I’m married with a young child at home and will soon be making student loan repayments.
If I were to get hit by a bus tomorrow and die, would my wife be saddled with my student loan debts? I think the answer is no, but…
What if I have assets that are 100% in my name? Will the government liquidate those assets to the extent that they pay towards my debt?
In other words, would the property I own go first to my heirs, or first to repay the student loans, like they would a normal creditor?
If you mean student loans such as Stafford and Perkins loans, your answer of “no” is correct. There are only two ways out of most loan repayment, either full-body paralysis or death.
Depends upon the type of loan. As stated above, certain types of Federal student loans contain provisions that forgive the indebtedness upon death. You should review they documentation of your student loan.
What? You didn’t keep your loan agreement and documentation?
If it is a private student loan, like from a bank or other lending institution, it likely does not contain a forgiveness upon death provision, unless you negotiated that in. In that case the debt is still part of your estate upon your death, and is subject to repayment from assets within your estate, which in most cases, sense you are married, would be 50% of what you and your wife own together.
These are factors that should be considered in the amount of life insurance you should consider purchasing for yourself.
I forgot to add. One exception would be a PLUS loan. If only one parent signed for the loan and either that parent or the child/student dies, there’s no repayment. However, if both parents co-signed, repayment continues until the death of the surviving parent or student/child.