ABA Journal, Son’s Death Leaves Mom with Big Tax Bill on Forgiven Student Loan Debt:

If a student loan borrower is unable to repay the money because he or
she dies, that's the end of the story, not only for the lender but the
Internal Revenue Service, too.

If the borrower is the parent of the deceased student, however,
that's a different story. And Regina Friend can tell it from personal
experience, the Baltimore Sun reports.

After the suicide last year of her son, who was a student at Temple
University, both his student loans and the $55,400 she took out in
ParentPlus debt were forgiven. But Friend was shocked this year to find
out that the IRS expects her to pay a $14,000 tax bill because the
forgiven debt is counted as personal income. …

The U.S. Department of Education reported that it canceled $2.7 billion in student loans in 2011 when borrowers died, became disabled or went bankrupt. While Regina Friend's situation might not be unusual, it is impossible to tell from the data how many other parents are facing similar tax bills.

Forbes: There's No Escape: Death, Taxes And Student Loans, by Robert W. Wood.