I’m 67 years old and still have $35K in student debt that I can’t afford to pay on my fixed retirement income — what will happen to that debt when I die?

What happens to student debt after you die?

Whether or not your student loans are discharged upon your death depends on the type of loan you signed.

The good news is that federal borrowers are generally safe in this regard, as those loans are discharged once the borrower dies. Parent PLUS loans are also discharged if the parent holding the loan passes away, or if the student associated with those loans dies.

However, with private student loans, things can get a little more muddled. Some private lenders will discharge student loans upon the death of the borrower after the required proof of death is submitted. But it’s not always guaranteed.

In some cases, private lenders may go after the co-signer on a loan. If there isn’t a co-signer, the deceased person’s estate could be held responsible for repaying the private student loan.

So, as a hypothetical, if you owe $35,000 in loans to a private lender and have assets worth $100,000, your heirs could potentially lose about one third of their inheritance.

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What to do when you’re retiring with student loan debt

If you have federal loans, one option to consider is enrolling in an income-driven repayment plan. The government offers a few plans that can adjust your payments according to your income and family size, thus making repayments more affordable.

Depending on the plan option you select, your loan payments wouldn’t surpass 10% or 20% of your discretionary income. And, once you hit 20 or 25 years of student loans, the remaining balance is typically forgiven.

Another option to consider is taking out a life insurance policy. If you don’t already have one, you may hit some roadblocks if you are over the age of 55. You may find you’ll have more luck securing a more senior-friendly shorter-term policy.

Either way, having a life insurance policy could help your beneficiaries avoid having to repay your student debt as they can use the policy’s benefit to offset or cover the costs.

Another possible avenue is to refinance or consolidate your loans. You may find you’re able to extend your repayment term and snag a lower interest rate, depending on the loan and circumstances. Essentially, you’d be combining one or more existing loans into a new one.

You can also check for forgiveness eligibility. If you have federal loans, you may meet the required criteria to potentially find yourself released from your commitment to repay a part of — or your entire — student loan.

If you’ve recently encountered significant economic hardship or a medical emergency, as a last resort you can also dig into whether forbearance or deferment might work for you.

While this would temporarily suspend your payments and help you in the short term, it’s worth noting that you will accrue interest during this period, ultimately increasing your balance and leaving you with a larger tab over the life of your loan — and potentially becoming the responsibility of your loved ones once you pass away.