Student loans and estate planning

[greenmint]

My husband and I are in our early 30's, and we've recently been doing a lot of thinking about estate planning and such - we have a 1 year old, we want to make sure that he is provided for. My husband has some very significant student loan debt - about $220,000, the bulk of it in private student loans. We've been encouraged by a life insurance agent to take out a policy that, should something happen to my husband, I am left with enough money to pay off his loans. I'm not a co-signer on any of these loans - his mother is, but we intent to pursue getting her name off of them, as we have been solely paying them for years at this point. I'm just wondering if anyone knows - if my husband were to pass away at a young age, still owing a large chunk of these loans, would I be liable for them in any way? I'm particularly thinking about it from a real estate prospective, as we are hoping to purchase our first home in the next year. 

[SCF]

It seems like how a death discharge works with private student loans varies from lender to lender.  I would carefully read over the terms of your loan to determine what would happen if your husband or his mother should pass away.  Some private loans default automatically if the co-signer passes away (it sounds ridiculous, but someone posted on these forums not too long go about a situation like this), so you'll want to know if that is the case for your loan - that way you have all the information you need to plan your next moves.

[greenmint]

Yeah, I'm aware of that awful, awful thing with death and co-signers - thats one of the reasons that we want to get his Mom's name off the loans. But what I'm really wondering about is this: if he dies still owing tons, and we have a house, or other investments, will they take the house and anything else they can get their hands on, as it would be part of his estate? I'm not really sure how all this works, and thinking about it is terribly morbid, but I'm trying to figure out if carrying an extra $250,000 worth of life insurance on him, to cover those loans should something happen, is a good idea. 

[SCF]

It depends on the terms of the loan and whether you live in a community property state.  Some private loans are discharged on the death of the borrowers, others are not - and what, if any, parts of the estate the lender may be able to access if the loans are not discharged (and whether you would have any responsibility for them as his spouse), is going to be based on state law.  I would read through your loan papers and then check state law.