Why It Isn’t As Bad As It Sounds

When most people hear the phrase “die with debt”, they picture something out of a financial horror story.But for some student loan borrowers, particularly those later in life, this strategy can make more sense than draining retirement accounts or cutting back on essentials just to hit a zero balance.It can be uncomfortable to talk about mortality alongside money.But being honest about both can lead to smart financial decisions.

Let’s unpack what the die with debt student loan strategy is, how it works and why it’s not always as bad as it sounds.Start with the numbers: Life expectancy vs.student loan repayment The first step in evaluating this unconventional student loan strategy isn’t looking at your loan servicer’s website.Instead, start by pulling up the Social Security Administration (SSA) actuarial life table.

This chart tells you how many years, on average, people your age are expected to live.Here’s a condensed version based on the most recent life expectancy data: AgeMale (Remaining Years)Female (Remaining Years)4037.6741.864533.3237.255029.0532.735524.9428.346021.0824.126517.4820.127014.0916.277510.9212.68808.119.49855.756.76 Source: SSA, 2022, as used in the 2025 Trustees Report If you’re in your mid-60s with student loans, a 20- or 25-year year income-driven repayment (IDR) plan already outlasts your average life expectancy.In which case, you may never finish paying off your student loans before they’re forgiven due to death.That realization alone can shift the way you think about your student loan debt.

Many older borrowers panic and drain their retirement accounts in the name of being debt-free, only to discover that they’ve shortchanged themselves later.Others reduce their lifestyle to bare-bones living, leaving no room for freedom and flexibility in the final decades of life.By dedicating every dollar to paying off student loans, there may be nothing left to cover rising healthcare or long-term care costs, such as a nursing home stay, assisted living or in-home assistance with daily living activities.And since Medicare doesn’t cover long-term care, these borrowers are often left relying on their children to pick up the slack financially — a burden they were trying to avoid in the first place.

Some borrowers even go so far as to cash out investments or sell property they once planned to pass down.In trying to eliminate student loan debt, they also eliminate the very inheritance they hoped to leave.Why the die with debt strategy isn’t just giving up This student loan strategy isn’t about throwing up your hands and ignoring your loans.It’s about making intentional, informed choices when the math and your priorities are in alignment.

Here are some of the top arguments for considering this strategy: Federal student loans are forgiven at death.Unlike a mortgage or car loan, your children or heirs won’t be saddled with the balance.Federal student loans are discharged tax-free when the borrower dies (after a family member or other representative provides acceptable documentation for proof of death).However, if you have private student loans, check your loan agreement or your lender’s policy documents to determine how your remaining student debt will be handled at death.

You can free up resources.Instead of funneling every spare dollar into debt, you can save for long-term healthcare costs, direct funds toward retirement or preserve assets you want to pass down.It may reduce your financial stress.When you know your loans won’t follow you (or your family) forever, it’s easier to focus on living well today.

Keep in mind that rules around repayment, taxes and loan forgiveness can change.Therefore, this strategy still requires careful monitoring and adjustments when necessary.Several planning strategies can make the die with debt strategy more manageable, especially if you’re trying to stretch out payments or minimize them.1.

“Forever forbearance” might work for some borrowers Federal student loan borrowers previously could lean on repeated forbearance requests to postpone payments almost indefinitely.But President Trump’s One Big Beautiful Bill made some major changes to this approach.The bill states that forbearance is limited to nine months in a 24-month period for borrowers who receive a loan on or after July 1, 2027.So, if you take out new loans after that timeframe, you won’t be able to use forbearance as a long-term solution.

However, if your loans are all pre-2027, you might be able to use extended forbearance to your advantage and avoid payments for as long as eligible.2.Filing as “married filing separately” (MFS) when on an IDR plan If you’re a married borrower, how you file taxes plays a major role in calculating your IDR payment.Depending on the plan, filing MFS allows you to exclude your spouse’s income, giving you lower monthly payments.

