Will My Estate Be Responsible For My Student Loans?
Statistically, having a bachelor’s degree doubles your lifetime earning potential. But that degree often comes with a high cost, which most families are unable to afford without a loan.
According to a recent study, approximately two-thirds of college students borrow money to finance their education, and the average debt for college graduates in 2010 was over $25,000.
But what happens to those loans if you die before they are paid off? Does your estate have to repay those loans? The answer depends what kind of loan you have.
If you received Federal student loan and you die or become totally and permanently disabled, the government discharges your student loan debt. That is not the case with most private loans, which currently account for 25 percent of student loans in private four year colleges and 14 percent of loans in public four year schools.
Although some private lenders are beginning to institute a loan forgiveness program in the event of death or total permanent disability, the vast majority do not.