If a deceased person still has outstanding student loans, the post-death status of those loans depends on what type of loan they are.
A person would almost have to be living under a rock not to know someone with student loans and that millions of Americans owe more than a trillion dollars in unpaid student loans. This debt has become a major social and political issue.
Many of the student loan debtors will pass away without having paid off all of the loans and that means their estates will have to deal with them. How estates have to deal with them depends on what type of student loan they are.
As the New York Times reports in "In New Jersey Student Loan Program, Even Death May Not Bring a Reprieve," the state of New Jersey wants its money back no matter what. The state relies on Wall Street to finance its loan program and does not forgive loans when debtor-students pass away. That often means parents who have cosigned the loans are required to pay them off.
Most private student loans issued through banks operate in the same way. The loan must still be paid after the student debtor passes away. If there is not enough money in the estate to cover the costs, cosigners are stuck with the bill.
On the other hand, loans insured by the federal government are written off if the debtor passes away. It is not automatic, however. Executors need to take affirmative steps to have the loans forgiven, but it is not a difficult process.
Because of the different types of student loans, it is important that executors of estates with unpaid student loans contact an estate attorney to make sure each loan is handled in the proper way.
Reference: New York Times (July 3, 2016) "In New Jersey Student Loan Program, Even Death May Not Bring a Reprieve"