Death isn't something students usually think about. They're younger. They're healthier. They're statistically less likely to die.
But for students financing their education with loans, death could mean passing on the burden of debt to their families.
Though all federal loans, such as Perkins and Stafford Loans, are discharged in the event of a student's death, repayment of private loans falls on the loan's cosigner - often the student's family.
When a student applies for a private loan with a cosigner, most loan contracts include a clause requiring the borrower's cosigner to assume all debts in the event of the student's death. For students with these loans, life insurance is something that could free cosigners of that burden.
But it is an option few students with private loans pursue and one that life insurance companies rarely advertise.
"It costs a lot to go to college now," said Jim Turner, a State Farm agent who sells life insurance in Evanston. "But if the student passes away, banks are definitely going to try and recoup their money from somewhere. They are going to make a valiant effort to get their money back."
For these students, Turner said a life insurance policy is something they should consider.
"As a student, you're taking on that debt, and for the most part, if something happens to you, someone is going to have to pay," he said.
"You're owning up to the responsibility that, 'If something happens to me, I know my family is not going to be responsible for paying off this debt of mine.'"
Sallie Mae, whose Web site claims to be the nation's leading provider of student loans, requires repayment in the event of a student's death.
"The loan contract clearly states that the loan is not dischargeable if the student dies, and this is one of the reasons that Sallie Mae always encourages families to use private loans as a last resort after exhausting other financing options," said Sallie Mae spokeswoman Patricia Nash Christel in an e-mail.
2008 Woodie Awards
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Life insurance
posted 9/12/08 @ 1:18 PM CST
This is a little bit too dramatic, don't you think? I don't even want to think further about this because I am afraid I am going to come up with a terrible conclusion. (Continued…)
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