Sometimes college students need parents to co-sign the student loans. Although it’s unfair, if the student dies, the parents could be on the hook for the college education. An inexpensive life insurance policy protects against that risk.
Forbes reminds us that if you co-sign a loan, you’re on the hook even if the student dies. If you’re married, your spouse could be responsible. It totally sucks, but it’s still the law if you have private student loans. You can get different kinds of life insurance, but term life insurance is the cheapest. Get enough to pay off the amount of the loan. After college, you can decide to switch to whole life insurance or cancel the policy.
If the loans don’t have a co-signer, then the debt goes against the estate upon death. Typically that isn’t a problem for most students—they’re taking out a loan because they don’t have the money to pay for college. If a student has assets that could pay the debt, they might be sold off to pay the loan. Some federal student loans are discharged when the student dies. The risk only applies to cosigned private loans.
Photo by DonkeyHotey.