You are correct that federal student loans are not dischargeable in bankruptcy absent a showing of hardship, which is very difficult standard to meet.
However, I know of no law that binds the borrower's children unless they actually co-sign the loan (assuming they are of age to do so). Can you cite a source for that proposition?
I don’t have the source. I have read it here from other Freepers whose children have been caught up in loans. One her daughter is dying, they took her house, but the mom states that this is the case. Another is a Freeper whose mom got a loan when he was 17. His mom dies many years ago. This year the IRS took his refund to pay for his mom’s loan.
Apparently, death does not discharge the obligation.
If you find it, it would be good to have. But I find it hard to think more than one person here would just dream this stuff up.