When I die, will my estate be responsible for my student loans?

Hi Chuck,
If my student loans are not completely paid before my death (which they will not be - $85,000), will my husband or children be responsible for paying them after my death?

I am leaving life insurance to both of my children and want to make sure that money will not have to go toward paying any of my debts.

Thank you,
Caroline

Hey there Caroline,

Student loans are different animals.  A lot depends on whether they are federally guaranteed student loans/Stafford Loans covered by Title IV, since they are always discharged upon death.  The federal government covers the unpaid balance at that time (that's why they are "guaranteed").  Also, if the loan is a Perkins loan to the parents of a student who dies, this is also grounds for discharge.   You can learn more about loan discharges at www.studentaid.ed.gov/PORTALSWebApp/students/english/discharges.jsp?tab=repaying#content.

Also, note that if there is still an unpaid balance after 25 years (while the debtor is still living), the debts are discharged and the unpaid balance becomes taxable income.  Income taxes are typically taken out of the estate at death, and if the estate can't cover them, then that's the end of it (family members are not liable). 

Glad to help,