Dealing with the death of a current or former student can be one of the most emotionally difficult things to deal with as a financial aid professional. When it happens, it's a situation you want to handle with the utmost care and concern, making it as simple and comfortable for the family as possible. Great Lakes is here to help with some reminders on how to handle this situation. You can always count on Great Lakes, as a federal loan servicer, to help you navigate and resolve crucial issues as quickly, tactfully, and seamlessly as possible.
There are four primary steps to take when handling a deceased student's federal loans. While some of these specifics relate to Great Lakes–serviced loans, the basic steps will be similar for all federal loan servicers.
1. Stop Collection Activity
First, you'll want to make sure any collection activity stops. As soon as you receive notice that a student with Great Lakes–serviced loans has died, contact Great Lakes' Support Team representatives to have us put a 60–day Death Notification (DN) hold in place. This suspends all collection activity, such as delinquent borrower letters and phone calls. It also puts the account on a Great Lakes' Death Notifications report and flags it for follow-up action by our Support Team. The DN hold does not stop the number of days delinquent from increasing, but we will apply an administrative forbearance to prevent default if the account is nearing default while we await the death certificate. This type of hold may be placed on a student's Federal Family Education Loan Program (FFELP) and Direct Loans, including Parent PLUS Loans.
2. Confirm the Death
Once we apply the DN hold, our Support Team has 60 days to confirm the student's death by obtaining the death certificate. We reach out to the city, state, or county immediately to receive the death certificate, but sometimes delays occur. You can help by providing the student loan servicer's phone number if you speak with the family. If you can help by submitting a death certificate on the family's behalf, we encourage you to send an original, certified, or photocopied death certificate to any of the following.
Great Lakes Educational Loan Services
Attn: Borrower Services Manager
2401 International Lane
P.O. Box 7860
Madison, WI 53704
Fax: (800) 375-5288
3. Notify Lenders and Guarantors
Once we receive the death certificate, the hold on the deceased student's account changes to a Verified Death Certificate (VDC) hold, and the days delinquent on the account stop increasing. Great Lakes also notifies the deceased student's lender and guarantor of the student's death. It is the lender and guarantor–not the servicer–who are authorized to discharge the loan and who process the necessary paperwork to do so.
4. View and Confirm Loan Discharges
When the loan discharge is confirmed, Great Lakes updates the student's account to reflect the change. You'll be able to see this when you view the student's account on the National Student Loan Database System.
Once the loan discharge is complete, confirmation can be sent to the family upon request.
If Disbursements Were Made After a Student's Death
Any loan disbursements made after the student's recorded date of death must be returned to the U.S. Department of Education via Common Origination and Disbursement (COD). If the refund has not been submitted, Great Lakes will contact you to initiate the refund process.
Once the more sensitive aspects of this situation have been taken care of, you'll also want to think about how the student death will impact the numerator and denominator of your cohort default rate. The best way to do that is to consult the Cohort Default Rate Guide on the Information for Financial Aid Professionals portal.
If you have other questions about what to do when one of your students dies, refer to our recorded SmartTalks™, where you can view the What Happens When a Borrower Dies webinar. Plus, you can always reach out to our Support Team, our Client Services team, or your Great Lakes representative for compassionate support and information you can trust.