The immortality of student loan debt; not even death will erase it

Sadly, the death of a student loan borrower is one of the only ways student loans can be erased. But, when there’s a co-signer, death may not even these debts to be discharged.

It's bad enough that student loans can follow a person until death; they are virtually impossible to erase in bankruptcy. But for some people, astonishingly, student loans continue to be a problem even after they die.

Media outlets have reported various stories about certain lenders contacting co-signers, when a loan borrower has died, and demanding payment in full for the loan. Many of these co-signers are parents or family members of the deceased still grieving from the sudden loss.

But how is this happening?

Understanding student loan co-signing

The average tuition at a public college or university has risen drastically over the last decade. Tuition rates for 2013-2014 school year alone rose by a whopping 27 percent.

As college becomes more and more expensive, students are forced to come up with more money to pay for the tuition. After exhausting federal student loan limits, many turn to private lenders.

Private creditors, however, can be a bit more stringent than federal student loan lenders. Depending on the situation, some private lenders require a co-signer before approving the loan. And many are often parents of the student borrower.

But there's often small, fine print in student loan promissory notes which stipulate that in the event of the borrower's death, the loan balance will become due in full by the co-signer. And for some, the balance is often thousands of dollars.

So, when the parent or co-signer is called and asked to pay up, they are astonished-and understandably so. Given today's shrinking middle class, the average person or family just doesn't have that kind of expendable income. But many have no other options since students loans are extremely difficult to discharge in bankruptcy.

The future of student loan debt

And sadly, these types of instances are becoming more and more commonplace. Present outstanding student loan debt in the United States is over $1 trillion-more than the average household credit card debt. And default rates on student loans have also increased in recent years. Yet, despite the growing problem-save for any serious hardship-student loans remain exempted from bankruptcy.

Some experts believe that the student loan crisis will be the next financial calamity the U.S. will experience. Hopefully, amid this potential possibility, Congress will do something and help so many people trapped in inescapable debt-debt that is no doubt crippling America.

Help with student loan debt for co-signers

It's important to note that, although student loan debt is very difficult to discharge in bankruptcy, there are some student loan lenders that are willing to work with borrowers to refinance the loan or reduce monthly payments. In some rare instances, lenders may even relieve co-signers from the obligation.

Determining if any of these options are available to you is vital. Consulting with a bankruptcy attorney who understands the law is recommended.

Keywords: co-signers, student loans, discharge