Why It Matters
  • Death doesn’t always eliminate student debt – something cosigners on private lender loans should keep in mind.
  • The parents of Lisa Mason say that as cosigners of her private student loans, they had trouble paying off her $100,000 balance after she died at 27. After four years, that doubled.
  • The Masons’ story might nudge clients to prepare for the worst and consider term life insurance to help pay back debts.

As the price tag soars for attending college, Generation X or Baby Boomer clients may be feeling pressure to boost their contributions to kids’ or grandkids’ education.

You’re probably already reminding clients to carefully review their financial standing before taking a costly loan or withdrawal from their retirement savings to pay for Junior’s degree. Before your clients cosign Junior’s student loans, the life and legacy planning company Everplans has one more reminder for them: Be careful because some student loans can outlive the student.

Cautionary tale on student loans

Everplans tells the story of Lisa Mason, a mother of three who died at age 27 with $100,000 in student loans outstanding. Her parents say they had cosigned the loans but struggled to pay them off after her death as they became legal guardians to their three grandchildren, and after four years, the debt doubled to $200,000.

With any luck, your clients will live long, prosperous lives without falling into the same situation. However this real-life example could help you talk to clients who are considering cosigning a student’s loans to make sure they fully understand the risks.

It could also be a good time to ask clients who have cosigned a private lender loan for a student if the student would like to consider term life insurance to help repay debts if the worst happens.

You can demonstrate your value to clients by heading off financial situations before they become financial disasters.


Things to Consider:
  • You can help families understand the risks and benefits of taking out student loans or being cosigners.
  • Remind clients that life insurance could help them repay debts if something should happen to the borrower.
  • If your firm is OK with it, you may want to share Everplans’ article, Your Family Still Might Have to Cover Your Tuition Costs If You Die, with clients.

This article is provided by Everplans – a life and legacy planning company dedicated to transforming the way people get their families organized. Everplans Professional is used by advisors across the country who want to take multigenerational planning to the next level. For more information, visit: everplans.com/professional 

Neither Transamerica nor its agents or representatives may provide tax, investment, or legal advice. Anyone to whom this material is promoted, marketed, or recommended should consult with and rely on their own independent tax and legal advisors and financial professional regarding their particular situation and the concepts presented herein.

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