If you die, your widowed spouse could be left responsible for paying off your student loans, depending on your state of legal residence and whether the loans were borrowed during the marriage.
In the nine community property states — Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin — a surviving spouse may be held liable for repaying a private student loan following the death of their husband or wife, even if they didn’t cosign the loans, but only if the loan was taken out after the marriage.
If the loan was borrowed before the marriage or the couple did not live in a community property state, this spouse is not responsible for the loans unless they cosigned the loan.
Minimize Your Risk
Death is never a comfortable topic to think or talk about, but when it comes to the financial repercussions it could leave on your loved ones, prepare yourself in advance in the event of the worst. Consider these tips to help your loved ones deal with your debts in the event of your untimely passing:
All federal student loans are discharged upon the borrower’s passing. For Federal Parent PLUS loans, the debt is also forgiven upon the death of the student for whom the loan was borrowed.
For private student loans, death discharge policies vary from lender to lender, so consider each lender’s policies before you take out a loan. If you’ve already locked in to a private loan, consider refinancing the loans into a private student loan that offers a death discharge options.
If a lender doesn’t offer a death discharge, get a term life insurance policy with a face value equal to the current balance of your student loans and your other debts, so your heirs won’t need to cover the cost of repaying your student loan debt.
If you are married and live in a community property state, learn your state’s laws. A prenuptial or antenuptial agreement might protect your spouse from your student loans. Consult with a qualified estate or tax attorney to review your options.