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Don't forget your student loan debt in your estate planning

As the cost of higher education increases, so does the amount of student loan debt held by Americans. Some people are paying off their student loans even after they've retired. Others are still paying off loans they've taken out for their children.

As you're doing your estate planning, it's essential not to forget your student loan debt and to find out what happens to it after you pass away. This will save your loved ones the time and stress of determining what to do about it.

If you have a student loan from the federal government, it will be discharged. The executor of your estate or someone else will need to submit a copy of your death certificate to the loan servicer.

If your debt is to a private student loan provider, it may or may not be dischargeable upon death. If you don't know what your lender's policy is, find out. In most cases, private student loans without a co-signer are discharged. If the co-signer is still alive, they're likely going to be responsible for it.

If the remaining debt on a private student loan is difficult for the estate or a co-signer to cover, lenders have to provide what's called a "compassionate review." After this review, the lender may agree to discharge the debt.

As we noted, the student loan you're paying off may be for a child. Parent PLUS loans are federal loans taken out by parents for their dependent children's education. If the parent who took out the loan dies (or if the student the loan was for dies), it can be discharged with proof of death.

No matter how old (or young) you are, if you are making payments on a student loan, it's wise to include information about your lender and copies of the loan documents with your estate plan or somewhere that your executor can easily access them.

Too often, surviving loved ones had no idea that someone was making payments on a student loan. When they find out, they may have to search for the information they need to seek a discharge or otherwise deal with it. You can save them this trouble by working with your attorney to get the information they'll need in order.

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