Student borrowed sub or unsubsidized loan from bank, who must pay installment if h/she died, disabled?

Question

Is his or her blood, marriage, law- relation reponsible to pay the installment?

Answer 1

The debt normally dies with the borrower if he dies. However, if there is an estate that the student is leaving, the creditors could go after that. Generally, though, it is just written off by the creditors.

Disability is a different thing. The student is normally still legally responsible for the debt. There are usually conditions where the student can seek a temporary forbearance for illness or unemployment, but at some time, the debt will again become due. Of course, if the student is never able to recover or earn, there may be other options, but I don't believe there is ever a condition where other family members would become obligated, unless they co-signed the loan.

Co-signers on any of these loans would become fully obligated for the entire debt, regardless of circumstance.

Answer 2

Normally in the two situations. Contact the loan institution and tell them the person either Died or became disabled. They will probably send you some paperwork to fill out, I assume by a Doctor, and you return that information to them. Then they just Write off the loan.

Answer 3

Unless the another party (co-maker or guarantor) signed the loan documents, thus making a guaranty to pay the loan if the main party couldn't, there is no obligation to pay.
My brother passed away last year and his school loans were forgiven.

Answer 4

Legally the debt is gone if he/she signed for the loans alone. If there was a cosigner then they would be obligated to pay. Even though it is gone that doesn't mean that they won't try to get a relative to claim the debt to be paid.

Answer 5

No, the loan will be paid by a private institution.