Will your family be responsible for your student loans after death in Florida? The answer this questions is generally NO, your family will not be responsible for your loans but it is a bit more complicated than that.
Federal Student Loans
All federal student loans subsidized by the federal government are forgiven at death. This means that your spouse, your family and your probate estate will not be responsible for your federal student loan debt upon your death.
Private Student Loans
If you are have private student loans not backed by the federal government your loan agreement or lender’s policy may not automatically forgive the debt upon your death. This means that your student loan lender may, make a claim against your estate to satisfy the debt. The good news is with proper estate planning all or most of your assets will pass to your spouse or your family outside of your probate estate and the student loan lender will be left with nothing to collect. If you have a life insurance policy that pays out upon your death your named beneficiary on the policy will receive the proceeds outside of your probate and will not be subject to a lender’s claim. In Florida, as long as your spouse is not a co-signer on student loan debt they will not be personally responsible for the debt.
If you are or have co-signers on your student loans they will remain liable after your death. One way to avoid this risk is to obtain life insurance on yourself, and the co-signer if you choose, to pay off the debt upon their death. Term life insurance policies are generally affordable, costing $100 or so a month, and may give your co-signer peace of mind should you die before paying off you student loans.
If you have questions regarding your student loan debt or structuring your estate to protect your love ones should you pass prematurely, please contact Jacksonville’s debt relief lawyer, Matthew C. Bothwell, Esq. We are here to help.