Back in 2019, when more than 44 million Americans joined student loans Debt is $1.5 trillion, insurance company Haven House researched borrowers about the effect of death on their student loans and found that most people – 73% of respondents – do not know what happens to their debts when they die.
Hopefully student loan lenders know better by now. Although private loan terms vary from borrower to lender according to their terms of reference, federal student loan holders ( 92% of all student loans, i Forbes), the Department of Education (ED) will release their debt upon death.
What about any surviving spouse with the deceased person’s debt?
Like Lending Tree Student loan heroes note, there are three times a surviving spouse can be bound to pay the remaining debt of the deceased debtor. A spouse may be required to repay a deceased partner’s loan if they:
1. Student Loan Co-Sign
In the case of a loan signed by both spouses, there is a possibility that they may be legally responsible for repayment if the first borrower dies. If you co-sign one or more of your spouse’s student loans, your legal obligations can remain the same regardless of marital status. However, it depends on the loan.
For federal student loans, the loan will be waived because no co-signers are required. If you are a co-signer on their student loan, you should contact the lender to see if there is an option to get out of the payment. the loan.
2. Consolidate Debt into a Consolidation Loan
Couples take on many financial responsibilities when they get married. It doesn’t usually extend to student loan debt – unless a couple consolidates their debt into a joint personal loan double (or one partner’s signature for the other’s debt, as previously mentioned).
When you take out a joint loan for a couple, you will use a private company to refinance, which may result in one half of a marriage or common-law partner taking on the other’s debt as a borrower. alone (and put on the hook for repaying the rest of the loan on their own) after the other half.
3. Live in a Community Property State
Most states maintain common property distribution laws, however, nine states currently have community property laws, where all assets and liabilities acquired during the marriage are assessment of community property – and therefore both spouses have the same ownership, regardless of who is registered. , buy or raise.
If you live in one of these states – Arizona, California, Idaho, Louisiana, Nevada, New Mexico, Texas, Washington and Wisconsin – a student loan is considered community property and, otherwise, it will be charged to the living spouse if it is taken. out after marriage and before divorce.
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Additionally, borrowers who have refinanced a federal student loan are in a difficult position because their loan has changed from a dischargeable federal student loan to a private student loan. may be excluded, not protected. Again, when a borrower passes out, it is necessary to contact the company providing the loan and review the policy.
Added From GOBankingRates
This article originally appeared on GOBankingRates.com: Does my spouse have to pay my student loans when I die?