What Really Happens To Your Debt After You Die

According to the Federal Reserve’s Consumer Credit report, approximately 43.5 million Americans were facing $1.7 trillion in student loan debt to begin 2023. That number constituted 13% of the U.S. population, and the average amount owed per student was $37,787. Further, per Federal Student Aid, 92% of that $1.7 trillion was in the form of federal student loans. In October 2023, President Biden’s administration announced that, through its loan forgiveness programs, it had canceled $127 billion of student debt for 3.6 million Americans.


Given how widespread student loan debt is, you might be surprised to learn that death is not a guarantee of debt forgiveness. This said, perhaps one of the only semi-positive things about federal student loans is that they’re generally forgiven upon the borrower’s death. Private loans, however, can be far more varied, so it’s best to look at your loan terms to see what “death discharge” terms are included in your agreement. If your loan doesn’t offer a death discharge, this means your lender can pursue your estate to collect the debt after your death.

Since student loans are considered unsecured debt (meaning the loan isn’t backed or tied to any specific collateral), there are several ways for a lender to get its money back. This can be even more complicated if you and your spouse live in a community-property state (like Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington, or Wisconsin), which essentially allows lenders to go after your surviving family’s home and assets to pay off your debts. This means your spouse and/or kids could end up paying for your student loans even after you’re gone.