Insurance Rates on Federally Subsidized Loans Set to Double July 1st

Insurance rates on federally subsidized student loans are set to double on July 1st. The current rate is set at 3.4% and the increase would set the rate equal to unsubsidized loans, currently set at 6.8% interest. The hike could be devastating for students who come from low to middle income American families.

The average college student graduates with $25,000 in debt, up from $12,000 only 15 years ago. The amount of students borrowing for college has also increased from ¼ to ¾ of the nation’s undergraduates. In uncertain economic times with state budgets continually being slashed, tuition hikes are widespread across our country. Many universities will have no choice but to increase tuition again for the 2012-2013 academic year, a terrifying fact for those students whose interest rates are also increasing.

“There has never been a better time to purchase life insurance for yourself, or your child. With an uncertain economy that will continue to increase the costs of a college education, consider what your child would do if you weren’t there to support them through school,” says Frank Darras, America’s top insurance lawyer.

One benefit right now, is that life insurance costs have gone down. A healthy 40-year-old nonsmoker can buy $500,000 of life insurance coverage at a set rate for 20 years, for less than $31 a month. This policy will help ensure that your child’s education will not be at risk if something were to happen to you.

“As many parent’s know, it is never too early to start planning for your child’s education. Even if your child hasn’t started elementary school, protecting their future starts now. Remember, the younger your child is when purchase life insurance, the less it will cost you,” says Darras.

While many adults see the need for purchasing life insurance once they have children, many forget about taking out a policy on their children once they acquire a student loan. “If something were to happen to your child and they have taken out a student loan, their debt will most likely become your debt. It is important to take out a policy on your child the minute they accept a loan. The amount will be minimal compared to the cost of interest if you became responsible for the loan,” says Darras.

Think about taking out a life insurance policy that builds cash value when your children are born, on their lives. With modest premiums your child’s life insurance policy can build cash value tax free so when they want to go to college, they can cash in their life insurance policy and use the cash value to fund some or all of their college expenses.

When it comes to the rising costs of a college education, it is never too early to start planning for your child’s future. Make sure they and you, are protected by consulting an experienced insurance lawyer who will guide you in purchasing a secure insurance policy.