What to do when a MOHELA account holder dies

Both. A Direct PLUS Loan, including a Parent PLUS Loan, is discharged on the death of the parent borrower and also on the death of the student on whose behalf it was borrowed (34 CFR 685.212(a)). MOHELA's Death Discharge page says the same in its opening line — the loan may be eligible for discharge when "a borrower or the dependent student of a PLUS Loan" dies. In practice this is the single most missed benefit on this account: a surviving parent who keeps paying a Parent PLUS Loan for years after the child it was borrowed for has died is paying a debt that federal rule says should be discharged. Proof of death for the student supports the discharge; submit the student's death certificate the same way you would the borrower's.

A copy of the death certificate, and MOHELA states plainly that a clear photocopy is acceptable — unlike most banks and insurers it does not require a certified original. If a death certificate cannot be obtained, MOHELA accepts alternative documentation showing the decedent's name and date of birth: verification from an official of a county clerk's office stating the decedent is deceased but that a death certificate could not readily be provided, a letter from a clergyman or funeral director on official letterhead, or an announcement of the death from a local newspaper. The limit that trips people up: MOHELA allows those substitutes only "for borrowers with federally-owned loans (Direct Loans)." If the loan is a Federal Family Education Loan (FFEL) Program loan or a MOHELA CASHLoan, expect to produce the death certificate itself.

There is no death-discharge form. Send the proof of death by fax to 1-866-222-7060 (636-787-4038 from outside the U.S.), upload it after logging in at mohela.studentaid.gov using "Upload Documents," or mail it to MOHELA, 633 Spirit Drive, Chesterfield, MO 63005. Do not mail it to the payment address — MOHELA states that documents sent to the payment PO Box are not processed there. MOHELA identifies uploading as the fastest channel. Payments made after the confirmed date of death are returned to the estate before the remaining balance is discharged, so an executor who kept the autopay running out of the estate account recovers that money. Note that FFEL Program loans and CASHLoans are serviced on a different line (1-800-945-4701) and a different fax (1-888-212-5912) from the Direct Loan side (1-888-866-4352).

Not federally. A student loan discharged on account of death is excluded from gross income under IRC 108(f)(5), and MOHELA states that discharges due to death have not been counted as income by the Internal Revenue Service since January 1, 2018. This is the exclusion that survived: the broader 2021-2025 exclusion covering OTHER kinds of student loan discharge lapsed after 2025, while the death-and-disability exclusion is permanent. One compliance detail from IRS Publication 4681 applies to any loan discharged after December 31, 2025 — the return must carry a Social Security number that is valid for employment and was issued before the due date of the return. State tax is a separate question: MOHELA notes the discharged amount may be considered income for state tax purposes, and the state tax authority determines that. Consult a licensed tax professional about the decedent's final return and any state filing.