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Home > Ask The Get Out of Debt Experts > If I Kill Myself Will Sallie Mae Take My Life Insurance Money to Pay the Student Loans? – Sam

If I Kill Myself Will Sallie Mae Take My Life Insurance Money to Pay the Student Loans? – Sam

“Dear Steve,

Took out student loans at 8.5 % interest rate in middle 90’s to enable me to get Bachelors degree to be a teacher, have been making payments off and on since depending upon if I could afford them or not. Have used up all forbearances, etc…options, and am currently in about month 6 of a year long income sensitive repayment plan.

I owe about 35,000 and currently the 120 monthly payment, NOTHING, is going to the principle. I have no chance to pay this off as long as I am forced to play this game. I cannot ever foresee being able to make monthly payments of 300 to 500 to pay it off; They refuse to negotiate any lower interest rates, they refuse to apply payment amounts that I can afford to the principle, and sadly have the law on their side to hound me to my death.

I have 250,000 life insurance policy that has been in place for 15 years now. I believe my student loans are only in my name, but I’m not totally sure of that – If I kill myself, will sallie mae try to take that money to repay the debt?



Dear Sam,

It is my understanding that Sallie Mae could only look to your estate for repayment if you are the only one responsible for the loans. That’s a big deal and certainly worth carefully checking. I would not make any assumptions you were.

I believe that the life insurance proceeds would go to the designated beneficiary outside the control of any creditor.

Before you consider anything drastic you might want to read The Ultimate Guide to Dealing With Student Loans You Can’t Afford.

I would never be an advocate for suicide over student loans. I’ve heard the same refrain from others as well.

If you find yourself in an unmanageable place when it comes to the student loans you can buy five years or so by considering a chapter 13 bankruptcy. More people are looking to rolling chapter 13 bankruptcies to pay what they can afford now in hopes of Congress or the Consumer Financial Protection Bureau passing new rules regarding allowances for private student loans.

But just because your loans are with Sallie Mae, does not mean they are automatically private loans. If they are subsidized loans they would be eligible for the programs I talk about in my student loan guide.

You can click here to find a local bankruptcy attorney and talk to them for free about your specific situation. Get the facts and then you can make an informed and educated decision if bankruptcy is right for you.

Please post your responses and follow-up messages to me on this in the comments section below.

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About Steve Rhode

Steve Rhode
Steve Rhode is the Get Out of Debt Guy and has been helping good people with bad debt problems since 1994. You can learn more about Steve, here.
  • Guest

    I am choosing to remain anonymous by posting this, but I do want to say that I’m 35 1/2 years, legally autistic, work 6 days a week, 11 hour days, as a pharmacy technician and still can barely even pay my month expenses. I have over $10,000.00 in credit card debt, with all but one of my credit cards currently in collections. I am not, nor have I ever been married, nor have I ever had anyone co-sign on any of my financial arrangements, nor do I have any children or dependents. I do not have any student loan debt, because I made the moral, religious and conscientious decision at age 18 that I simply could not in good conscious ever register for Selective Service, I am a 100% absolute moral, spiritual and religious pacifist, and could never, and will never take up any violent action against another human being, even in self-defense. I worked full-time throughout my entire college career to pay my way through school, but often found myself using credit cards as the only way to keep a roof over my head and food on my table. If I ever get to the place where I am realistically looking at homelessness (which could very well happen), I would much rather commit suicide and end my own life at my own hands than ever declare bankruptcy. My understanding is that legally, since I own much, much less property than my credit card debts (my most valuable possessions are 5+ year old TV’s, and stereo systems), if I were ever to commit suicide, no one could ever legally inherit my debts, and the credit card companies would have to eat them. Personally, I’d much rather deal with credit card shitheads that way than the unimaginable pain, stress and duress of bankruptcy..

  • Gary Hayes

    Good Morning. I have read the responses to the question “will the feds take my life insurance money away from those I love if i kill myself”?. It never ceases to amaze me the insensitivity of some people or the willingness of the truly uninformed to offer opinions. I am currently considering suicide as an option to debt, including massive student loans, as well as a basically miserable failed life. For me I have no estate. I sincerely have nothing more than $35 in quarters, $7 in US currency, less than $100 in two checking accounts and monthly obligations, not including student loans, Taxes (feds and State). Unemployment pays nothing really. enough to subside on for a few months but nothing that will satisfy the debt until I find a job. The US government can do what ever it wants. It does not have to go to court to take your assets. It can throw you in prison if you refuse to pay your taxes. In a sense it can kill you without so much as a blink from the media, corporations or the general public. The US government forgives corporate debt everyday, it doles out money to corporations like it was candy on Easter Sunday. But the American, especially the poor is out of luck. Suicide is an act of anger. My love for my daughters prolongs my decision for I am not angry with them and do not wish to cause them pain. But thoughts of suicide fill my thoughts every day. Our country is lost. Our Nation is controlled by Corporations and Special Interest. Our Senate and Congress is filled with corruption. Our Government is full Hypocrisy. It will not change, It will not get better for the majority of us. In less than a decade the chains that are being placed around our ankles will soon be welded and there will be no escape.

  • Anon

    Note to Guest who left Idiotic comment/ if getting 2nd job was easy do u really think Mr. Goldstein would be considering suicide!!! Have some sense and sensitivity or don’t bother to leave a comment. It sickens me that people who rank up debt in credit cards and other misc items can’t get it charged off with bankruptcy however people who are drilled to get a higher education and end up with jobs that don’t benefit from said education and barely enough money to live can’t get it discharged with bankruptcy. WTF ???!!!! Then people wonder why we hate our government. I’m where U R at Mr. Goldstein but looks like u have someone else who actually needs u to stay alive. Think of how she’ll feel if u left her.

  • Scott Goldstein

    I found this post to be very disturbing – to the author: it is really not THAT bad so as to consider taking your own life. There are options out there for borrowers, such as IBR and ICR plans that take your income into account. There is forebearance, there is a Chapter 13 option, as Steve said. Please seek legal counsel before taking an irreversible step and perhaps other counsel for the emotional pain you are obviously suffering.

    • Steve Rhode

      Debt is just a math problem wrapped in emotion and that can lead us to take drastic and unneeded action. That makes it understandable, not reasonable.

      There are options.

  • Guest

    If you kill yourself life insurance does not pay. So don’t worry about them taking the money because they will not get any.
    Get a second job it is pretty easy.

  • Joan Adolf

    I find this post VERY disturbing. NOTHING is ever worth the loss of a life. I hope the writer is NOT actually thinking about killing themselves.

    • Anon

      Well Ms. Adolf of course he is considering it that’s the point of this website. What is the matter with you people and your insensitivity. That’s as bad as me commenting on how ridiculous you look trying to be sexy in your photo.

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