However, married filing separately can potentially increase Medicare premiums if you’re a high-earning household.It also usually means a higher tax bill as you’ll lose access to certain tax credits and deductions.But in some cases, the reduction in student loan payment more than makes up for it.Use our Married Filing Separately Tax Calculator to see how MFS could impact your taxes and student loan payments.

3.Using the Extended Graduated Plan to your advantage If you don’t qualify for income-based repayment, the Extended Graduated Plan can give you some breathing room.Payments start lower and gradually increase every two years over a 25-year period.The key is to consolidate after several years to reset the clock and re-enter the extended plan again with a new payment schedule.

That way you can stretch out lower payments for as long as possible.When the die with debt strategy makes sense The die with debt student loan strategy isn’t necessarily an attractive option on its own, but for older borrowers it can be the more realistic path when taking a holistic approach to financial planning.It tends to work best if: Your repayment terms outlast your life expectancy.It’s a safer bet if you’re in your 70s or 80s, but more of a gamble if you’re in your 60s.

You want to preserve cash for retirement living expenses or long-term care costs.Leaving an inheritance matters more than leaving behind a student loan-free legacy.You’re comfortable navigating tax and repayment rules (or working with an expert who can).This strategy isn’t ideal if you’re younger, have high income with decades of earning potential left or simply can’t stomach the idea of carrying debt into your later years.

Case study: 70-year-old borrower with $100,000 in student debt To illustrate, let’s compare how two different approaches to student loan repayment in your golden years might play out.Imagine you’re a 70-year-old borrower with $100,000 in federal student loans at a 6% interest rate.If you go with the Standard Repayment Plan, you’ll need to come up with roughly $1,110 per month for the next 10 years.By the time the balance is gone, you’ll have paid around $133,000 in total (assuming you live to age 80 and never miss a payment).

For someone living primarily on Social Security and modest retirement savings, that kind of payment could consume a significant chunk of income, leaving little room for everyday expenses or unexpected medical costs.Now compare that to enrolling in an income-driven repayment plan.Based on retirement income of about $80,000 per year, your monthly payments could drop to $402 on the Pay As You Earn (PAYE) plan or Income-Based Repayment (IBR) plan, which are both based on 10% of discretionary income.This amount could be even less, potentially as low as $0, if you file taxes as married filing separately.

Over that same 10-year window, you’d pay only about $55,000 in total.If you lived to 85 and made payments for 15 years, your lifetime repayment would still be closer to $89,800 — about  one-third less than what you’d pay on the Standard Repayment Plan.And if you passed away before reaching the end of your repayment term, the remaining balance would be discharged tax-free.Bottom line: you could spend your later years with an extra $700 or so in your pocket each month to cover housing, food, healthcare, travel or other adventures instead of throwing it all at your student debt.

This strategy isn’t about gaming the system.It’s about recognizing that preserving your quality of life is more valuable than burning every dollar in the last phase of your life to eliminate a debt that doesn’t get passed on anyway.The emotional side of dying with debt Let’s not ignore the elephant in the room.It might feel weird, even irresponsible, to plan to die with debt.

But remember, this isn’t credit card debt at 29% interest.It’s federal student loan debt, which automatically includes forgiveness at death.It’s a completely legal strategy within the rules of the system.If your choice is between draining your retirement accounts to pay off loans — or worse, relying on your children to shoulder the cost of your care — versus maintaining a comfortable standard of living while letting the loans die with you, the latter may be the more beneficial option for both you and your family.

Dying with debt isn’t as bad as it sounds The die with debt student loan strategy isn’t for everyone.But for older borrowers in their 70s and 80s (and others with shorter life expectancies), it can be a smart, intentional plan that balances student loans against life expectancy and legacy goals.Instead of letting fear dictate your decisions, look at the numbers and weigh the trade-offs.Choose the path that gives you the best chance at financial peace during your lifetime… because that’s the whole point of living.

Want help running the numbers and deciding if this strategy is right for you? Schedule a consultation today and let one of our student loan experts map out your best options.