In short
Federal student loans are discharged when the borrower dies, so they need no insurance. Private loans depend on the lender and the date of the note, and a cosigner, usually a parent, can be left owing the balance. The fix is a small term policy on the borrower, sized to the private balance, with the cosigner as beneficiary. $100,000 of 10-year Nectar Term on a healthy 25-year-old is an estimated $5 a month, set during underwriting.
Key takeaways
- Federal loans, including Parent PLUS, are discharged on the borrower's death. Only private loans need coverage.
- Private loans follow the promissory note. For loans signed after November 2018, federal law requires the lender to release the cosigner when the student borrower dies; older loans often do not, and lender policies vary. Read the note or ask in writing.
- Size the policy to the private balance, rounded up, and match the term to the years left on repayment. Ten years is common.
- The borrower is the insured. The cosigner is usually the beneficiary, named directly, not through the estate.
- $100,000 of 10-year term is an estimated $5 a month at 25 and $250,000 about $10. A healthy 25-year-old qualifies without a medical exam, usually with a same-day decision.
A parent who cosigns a private student loan makes a promise most families never think through: if the student dies, the lender can collect the balance from the parent. Federal loans do not work that way, and some private loans no longer do, but enough still do that it is worth twenty minutes to find out which kind you have and, if the answer is bad, to fix it for a few dollars a month.
This guide explains what happens to each type of loan when a borrower dies, how to read your note, how to size a policy to the private balance, who should own it and receive it, and what $100,000 and $250,000 of term cost at 25 and 30.
What happens to student loans when the borrower dies?
Federal loans are discharged. Direct Loans, FFEL loans and Perkins loans are discharged when the borrower dies: a family member sends the servicer a death certificate, and the balance is written off. A Parent PLUS loan is discharged if the parent who borrowed dies, and also if the student the loan was taken out for dies. Nothing is collected from the family, and no insurance is needed for a federal balance. Federal Student Aid, the Department of Education's loan office, publishes the rules.
Private loans follow the contract. A private student loan comes from a bank, a credit union or an online lender, and the promissory note decides what happens on death. The borrower's estate is liable for the balance, and so is any cosigner, unless the note or the law says otherwise. Because the estate of a 24-year-old usually holds very little, the cosigner is the one the lender calls.
If you are not sure which kind you have, every federal loan appears in your Federal Student Aid account, and anything that does not is private.
Can a cosigner be pursued for a private student loan after the borrower dies?
For many loans, yes, and that is the whole reason for the policy. The answer depends on when the loan was signed and what the note says.
A federal law that took effect in November 2018 requires private lenders to release a cosigner from the loan when the student borrower dies, for loans signed on or after that date. For loans signed before it, the note controls. Some lenders release the cosigner or forgive the balance on death as a matter of policy, and some apply that policy to older loans; others do not, and the lender can pursue the cosigner for every dollar. Older notes could even treat the cosigner's own death as a default, which the same 2018 law stopped for new loans.
So the first step costs nothing: find the date on the note, then ask the lender in writing what happens to the loan and to the cosigner if the student dies, and keep the answer. The Consumer Financial Protection Bureau publishes plain-English guides to private student loans and cosigner release, and it takes complaints when a lender will not answer.
Get the lender's death and cosigner-release policy in writing before you decide anything. If the note was signed before November 2018, or the answer is vague or "at the lender's discretion", insure the balance.
If the loan predates the law, if the lender's answer is discretionary, or if the family would rather not depend on a lender's process in the weeks after a death, a small term policy removes the question. It also pays the parent directly, which a release never does, so it covers the funeral or a cosigned car loan at the same time.
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How much life insurance do you need to cover student loans with a cosigner?
Size it to the private balance, not the total student debt. Add up the cosigned private loans at today's balance, ignore the federal ones, and round up. In the early years of a level payment most of each payment is interest and the balance falls slowly, so a $92,000 balance today is a $100,000 policy, not a $90,000 one, and a loan still in deferment is growing.
Two adjustments are common. If the same parent cosigned a car loan or an apartment lease, add those. And if the borrower has a partner or child who would miss their income, this policy is too small for that job; our guide to how much life insurance you need covers the income math, and the coverage calculator runs it in a minute. Nectar Term starts at $100,000, which is the right floor for most private balances.
Who should own the policy and who should be the beneficiary?
The borrower is the insured, because it is the borrower's death that leaves the cosigner owing. The beneficiary is usually the cosigner, named directly by name and date of birth. Two alternatives come up, and both are worse:
- Naming the lender. The lender gets paid whether or not it would have released the cosigner, and any amount above the balance is awkward to recover. Name the person who holds the risk; they pay the loan if they still owe it and keep the rest if they do not.
