If you die with outstanding federal student loans, it seems like the student loans will die with you. My understanding is based on the following quoted text:
Federal student loans will be discharged upon the borrower's death. The following link has pertinent info on this: studentaid.ed.gov/students/publications/repaying_loans/2003_2004/english/loan-discharge-cancellation.htm For more information about discharge, contact the Direct Loan Servicing Center by calling 1-800-848-0979 if you have a Direct Loan. If you have a FFEL, contact the lender or agency that holds your loan WikiAnswers - If you have outstanding student loans and die is the estate charged for the student loans. wiki.answers.com/Q/If_you_have_outstanding_student_loans_and_die_is_the_estate_charged_for_the_student_loans (accessed May 13, 2010).
So it really looks like if you die while you still have unpaid student loans, then the loans aren't going to be a burden on your family. The unpaid part of the loan just vanishes when a person dies, it seems.
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