Pay Dirt

My Mother-in-Law Has More Than $100,000 in Student Debt

And she just revealed an alarming plan for what to do about it.

Woman in her 60s sitting behind a computer and smiling
Photo illustration by Slate. Photo by Getty Images Plus and Spoon Graphics.

Pay Dirt is Slate’s money advice column. Have a question? Send it to Athena and Elizabeth here. (It’s anonymous!)

Dear Pay Dirt,

My mother-in-law is in her late 60s and has well more than $100,000 in student loan debt that she has no plan to pay back. In fact, she’s told my husband and me repeatedly that her plan is to go to school until she drops dead to avoid repaying! She has two master’s degrees and is now applying for a Ph.D. program in a social science field where, even if she got a pay raise, she’d have no hope of making enough to pay her loans. I would (obviously) rather she at least considers paying her loans, but I also think student loans are predatory at best, so it’s not a battle I’m willing to have with her—unless we’ll be on the hook for her bad behavior after her death.

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My husband and I together make half of what she does, and we’re barely getting by month to month. Taking on $100,000-plus of debt would be catastrophic. I’d always assumed student loans were discharged on death, but I’m worried that she’s taking on some from lenders that aren’t the government and that we might be on the hook here. We’ve never cosigned anything for her, if that’s relevant. Is this something I need to worry about, and if it is, how can I have this conversation, despite my own reluctance?

—Not the Inheritance I’m Looking For

Dear Inheritance,

So, the short answer about inheriting your mother student loans is that you can or can’t be left with the debt—it’s just dependent on who the provider is. Death is an emotional roller coaster on top of a paperwork nightmare, and banks don’t make it easier, so let’s get started.

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Federal student loans taken out by a borrower are dischargeable upon the borrower’s death, so you won’t be on the hook for any of her federal loans. Private student loans are a different story. Some private lenders will allow discharge of remaining student loan balances if a borrower should pass away. Others will choose to go after that person’s estate upon their death, leading the account to be settled in court during a probate hearing. Depending on the size of the estate and what assets are left, the debt could still be forgiven, since it cannot be left to anyone else to pay, even if they are the borrower’s next of kin.

So you don’t need to have a conversation with her about her student loans. But make sure your husband understands the ramifications you will be dealing with if he is left in charge of her estate. At least then he can have a list of borrowers and be aware of who may be coming to call when it’s time.

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Dear Pay Dirt,

I’m an early 30s academic with a decently paid job (about $60,000 a year) and an intention to stay in my relatively underpaid field going forward. A couple years ago, I was in an awful car accident, which I thankfully survived with only minor but permanent damage. The lawsuits following this accident were lengthy and finally got resolved about a year ago. I had good lawyers, and even after paying them their share of the settlement, I was left with a healthy compensation in the mid–six figures. I used some of this to reduce my outstanding debts and invested the rest in several mutual funds of varying degrees of risk-tolerance.

However, I don’t really know what I’m doing financially. I had a phone call with my parents’ financial planner, who advised me to pay down some of that debt and invest most of the rest. He also offered to manage my portfolios, at a relatively low rate for such a thing (less than 1 percent). But I don’t know if that’s necessary. I have a small enough set of numbers that it feels like overkill to pay someone to watch it all the time. I have vacillated over visiting a fee-only planner. At what level does it make sense to have someone manage my money versus do it myself with some occasional input from a fee-only professional?

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—I Made My Money the Old-Fashioned Way (I Got Run Over by a Lexus)

Dear Run Over by a Lexus,

You said you did have some minor but permanent damage to your body. That could be no big deal today but get worse over time, especially to the point where you may no longer be able to work. For that reason, as well as having funds in the mid–six figures, I think you should hire a certified financial planner.

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It’s generous that your parents’ CFP offered to manage your portfolio, but even if you were to choose to go with another one, it’s usually worth it with that level of savings. When you have a good, active planner, they are in the business to make money with your money, which cancels out any fees you would have to pay them. This is otherwise known as an adviser alpha. I would go with this strategy for at least a year. You can always opt to stop using a planner if you do not see the return on investment and can go back to seeing a fee-based adviser when the situation calls for it.

