Obtaining a college degree is a great accomplishment!
Unfortunately, this accomplishment does not come without a hefty price tag. Student loan debt is a large financial burden to many in the United States. With many Americans having student loan debt, the worry of what happens to this debt if they pass away comes to the minds of many.
The answer to this question varies based on many different situations but having life insurance can make this answer much simpler in many circumstances. National Educational Services is here to help you alleviate your worries and inform you better about life insurance policies.
Role of Cosigners
In terms of private student loans, the co-signer on the loan may be responsible for your student loan debt if you were to pass away. If your specific lender does not provide death forgiveness for student loans, then you can expect whoever cosigned your loan to be responsible for the debt after your passing.
When it comes to federal student loans, things are a little different. If one of your parents cosigned on a federal parent PLUS loan, the student loan debt will be discharged if your or your parent who cosigned passes away. If both of your parents cosigned the loan and one of them passes away, the other living parent will be responsible for the debt if you are still alive as well.
Role of Spouses
If you were to pass away and your spouse is still alive, then they may end up being financially responsible for your student loan debt if your state classifies student loan debt as shared marital property, even if they did not cosign on the loan. Additionally, if you take out a loan while you are married in one of these states, then that loan is considered to be the property of both you and your spouse.
States that have community property laws are listed below:
- New Mexico
Additionally, in Alaska, spouses are given the option to opt into community property, which means you are given the option to decide if your assets are shared.
Life Insurance Policies for Student Loans
Student loan debt is a worry for many Americans, but especially recent grads. Lucky for you, life insurance policies can help reduce some of this concern. Listed below are two types of life insurance policies that can help with student loan debt fears.
Term Life Insurance
Term life insurance provides coverage for a specific amount of time. If you pass away during the time period of your insurance policy, the beneficiaries will receive a payout that is the amount you chose when you purchased the policy. If you do not pass away before the policy expires, your beneficiaries will not receive the payout.
Term life insurance is great for individuals with a smaller budget, since it is typically less expensive.
Whole Life Insurance
The other type of life insurance plan is whole life insurance, which provides coverage throughout your whole life. This plan is more expensive than other life insurance plans, but it provides living benefits, such as potential dividends.
Speak with an Agent at National Educational Services
Do you have questions about life insurance or student loan debt? We are happy to help! Drop us a line below, and we will be in touch with you soon.