Normal Situation

• Generally, when you die, the lender forgives the debt. If you have federal student loans, the government automatically cancels your debt once your heirs prove your death. Most lenders have policies that they will not pursue a student loan in case of death by the borrower, according to Mary Pilon of the "The Wall Street Journal." A private lender can go after the debt if you leave an estate.
  
  

Co-signers

• If anyone cosigned your student loan, he has a legal responsibility to repay it regardless of what happens to you. Private lenders may review the bequeathed debt to determine whether the company will pursue the debt or cancel it. Lenders may only forgive certain types of loans in case of death or if you negotiated to include a death clause in your loan note.
  
  

Considerations

• Federal loans include a hardship clause in case of a permanent disability, such as when you become paralyzed. Private student loans may also have the same hardship clause. However, if you become permanently disabled, you can discharge the student loans in bankruptcy. In general, a permanent disability is one of the few ways to discharge student debt.
  
  

Tip

• To eliminate any student loan because of death, your heirs must prove death to the lender. You should photocopy the death certificate and mail it to the U.S. Department of Education in case of a federal loan -- you cannot fax a death certificate. Private lenders may require additional information, such as the final resting place of the deceased.