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Many individuals with student debt may wonder what happens to their debt once they pass away. Debt after death is a morbid topic, however, it is important to understand to protect yourself and your loved ones. 

In this article, we will explore what happens to your student debt when you die. 

Article Key Takeaways

– Government student loans are forgiven in the event the borrower dies.
– Private student loan lenders have no legal obligation to discharge or cancel student loans if the borrower dies. These debts are passed on to the estate.
– If your student loans are co-signed, the cosigner will become responsible for your student loan.

What Happens To Government Student Debt When You Die?

All government student debts are dischargeable when the borrower dies. Both federally and provincially government-backed student loans are not passed on to your family members or your estate. 

Instead, your student debt will be completely forgiven by the government and no one will be responsible for paying it. This is one of the several benefits of federal student debt. 

To complete the debt forgiveness process, someone must provide proof of death to the student loan service manager overseeing the deceased individual’s debt. Once this is done, the debt will be fully forgiven. 

What Happens To Your Private Student Loans After You Die?

There is much less protection with private student loans when compared to federal student loans. Private lenders have no legal obligation to discharge or cancel student loans if the borrower dies. 

However, that doesn’t mean that private lenders won’t discharge or cancel the debt if the borrower dies, some may do so anyway. If you want more clarity, review your student loan agreement to identify details about how the student loans are handled in the event of the borrower’s death. 

If the private lender does not discharge or cancel the debt, it won’t disappear. Rather, outstanding student debt is passed on to the estate of the deceased borrower

How Is Student Debt Handled During The Probate Process? 

An estate is settled through a probate process which includes paying off and settling outstanding debts. If there isn’t enough money in the estate to settle all debts, including student debts, the debt often remains unpaid. 

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Can Your Student Debt Pass On To Your Loved Ones? 

Unpaid student debt will not be passed on to someone who is not legally responsible for the debt, such as a family member or friend of the deceased individual. 

For example, if you have a spouse, they will not be held legally responsible for your student debt repayment. However, if your spouse or loved one is a cosigner for your student loans, they will be held responsible for your student debt if you pass away.  

What If Your Student Loan Cosigner Dies?

In the eyes of a lender, the primary borrower and co-signer on an agreement both have equal responsibility to repay debt. If a cosigner on an agreement dies, it can cause problems. 

Some agreements state that if the co-signer passes away, the lender can demand full payment of the loan. This can throw you into default if you don’t have the funds to pay the loan immediately. 

These clauses have become less common, but it is something to watch out for. If you’re concerned, review your agreement to identify if this condition applies to your co-signed student debt.

Who Do You Contact When A Borrower Dies?

To report a deceased borrower, you can contact the following:

Federal Government LoanNational Student Loans Service Centre (NSLSC) at 1-888-815-4514
British ColumbiaStudentAid BC at 1-800-561-1818
Alberta Alberta Student Aid Service Centre at 1-855-606-2096 
SaskatchewanSaskatchewan Student Aid Services – 306-787-5620
ManitobaManitoba Student Aid at 1-800-204-1685
Ontario  Contact your OSAP Financial Aid Offices 
QuebecStudent Financial Assistance – Client Services at 1-877-643-3750
New BrunswickNew Brunswick Student Financial Assistance Program 1-800-667-5626
Nova ScotiaResolve NSDL at 1-877 283-1687
Prince Edward IslandPEI Student Financial Services at (902) 368-4640
Newfoundland and LabradorStudentAidNL 1-888-657-0800

How To Protect Your Family From Your Student Loan Debt

As we saw above, your family and loved ones will not become legally responsible for your debt if you die, unless they have co-signed a loan with you. One thing you can do to protect your family and loved ones in this unlikely scenario is to purchase a life insurance policy. 

The proceeds from life insurance will cover your outstanding student debts if the lender demands payment in full from your family or loved ones.

Bottom Line

Depending on the type of student loan debt you have, how it will be handled in the event of your death varies. This is why it is so important that you fully understand all your options and read your loan contract before you make any final decisions.

Student Debt After Death FAQs

Will my beneficiaries inert my student debt?

No, your student debts will not be inherited by your beneficiaries, unless one of them happens to be your co-signer. However, your outstanding debts will be paid out of your estate. This means your assets will be used to pay off your student debts before any inheritance proceeds are paid to your beneficiaries.

How can I avoid paying debt from your estate when I die?

A life insurance policy can help your estate from being used to pay off your debts when you pass away. Just be sure your insurance policy is big enough to cover your debts.

What happens to my student debt if I die with no estate?

If you don’t have an estate to settle your student debts then the debts remain unpaid. However, if you have a co-signer they would become liable to pay the debt.
Veronica Ott avatar on Loans Canada
Veronica Ott

Veronica is a writer who specializes in creating unique and educational personal finance content. She has extensive experience writing blog posts for companies in the financial sector. Veronica's background is in accounting as she graduated from Western University in 2017 with a degree in accounting. She is passionate about using her accounting expertise to help others with their personal finance questions and issues and enjoys using her writing to educate Canadian readers. When Veronica is not writing, she enjoys film, reading, travelling, going to the gym, and listening to music.

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