If a parent who took out a Parent PLUS loan dies, the loan is cancelled in full. The Department of Education discharges the entire remaining balance — principal, accrued interest, and any fees — and does not pursue the deceased borrower’s estate for repayment.1Federal Student Aid. What Happens to a Loan if the Borrower Dies The same discharge applies if the student the loan was borrowed for dies. Any endorser who co-signed is also released from further obligation.2eCFR. 34 CFR 685.212 – Discharge of a Loan Obligation
There are no qualifying-payment or employment conditions attached. The loan is eligible for cancellation as of the date of death, once documentation reaches the servicer.
The Debt Does Not Pass to the Student
A Parent PLUS loan cannot be transferred to the student for repayment at any point, whether the parent is alive or deceased. The parent is the sole borrower, and the student has no legal obligation on the loan.3Federal Student Aid. Direct PLUS Loan Basics for Parents Servicers occasionally receive calls from grieving families asking how to move the loan into the student’s name. The answer is that they cannot, and they do not need to: the balance goes away.
What Documentation the Servicer Needs
To process the discharge, the loan servicer needs proof of death. Federal regulations accept several forms:2eCFR. 34 CFR 685.212 – Discharge of a Loan Obligation
- An original or certified death certificate from the vital records office in the state where the death occurred.
- An accurate and complete photocopy of the original or certified certificate.
- A scanned or faxed copy of the original or certified certificate.
- Verification through an approved federal or state database, which the Department may be able to complete without requiring a family member to submit a certificate at all.
The Department may accept other reliable documentation on a case-by-case basis under exceptional circumstances. The death certificate should show the deceased person’s full name, date of death, and the jurisdiction where the death was recorded.4Federal Student Aid. Required Actions When a Student Dies Ordering several certified copies from the state vital records office is usually a good idea; other financial institutions and government agencies will ask for them too.
Submitting the Discharge Request
Start by identifying the correct loan servicer. Log into studentaid.gov, where the servicer’s name and contact information appear on the account dashboard.5Federal Student Aid. So Your Loan Was Transferred – Whats Next If you cannot access the deceased borrower’s account, call Federal Student Aid at 1-800-433-3243 to locate the servicer.
Tell the servicer you are reporting a death. They will typically pause billing and collection activity while the request is under review. Send the documentation by whatever method the servicer accepts, whether mail, fax, or a secure online upload. If you mail it, use a trackable method so you have proof of delivery.
Once the servicer verifies the documentation, they set the balance to zero and issue a written confirmation. Processing times vary and usually take several weeks.
Consolidation Loans
If the parent borrower dies and the PLUS loan was consolidated into a Direct Consolidation Loan, the entire consolidation loan is discharged, because the borrower has passed away.
The situation is different when the student dies rather than the parent. In that case, only the portion of the consolidation balance attributable to the original PLUS loan for that student is discharged. The rest of the consolidation loan stays with the parent.2eCFR. 34 CFR 685.212 – Discharge of a Loan Obligation This matters if the parent consolidated PLUS loans for more than one child, or combined the PLUS loan with their own federal loans. The servicer can identify which portion qualifies.
Payments Made After the Date of Death
Any payments received on the loan after the date of death are refunded to the borrower’s estate. This includes autopay withdrawals, manual payments, and amounts collected through wage garnishment.2eCFR. 34 CFR 685.212 – Discharge of a Loan Obligation The refund covers amounts received after the date the discharge eligibility requirements were met, which is generally the date of death itself.6MOHELA – Federal Student Aid. Death Discharge
Autopay withdrawals often continue for a while before a servicer learns of the death. Contact the servicer promptly and cancel any automatic bank drafts to limit how many payments have to be reclaimed later.
Taxes on the Discharged Balance
A Parent PLUS loan discharged because of death is not treated as taxable income on the federal return. Under 26 U.S.C. § 108(f)(5), the discharged amount is excluded from gross income when a student loan is cancelled because of the borrower’s death or total and permanent disability.7Office of the Law Revision Counsel. 26 U.S. Code 108 – Income From Discharge of Indebtedness
This exclusion was originally set to sunset on December 31, 2025, but in July 2025 Congress amended the provision to apply to discharges after that date, effectively making the exclusion permanent for death and disability discharges.7Office of the Law Revision Counsel. 26 U.S. Code 108 – Income From Discharge of Indebtedness A broader tax exclusion for other kinds of student loan forgiveness under the American Rescue Plan Act did expire at the start of 2026, but that expiration does not affect death discharges.
If the estate receives a Form 1099-C from the servicer showing cancelled debt, keep it with the borrower’s tax records. The discharged amount does not need to be reported as income on the federal return. Some states may still treat forgiven loan balances as taxable for the estate or a surviving spouse, so consulting a tax professional about state filing requirements is worthwhile, particularly in community property states where the treatment of marital debt varies.