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Dear Pay Dirt,

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I have a good friend whose husband died five years ago from cancer. My friend had been a stay-at-home mom but soon reentered the workforce as a teacher. She seems to have enough money to continue to live comfortably.

But I recently learned that she is still using her deceased husband’s credit card. I guess she didn’t have one in her own name but was an authorized user on his account. She does all the banking online and pays the bill each month. While I did persuade her to open a card in her name, she still insists on using her husband’s card, because it has accumulated a lot of miles and other benefits. I am concerned about her, especially since I recently read that Gabby Petito’s fiancé was just charged with bank fraud for using someone else’s debit card. How much trouble could my friend get into for using her husband’s card? How likely do you think it is that she would get caught?

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—Worried

Dear Worried,

You are right to be worried, because using a deceased person’s credit card, even if you are an authorized user, is illegal. She needs to stop right now and seek legal help for how she can best close these accounts, now that he’s been deceased for over five years and she has kept using the card. Since she is not a joint account holder, and instead an authorized user, this is considered fraud. She can even be taken to court and sued. Encourage her to stop and find a lawyer who can help her clean up the mess.

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Dear Pay Dirt,

I graduated from grad school with a ton of debt and in the middle of the Great Recession. I felt like an idiot for having taken out so many loans. It’s taken many years, but I’m finally debt-free.  One of my close friends, “Kim,” was in a similar situation. One way Kim and I got out of debt were side hustles. We both realized too late that some of our ideas and jobs would have been great in college and could have significantly decreased the amount of loan money we needed, but our parents told us that school needed to be our main focus and taking on loans was more than worth it.

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I recently saw Kim’s preteen daughter for the first time in about a year. Her daughter now takes every opportunity she can to make money. I made a comment about school, and she just brushed it off like school isn’t important. I feel like she’s so focused on making money that she’s no longer being a kid anymore. I think there is great value in school and great value in understanding the value of money, but I don’t want my children’s childhoods ruined by the idea that they have to know how to make money right away. How do I walk the line between instilling the value of money and entrepreneurship and making my children think that making all the money they can is the most important thing in life? I would never give up my college education, but I would also have liked to know how to make money before I started.

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—Want to Keep My Kids From Becoming Little Money Monsters

Dear Little Money Monsters,

Kim’s daughter may have brushed off your comment about school being important because she may not be interested in attending college. There are a few ways to have a great career without going to school (the military and trade schools, for example), so she may already have an idea of what her path does or doesn’t include.

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If you would like to start instilling the value of money in your children without pushing them into the capitalism deep end, you could go about it in a few different ways. First, help them set a money goal. This can be a variety of different things when you’re a kid, but common ones include purchasing an electronic device or a shopping trip at a popular store. You can share with your child different examples of how they can hit their money goal, which can include earning money with chores or by taking on a side hustle.

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You can also sign up for an app like Greenlight. Greenlight allows you to teach your child different money management strategies that include spending, investing, saving, and allowance. When children see their parents model positive money habits, they are more likely to follow by example. So whatever you do, just remind yourself that your kids are different than Kim’s, and it’s going to be your footsteps that they follow in. Good luck, Mom—you got this.

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—Athena

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My husband is a stay-at-home dad to our 1-year old daughter. I appreciate all he does, and I feel lucky he takes equality in our marriage seriously. But his unemployment has put a strain on us financially, and I’m consumed with jealousy that he gets to stay home. He quit his job because he was suffering from depression. I had hoped—and expected—that he would find a new job before he quit. He made more money than I do, so it cut our income by a little more than half. Our priority is his mental health, but it’s been 10 months and he’s not suffering any more. Our savings have run out and my paycheck only covers bills, so we can’t afford fun stuff or emergencies.

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