Is this worth pursuing?

Parent Cafe
41

@gabbymom First, let me say I am so sorry for your loss.

But I am so glad to hear of this outcomes for whatever small comfort it may bring. Good job!

You might be interested in this series of articles from 2016 about similar situations with the NJ student loan program. I’m linking them in date order.
https://www.nytimes.com/2016/07/04/nyregion/in-new-jersey-student-loan-program-even-death-may-not-bring-a-reprieve.html

https://www.nytimes.com/2016/07/15/opinion/bearing-the-burden-of-student-loans.html

https://www.nytimes.com/2016/08/09/nyregion/legislators-take-aim-at-new-jersey-student-loan-programs-tough-tactics.html

https://www.nytimes.com/2016/10/21/nyregion/new-jersey-lawmakers-vote-to-forgive-deceased-students-loans.html

https://www.propublica.org/article/new-jersey-lawmakers-vote-to-forgive-dead-students-loans

https://www.propublica.org/article/new-jersey-will-no-longer-collect-loans-from-families-of-dead-students

42

So glad you were able to get them to discharge the loan. Small consolation for your huge loss, but a ray of sunshine one a cloudy day.

43

OP:

First of all my sincere condolences. I can’t imagine the pain of losing a child!

I’m very pleased (and surprised) you were able to get this loan discharged. PLEASE CONSULT A TAX ACCOUNTANT ASAP!!! This $ amount discharged I am 99% sure will be added to your 2020 income for tax purposes and you will be under withheld and get a nasty tax bill this time next year along with possible IRS penalties. People that had mortgages discharged or partially discharged in the last decade found this out the hard way. No way around it I’m afraid.

Second, for parents that are reading this thread that have taken out private loans or are thinking about it PLEASE take out term life insurance on your child in the amount of the private loan total you expect. It’s not expensive and you are financially protected in case of the worst. The OPs experience of getting the private loan discharged is NOT the norm and should not be expected. The lender is under no obligation to do so. The private loan is the parent’s and is their responsibility just like any other unsecured loan.

Again, OP my condolences!

44

Again, I’m so very sorry about your son. My heart hurts about this. Hugs to you and my very best wishes.

I give you a lot of credit for being able to pursue this matter and am happy it was resolved. Do check and see if it will result in a taxable event because as mentioned above, it could cause a larger than expected tax bill.

I wish you well.

45

Was about to post almost the same thing to the letter.

OP, well done.

46

Thank you everyone, for all the replies . It strengthens me to know you all are on my side. Thanks for the articles, @brantly, they are very interesting. I have been looking into possible tax implications, and from what I have read, there are exclusions from tax implications for discharges of loans due to death. I will be checking with my accountant, but hopefully this is true.