Sometimes your mind wanders. Sometimes you have legitimate concerns… 

Student loans can create a ton of anxiety and worry if you let them. This is definitely a situation where the more you know, the more comfortable you will become. 

These questions are asked regularly, so that tells us many many veterinarians have similar ones. 

What happens to my student loans if I die before they are paid (or I reach forgiveness)?

If borrowers’ student loans are in the federal student loan system and they die, their student loans are forgiven, tax-free. This means there is one less thing to worry about. A couple of things to unpack here. 1) This is another reason to keep your student loans in the federal system and not use private consolidation or refinance. Once a borrower uses private refinance or consolidation, then the new lender will likely require repayment if they die. This means your estate or family will have to pay the balance of the student loans. This is a big problem for a family that is grieving. 

So, don’t refinance or consolidate unless you’re 100% sure it's the right decision for you. And if you do, buy life insurance that will cover the balance of your loans.

What happens if a divorce occurs? 

This is sad to talk about, but let’s be honest, divorce happens. Since federal student loans are in the personal name of the borrower, they are not shared during a divorce. They are attributable to the student borrower. This is a huge deal here that has affected many veterinarians. Their spouse lives off of their student loans during their vet school. They borrow the maximum amount and share living expenses. Later they divorce, but…the veterinarian is stuck with paying the student loans because they are the borrower. It’s a very unfair and very sad situation, but it illustrates that student loans are personal to the borrower, regardless of how the funds are used. 

What happens if a veterinarian becomes disabled? 

This one depends very much on the nature of the disability, but under severe disability, federal student loans will likely be forgiven. Under a temporary disability, it’s likely the federal servicer will put the loans into forbearance. As you know, this is not desirable, it’s better to use an income-driven repayment plan to have the time with low-income count toward debt forgiveness. 

This is another plug to keep your student loans in the federal system, in case of a tragic disability. 

What happens to student loans in bankruptcy? 

This is a remarkably common question. Bankruptcy is advertised as a “fresh start” and a way to wipe the debt clean. But it is extremely rare that student loans are discharged or forgiven in bankruptcy. The borrower has to prove “extreme hardship” and the number of cases where that’s worked nationwide is in the single digits. So, don’t count on bankruptcy as an easy way out of your student loans. Secondly, bankruptcy is very hard on your credit and can make borrowing much more difficult. 

These common questions are nothing to be afraid of and the answers may surprise you as relatively helpful to borrowers. 

So, don’t let a fear of the unknown stop you, keep moving forward!