loan debt ruins retirement. It is also advised that you read search the states with highest student loan debt and see if you reside in one of the states mentioned. These things may not be directly connected to what will happen to your debt if you die, but they are as equally important.
But the most important of all is to have a debt attorney by your side. A competent, experienced and knowledgeable attorney who will really provide answers to your concerns. Hiring a debt attorney is for your best interest. With an attorney, you can ensure that your rights are protected and that you can eliminate the debt without too much burden on your part.