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Do student loans die with you?

Have you ever wondered what happens to your student loan if you die before it’s paid off? We take a look at what happens to student loans when you die.

Jennifer Laird
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Do your student loans disappear when you die if you haven’t paid them off? We take a look at how the student loan system works when the loanee dies, and how to report a death to the Student Loans Company (SLC).

What happens to student loans when loanees die?

When someone dies, the SLC cancels the student loan. It doesn’t matter how much of the loan remains outstanding – the SLC writes off the debt. So, essentially, if the loanee never earns above the repayment threshold, they could die without ever making a student loan repayment.

Do all loans disappear like this when someone dies? No.

Normally, debts become liabilities on their estate. In other words, their executor must pay these debts from the assets in their estate before they can pay out any inheritance. So, if they don’t have many assets but have a few debts, there will be less for people to inherit.

Generally speaking, if there isn’t enough money to cover the debts, creditors should write them off, but they’re not automatically wiped like student loans are.

Who tells the SLC about the death?

Well, technically anyone can notify the SLC about a death. However, it makes sense for the executor to contact the SLC since they’re the person responsible for managing the loanee’s affairs when they die.

The SLC won’t cancel the debt without evidence, though. So, if you’re an executor and you need to notify the SLC about a death, you’ll need two things:

  1. The person’s Customer Reference Number
  2. Evidence of the death

You can find the Customer Reference Number on old correspondence from the SLC. If you can’t find it, contact the SLC for more guidance.

To prove the death, send the SLC one of the following:

  • Original death certificate
  • Copy of a foreign death certificate
  • The original interim certificate from the coroner
  • A stamped copy of the coroner’s interim certificate

Once the SLC receives your evidence, they’ll cancel the loan and advise you when everything’s completed.

When are student loans written off?

Death isn’t the only occasion when student loans ‘disappear’. Here’s when else it happens.

  • If the loanee becomes permanently unfit to work, the SLC may cancel their student loan. Again, though, they’ll need supporting evidence for the claim.
  • Student loans are usually cancelled after 25 or 30 years depending on the loanee’s student loan plan, or when they turn 65 – whichever comes first.

So, if you’re an executor, you can check with the SLC to see if a loan is still actually payable before you send over any supporting evidence.

Takeaway

Most debts don’t disappear when someone dies, so student loans are definitely the exception. Just remember to contact the SLC as soon as possible after the death, though. Otherwise, they’ll try to take payments from the deceased’s bank account as normal, which causes everyone extra stress during an already difficult time.

If you’re an executor and you need more advice about dealing with someone’s estate, reach out to a charity like Citizens Advice for more help, or get legal advice from a wills and trusts solicitor.