Holy cow! Have you seen how much it costs to go to college these days? Many college grads are carrying a crippling amount of student loan debt. But what if you die before you’ve paid off your loans? Here’s a way to ensure that your family doesn’t get stuck with your unpaid student debt…Life Insurance.
Are you a recent college grad? Good. Then you know that college ain’t cheap. According to a recent article in Forbes, the cost of a four-year college degree can be as high as $334,000.
For some, student loan debt can be downright crippling. According to StudentLoanHero.com, Americans owe over $1.4 TRILLION in student loan debt. That’s $620 billion more than Americans owe on their credit cards. The average student (Class of 2016) is underwater with $37,172 in college debt, which is up 6 percent from just last year.
How do college grads plan to pay off a debt load that large?
According to a recent Citizens Bank survey, Millennials are so overwhelmed with their student loan debt that they’re dealing with it in a time-honored tradition…they’re ignoring it. In fact, 37 percent didn’t even know the interest rate on their loans. And 15 percent didn’t know how much they even owed. Sadly, more than half of Millennials (59 percent) didn’t know how many years it would take to pay off their loans.
And as far as paying back their loans, some have run into post-scholastic snags. According to a recent article in the Huffington Post , 13.7 percent defaulted on their student loans within 3 years of the repayment process.
Why are people defaulting on their student loans?
There are many factors that might explain this. For one thing, according to this article, wages for recent college graduates working full time has only risen by just 1.6 percent over the past 25 years, adjusted for inflation. A college grad in 1990 carried a student debt load that amounted to 28.6 percent of their annual earnings. In 2015, that number has shot dramatically up to 74.3 percent. According to this same article, a person with a bachelor’s degree could actually have a student debt load that exceeds that worker’s annual salary by the year 2023!
But what if you don’t make it to 2023?
Think about it. What if something unforeseen should happen before you’ve paid off your loan? As a recent CNBC story points out, if you die, but still owe on your student loan, that outstanding unpaid balance is passed onto whoever co-signed your loan. Statistics show that in most cases (87 percent), it is a parent or relative who is the primary student loan co-signer.
Do you really want to leave your loved ones with a huge financial hole to dig out of?
But there is simple and easy way to prevent this scenario…Life Insurance. Yup, that’s right. Life insurance. You can get a Term Life policy for practically peanuts that can cover the balance of your student loan.
How would life insurance work to safeguard my student loan?
Let’s say you’re a healthy 25-year male (preferred plus rate), with a total student loan debt is $40,000. You can get a small Term Life policy (let’s say, $100,000), with a 20-year term for as low as $105 a year. That’s just $9 a month! Some insurers may let you reduce the amount of the policy, should you be able to pay off your loan sooner than you originally thought.
Of course, it would make the most sense to make your co-signer the beneficiary of the policy to prevent any unnecessary legal wrangling over the ownership the life insurance after you’re gone.
For just pennies a day, you can ensure that the person that graciously co-signed your student loan…so you could continue your quest of higher education…is not financially burdened by that benevolent decision down the road.
If you want student loan debt data, on a state-by-state basic, check out this informative map.
For more information on this topic, talk to us at AccuQuote. For over 30 years, we’ve been helping our customers a ton of money on their life insurance. And we can help you too.