Heading off to college could be a start on a road that leads to substantial college loan debt.
It's June, and there’s another crop of high school graduates getting ready to head off to college in the fall. It’s an exciting time for them ... and for their parents! It’s a new beginning and a start on a bright future. It’s also a start on a road that could lead to substantial college loan debt because of the increasing costs of the college education. It's likely their college education could cost $100,000 or more over the four- (or five- or six-) year period the student will be attending college. Much of that cost will be paid through student loans.
A recent article from the Pew Research center stated that nearly one in five U.S. households owed money on student loans. Among households headed by someone younger than 35, a record 40% had student-loan debt outstanding. The average student loan balance outstanding for the college graduating class of 2016 was $37,172, according to a report from MakeLemonade.com, but 10% of student debtors owed more than $61,894. Students leaving college upon graduation today have the highest debt level they've ever had.
As a parent of a newly minted high school graduate heading into this college loan wilderness, it has to give you pause. And with more and more college loans coming from non-governmental sources, that means that parents, as co-signers, might be on the hook for paying off those loans if something unforeseen happens to that college student.
Purchasing an inexpensive term life insurance policy on your college student can serve two purposes. First, it’s an inexpensive way to start your college student out with insurance coverage upon which to build his or her future financial plan. Second, the policy can protect you, as the parent, in case something unexpected does happen to your child and you are left to pay off the college loans. Be sure to buy enough insurance to cover the full expected cost of college. And it’s not expensive, either. An 18-year-old male in excellent health can buy $100,000 of 10-Year Term life insurance for less than $11.00 per month. An 18-year-old female can get the same coverage for less than $9.00 per month.
Talk with a professional insurance agent today to help you get a better grasp on how much coverage you actually need for your college student’s expected student loan debt and how to best fit it into your budget.