What Happens to a Parent PLUS Loan?

Richard wants to know who's responsible for a Parent PLUS loan if the parent passes away. Dave explains how it works.

QUESTION: Richard on Twitter wants to know who’s responsible for a Parent PLUS loan if the parent passes away. Dave explains how it works.

ANSWER: Most of the Parent PLUS loans that I’m aware of, the child is not on the loan. It is simply a parent loan. Mom and Dad borrowed the money, and if it is a federally insured student loan, it does not count against the estate when you die. If you have a Sallie Mae loan or a Parent PLUS loan and you die, you just die and your estate does not owe the money. On any regular student loan, that would be true also.

The other thing is if you become permanently disabled. If you get a federal ruling on your disability, meaning you are receiving SSI, then you can have the student loans forgiven in that case as well.

In the event of death or disability, student loans just go away. They don’t count against the estate—they certainly don’t count back against the kid unless they co-signed.