Yes, under federal law, when the student loan borrower dies, the debt dies with him. The Department of Education will issue an administrative discharge of the loan. In addition, if you took out Parent PLUS loans to aid in paying for that education, those debts are discharged as well!
If a parent dies, on the other hand, survived by the student, then just the Parent PLUS loans are discharged, as long as there is no surviving parent cosigner on the notes. In effect, all loans die with the student, while only Parent PLUS loans die with the signing parents.
Bear in mind, though, that you must apply to the Department of Education for the discharge; it does not happen automatically. Find out more!
If you live in southern New Jersey and have lost a child or parent owing student loans, I may be able to be of assistance. Please feel free to call my office at 856-432-4113 or contact me through this site to schedule an appointment in my Woodbury office to discuss your case.
If you would like more information about student loans, you can download my free book, I Graduated; Now What? A Guide to Dealing with Your Student Loans.