- Naming the estate. Money paid to an estate goes through probate, where it is available to every creditor and arrives months later. A named beneficiary is paid directly, usually within weeks.
Who owns the policy, meaning who controls it and pays the premium, is a separate choice. Most often the borrower owns it and pays. Some parents prefer to own the policy on their child and pay the premium themselves, so the beneficiary cannot be changed and the policy cannot lapse without their knowing; a cosigner has a clear financial interest in the borrower's life, so that is a normal arrangement, and both parent and child sign the application. Either way, the borrower answers the health questions, because the borrower's health sets the price.
How long should the term be?
Match the term to the years left on the loan. Private student loans are commonly repaid over 10 years, and a 10-year term that starts at graduation ends with the last payment. If the loan runs 15 years, or you expect to refinance into a longer term, buy 15 or 20.
The price gap is small at this age. At 25, $250,000 of 10-year term is an estimated $10 a month, and the same amount over 20 years is $14. Many borrowers take the 20-year policy for the extra $4: the loan will be gone in ten years, but the mortgage, partner and child that often arrive in the following ten will not, and a policy bought at 25 is priced at 25 for its whole term. Our guide to how Nectar Term works explains what happens when the term ends.
How much does a $100,000 or $250,000 term policy cost at 25 and 30?
Our rate table is built on $500,000 of 20-year coverage in the preferred non-tobacco class: $25 a month for a 25-year-old man and $30 at 30. A $250,000 policy runs about 0.55 of the $500,000 price, a $100,000 policy roughly a quarter of it, and a 10-year term about 28 percent less than a 20-year.
| Coverage | Term | Man, age 25 | Man, age 30 |
|---|---|---|---|
| $100,000 | 10-year | about $5 | about $5 |
| $100,000 | 20-year | about $6 | about $8 |
| $250,000 | 10-year | $10 | $12 |
| $250,000 | 15-year | $12 | $14 |
| $250,000 | 20-year | $14 | $17 |
Estimated monthly premiums for the preferred non-tobacco class, set during underwriting. Women pay about 18 percent less: roughly $8 a month for $250,000 of 10-year term at 25 and $10 at 30. The $100,000 figures are approximate; small policies cost more per thousand dollars than large ones, so the real figure may land a few dollars above the arithmetic. Tobacco use costs two to two and a half times more, and the standard class typically 40 to 50 percent more than preferred. Our guide to term life insurance cost explains each input.
The no-exam path. A healthy 25-year-old applying for $100,000 to $250,000 is the simplest case we see. Policies up to $300,000 with clean health answers go through our simplified-issue path: a short set of health questions, no medical exam, and an instant or same-day decision in most cases. Larger amounts or a health history go to an underwriter who reviews prescription and driving records, which takes one to two weeks; our guide to whether you need a medical exam covers who gets one.
What to have ready. The latest statement for each private loan (lender, balance, remaining term); the promissory note or the lender's written answer about death and cosigner release; the cosigner's full legal name and date of birth for the beneficiary form; and the borrower's height, weight, medications and doctor's name. Decide the amount and term first, then see the estimated price. The quote shows approval odds and the expected decision time before anyone applies, and for a simplified case the decision usually comes the same day.
See what Nectar Term would cost you
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Frequently asked questions
Are student loans forgiven if you die?
Federal student loans are discharged when the borrower dies, and a Parent PLUS loan is discharged if either the parent or the student dies. Private loans depend on the lender and the promissory note; some are forgiven, and many are collected from the estate and the cosigner.
Is a cosigner responsible for student loans if the borrower dies?
For a private loan, often yes. Federal law requires lenders to release the cosigner when the student borrower dies for loans signed after November 2018; for older loans the note controls, and many do not release the cosigner. Ask the lender in writing.
Can I get life insurance just to cover my student loans?
Yes. A term policy of $100,000 or $250,000 on the borrower, with the cosigner as beneficiary, covers a private balance for an estimated $5 to $14 a month at 25. Nectar Term starts at $100,000, and a healthy applicant usually needs no medical exam.
Who should be the beneficiary of life insurance for student loans?
The cosigner, named directly. They hold the risk, so they get the money and decide whether the loan still needs paying. Avoid naming the lender, which gets paid regardless, or the estate, which routes the money through probate and every creditor.
How much is a $100,000 life insurance policy for a 25-year-old?
An estimated $5 a month for a 10-year term and about $6 for a 20-year term for a healthy man in the preferred class, with the final price set during underwriting. Women pay about 18 percent less, and small policies can land a few dollars above these figures.
Nectar Term policies are issued by Nectar's partner insurers, each rated A or better by A.M. Best, and serviced by Nectar. Prices in this article are estimates calibrated to published 2026 averages and are not an offer of coverage. Final rates are set during underwriting.
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