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Death Discharge

Federal student loans may be discharged if the borrower dies. This includes Perkins Loans, Direct Subsidized and Unsubsidized Loans, Parent PLUS Loans, Grad PLUS Loans, and Direct Consolidation loans. In addition, a Parent PLUS Loan may be discharged upon the death of the student for whom the parent borrowed the loan.

To obtain a death discharge, the family should provide an original or certified copy of the death certificate or a complete and accurate photocopy of an original or certified copy of the death certificate. The death certificate should be provided to the school for Perkins Loans and to the servicer for Direct Subsidized and Unsubsidized Loans, Direct PLUS Loans, and Direct Consolidation Loans. In unusual circumstances, the death discharge determination may also be based on other reliable documentation, subject to a case-by-case review by the U.S. Department of Education for Direct Loans and the guarantee agency’s CEO for Federal Family Education Loans (FFEL) loans.

When a federal student debt is discharged, it means that the balance will be brought to zero and no further collection activities will occur. Sometimes when a debt is canceled the discharged amount may be considered taxable income. In order to determine if the discharged debt would be considered taxable, we recommend the family contact the Internal Revenue Service or a tax professional.

Some lenders of private (non-federal) student loans offer a death discharge if the borrower dies. These include Sallie Mae, New York’s Higher Education Services Corporation, and Wells Fargo. With other lenders, the borrower should ask about the lender’s compassionate review process. Some lenders will waive the cosigner’s obligation on a case-by-case basis if the cosigner is on fixed income and does not have the resources to repay the debt or if the student was killed in action while serving in the U.S. Armed Forces or in a public safety position.

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