The responsibility to pay Parent PLUS Loans can’t be inherited or passed down to the parent borrower’s surviving spouse, the other parent, or the children for whom the loans were borrowed. All federal student loans are forgiven when the borrower dies. No one else will be held responsible for repayment.
Related: What Happens to Student Loans When You Die?
Private student loans, on the other hand, will become the cosigner’s responsibility when the primary borrower dies. Similarly, your spouse could be stuck having to make the loan payments if you live in one of the community property states.
Related: Are Student Loans Community Property?
So if you borrowed student loans from a private lender like SoFI or Sallie Mae, you might want to purchase a life insurance policy to protect your signer and family from having to pay back the debt.*
Other options include:
Requesting a cosigner release after making several consecutive monthly payments.
Refinancing the loans into your name alone.
Transferring the loans to your child.
Depending on your credit score, you may even be able to refinance and get a lower interest rate and better loan terms.
Related: Can a Parent PLUS Loan Be Transferred to the Student?
Use an online marketplace like Credible to compare rates and loan terms with multiple lenders simultaneously.
*Purchasing life insurance to protect a cosigner is unnecessary for private student loan debt borrowed after Nov. 20, 2018. Federal law mandates that lenders must release the cosigner if the primary borrower dies for loans taken out after that date.