No, private loans have no forgiveness option. And it's highly unlikely discover would ever reduce what's owed, they have no reason or incentive to do so.
No, student loans (and debt in general) can never be ``passed'' to a third party who didn't co-sign on the debt. Some types of student loans (including federal loans) are discharged upon the death of the borrower. Many private loans (like other kinds of consumer debt) become the responsibility of the estate.
Your parent's PLUS loan will be discharged if your parent dies or if you (the student on whose behalf your parent obtained the loan) die.
It is difficult, but not impossible to discharge student loan debt in bankruptcy. You can discharge federal and private student loans in bankruptcy.
How to get rid of private student debt. One of the few ways to get rid of private student debt is through discharge bankruptcy. It's an arduous — and expensive — process. You'll have to file Chapter 7 or Chapter 13 bankruptcy, then file an additional lawsuit known as an adversary proceeding.
If you're considering bankruptcy
It's important to understand that qualified education loans, as defined in Section 221(d)(1) of the Internal Revenue Code of 1986, aren't dischargeable through bankruptcy absent a showing of undue hardship.
Medical debt and hospital bills don't simply go away after death. In most states, they take priority in the probate process, meaning they usually are paid first, by selling off assets if need be.
But if you stop making payments and your loans default, a student loan lawsuit could be filed against you. If that happens and the court enters judgment against you, then any funds in your bank account — including your inheritance — could be levied or taken to repay the debt.
Student loans don't go away after seven years. There is no program for loan forgiveness or cancellation after seven years. But if you recently checked your credit report and wondered, “why did my student loans disappear?” The answer is that you have defaulted student loans.
Private Student Loans
If the primary borrower dies, the private student loan is canceled and the cosigner is not expected to repay the debt. However, for those private student loan programs that do not discharge the loan, the lender will likely charge the debt against the borrower's estate.
You can take a tax deduction for the interest paid on student loans that you took out for yourself, your spouse, or your dependent. This benefit applies to all loans (not just federal student loans) used to pay for higher education expenses. The maximum deduction is $2,500 a year.
Any borrower with ED-held loans that have accumulated time in repayment of at least 20 or 25 years will see automatic forgiveness, even if the loans are not currently on an IDR plan. Borrowers with FFELP loans held by commercial lenders or Perkins loans not held by ED can benefit if they consolidate into Direct Loans.
Navient offers private student loan forgiveness for borrowers misled by their schools. Eligibility is based on school misconduct, not employment or income. Borrowers must submit an application explaining how their school deceived them and provide supporting documentation.
Those who borrowed from Sallie Mae after this 2014 split have private student loans, which aren't eligible for federal forgiveness programs. However, Sallie Mae will discharge debts for borrowers who die or become totally and permanently disabled.
No, there is no way to change private student loans to federal loans. However, you can refinance your private and federal loans together, ideally to qualify for a lower rate or better loan terms.
If a borrower dies, their federal student loans are discharged after the required proof of death is submitted. The borrower's family is not responsible for repaying the loans. A parent PLUS loan is discharged if the parent dies or if the student on whose behalf a parent obtained the loan dies.
Student loans can lead to serious financial consequences if you don't keep up with payments, including the potential for your assets to be seized. However, whether or not your assets are at risk depends largely on the type of loan, federal or private, and the steps you've taken (or failed to take) to address the debt.
If you received a gift or inheritance, do not include it in your income. However, if the gift or inheritance later produces income, you will need to pay tax on that income.
When a loved one passes away, you'll have a lot to take care of, including their finances. It's important to remember that credit card debt does not automatically go away when someone dies. It must be paid by the estate or the co-signers on the account.
Perhaps the most common debts that cannot be discharged under any circumstances are child support, back taxes, and alimony. Here are some of the most common categories of non-dischargeable debt: Debts that you left off your bankruptcy petition, unless the creditor had knowledge of your filing. Many types of taxes.
If you contact the bank before consulting an attorney, you risk account freezes, which could severely delay auto-payments and direct deposits and most importantly mortgage payments. You should call Social Security right away to tell them about the death of your loved one.
If you can't pay your private loans
This way, you can work with them to find a solution. While exact policies vary, private lenders may be willing to temporarily pause your payments, reduce your payments for a short while, or offer a specialized repayment plan to help you catch up on missed payments.
After a referral from the CFPB, in 2014, the Department of Justice and the Federal Deposit Insurance Corporation ordered Navient and its predecessor, Sallie Mae, to pay almost $100 million for illegally overcharging nearly 78,000 servicemembers.
Thus, if you ever had a Sallie Mae loan or had Sallie Mae conduct loan servicing, that loan and servicing, likely, was transferred to Navient. Further, Navient then changed its name in 2021 to Aidvantage.