Federal loans and death

[NYyanx28]

I have heard before that federal loans for med school are "abolished" upon death of the person taking them out. Is this definitely true or is it passed on to the next of kin?

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[Steve203]

makes sense that they would be forgiven...if my brother dies, I'm gonna have to pay his federal loans??? Highly doubt it. Only way I could see that happening is with a spouse...but who cares...you'll be dead anyway.

 

[GreenShirt]

Most federal loans are forgiven upon death (Grad Plus is, not sure about Stafford & Perkins), whereas private loans are passed onto your co-signer. However, federal loans are not forgiven if you declare bankruptcy.

 

[NYyanx28]

makes sense that they would be forgiven...if my brother dies, I'm gonna have to pay his federal loans??? Highly doubt it. Only way I could see that happening is with a spouse...but who cares...you'll be dead anyway.

You must be slick with the ladies...

I'm not planning on dying anytime soon, but it would certainly affect my payback schedule post-residency if the federal loans weren't passed onto the spouse and all.

 

[mentirosa]

I am so going to take out loans, fake my death, then attend medical school for free.

 

[DrMom]

I have heard before that federal loans for med school are "abolished" upon death of the person taking them out. Is this definitely true or is it passed on to the next of kin?

a resident in my program was killed in an MVA a few years ago. her family wasn't stuck with her loans.

 

[NYyanx28]

a resident in my program was killed in an MVA a few years ago. her family wasn't stuck with her loans.

Wow, that's horrible. I'm glad the government allows this, that would be really awful if in addition to her death, her family was forced to pay off the remainder of her loans.

 

[Sol Rosenberg]

Guys, chill. Under NO circumstances do ANY debts become the responsibility of anyone's next of kin. I am not a lawyer, but during probate, the ESTATE of the deceased may end up paying off any outstanding debts from any leftover assets, but I don't believe there is any law which forces next of kin, etc to assume debts upon the death of a relative, etc.

EDIT: One circumstance that I just thought of is if there were a co-signer on those loans. I think it is very possible that upon the death of the primary account holder, the co-signer would be responsible for the debt. But, once again, I am not a lawyer.

 

[psipsina]

I can confirm this, I was going to take out life insurance to cover my loans if they could be passed on to my husband but I researched it and they can't. I don't know about private loans tho.

 

[sirdude]

I have heard before that federal loans for med school are "abolished" upon death of the person taking them out. Is this definitely true or is it passed on to the next of kin?

Yes, if you die then no one has to pay back the federal stafford loans (they are "abolished". This is probably one of the only big loans in your life that works like this. House, car, most everything else your spouse, family or someone who you knew would have to take on the dept.

ps. I doubt you could fake your death in the eyes of the feds unless you leave the country, that is if you still want to be a doctor... wouldn't be worth it otherwise would it?

 

[blargh]

wow, that's morbid

 

[gary5]

Well, if you're thinking of killing yourself to get out of paying loans, instead, I'd just skip med school and do something else. LOL.

 

[Sol Rosenberg]

Yes, if you die then no one has to pay back the federal stafford loans (they are "abolished". This is probably one of the only big loans in your life that works like this. House, car, most everything else your spouse, family or someone who you knew would have to take on the dept.

ps. I doubt you could fake your death in the eyes of the feds unless you leave the country, that is if you still want to be a doctor... wouldn't be worth it otherwise would it?

100% False. It falls to the estate of the deceased, and if the estate doesn't have enough to pay the loan back, it's similar to bankruptcy (the estate is "bankrupt.") If the estate has enough to pay the debts, then yeah that is "taken" from the heirs of the estate, but the heirs are never really responsible for the loan. The only way a spouse, etc could get stuck with the loan is if it is a joint account or if they are a co-signer. I am not a lawyer, but I am 99% sure about this. This is why it is a good idea NOT to have joint accounts/loans.

 

[Flopotomist]

100% False. It falls to the estate of the deceased, and if the estate doesn't have enough to pay the loan back, it's similar to bankruptcy (the estate is "bankrupt.") If the estate has enough to pay the debts, then yeah that is "taken" from the heirs of the estate, but the heirs are never really responsible for the loan. The only way a spouse, etc could get stuck with the loan is if it is a joint account or if they are a co-signer. I am not a lawyer, but I am 99% sure about this. This is why it is a good idea NOT to have joint accounts/loans.

Uhm - or you could just buy a small life insurance policy. I recall in undergrad, a loan that I took out had a life insurance component built into the loan itself (eg if I died, the loan would be paid off).

 

[IckeyShuffle]

makes sense that they would be forgiven...if my brother dies, I'm gonna have to pay his federal loans??? Highly doubt it. Only way I could see that happening is with a spouse...but who cares...you'll be dead anyway.

haha this is kind of random but that reminds me of a president bush quote. When asked what history will say about him he replies, "who cares, ill be dead"

 

[karmega5]

I'd heard about the death thing, but what if you're permanently disabled?

 

[Habibti]

I have heard before that federal loans for med school are "abolished" upon death of the person taking them out. Is this definitely true or is it passed on to the next of kin?

For Stafford and Perkins loans (www.studentaid.ed.gov)
Cancellation Conditions: Borrower's total and permanet disability of death
Amount Forgiven: 100%
Notes: For a PLUS Loan, includes death but not disability of the student for whom the parents borrowed.

Details for permanent disability: Beginning July 1, 2002, a borrower who is determined to be totally and permanently disabled will have his or her loan placed in a conditional discharge period for three years from the date the borrower became totally and permanently disabled. During this conditional period, the borrower doesn’t have to pay principal or interest. If the borrower continues to meet the total-and-permanent disability
requirements during, and at the end of, the three-year conditional period, the borrower’s obligation to repay the loan is canceled. If the borrower doesn’t continue to meet the cancellation requirements, the borrower must resume payment. Total and permanent disability is defined as the inability to work and earn money because of an injury or illness that is expected to continue indefinitely or to result in
death. More information on this discharge can be found in the promissory note and by contacting the loan holder.

 

[NYyanx28]

For Stafford and Perkins loans (www.studentaid.ed.gov)
Cancellation Conditions: Borrower's total and permanet disability of death
Amount Forgiven: 100%
Notes: For a PLUS Loan, includes death but not disability of the student for whom the parents borrowed.

Details for permanent disability: Beginning July 1, 2002, a borrower who is determined to be totally and permanently disabled will have his or her loan placed in a conditional discharge period for three years from the date the borrower became totally and permanently disabled. During this conditional period, the borrower doesn’t have to pay principal or interest. If the borrower continues to meet the total-and-permanent disability
requirements during, and at the end of, the three-year conditional period, the borrower’s obligation to repay the loan is canceled. If the borrower doesn’t continue to meet the cancellation requirements, the borrower must resume payment. Total and permanent disability is defined as the inability to work and earn money because of an injury or illness that is expected to continue indefinitely or to result in
death. More information on this discharge can be found in the promissory note and by contacting the loan holder.

Finally some definitive answers. Thanks.

 

[Mastac741]

thanks - I was wondering about this. I was going to take a life insurance policy out on myself in case I croaked so my wife didn't get stuck with the loans, but now I don't have to.