A Prodigal Daughter

Eddie says his daughter has $20,000 in student loans. He could pay them off today. If she never pays off the student loan, what will happen? Is there a better way for him to help her than paying this off?

QUESTION: Eddie in Nashville says his daughter has $20,000 in student loans. He could pay them off today. His daughter went through an illness a few years ago, and her outlook on life has changed for the better. If she never pays off the student loan, what will happen? Is there a better way for him to help her than paying this off?

ANSWER: If someone passes away and has a student loan, the student loan is forgiven. It does not count against your estate. If your student loan outlives you, then it does not—where versus if you had credit card debt, it counts against your estate. Credit card debt has to be paid out of the assets of your estate before inheritance is left to heirs. Student loan debt just goes away. It just disappears at death.

I’m assuming the way you’re describing this that she’s young and that she has largely healed from the health problems and is going to make it.

I would write a check and pay off the loan. I want her free in her new spiritual walk and in her health. I might require something of her like her attending Financial Peace University so that she never goes back there again, but that’s just part of her continued personal growth. I’ve got a feeling this particular person that you’re describing would jump at the chance to do that.

In this case, you’re just trying to be a huge blessing because this is a person who . . . It’s a prodigal. She’s come home, and we kill the fatted calf and we put a gold ring on her finger and a new suit of clothes. We throw a party and we write a $20,000 check to pay off the student loan debt. That’s what I would do.

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