— College is an expensive challenge and many parents must share the expense with their child. Choosing a major is more important now than ever. If a college graduate goes into a career that has an annual income that is less than the total amount of their student loan, the loan will be an extreme burden on their life for years. A $45,000 income job with a $50,000 student loan is a big problem. Paying back a $50,000 loan at 6% over ten years is about $600 per month. The Institute for College Access & Success provides a comprehensive state-by-state list of college students’ average debt. The average public college debt per student in Texas is $26,250 (TICAS, 2014). The TICAS website does not list many of the private college’s average student debt, and that is probably because private colleges are so expensive. U.S. News & World Report list private colleges with the highest per student debt close to or above $50,000 at graduation (Snider, 2015 Feb. 17).
Disability and life insurance are crucial for parents and college graduates that are responsible for loans. If parents have taken on or co-signed student loan debt, it is important to consider increasing their insurance. A two-parent family, going into retirement with one or more student’s loan debt can be a burden in the event of the death or disability of a spouse. If the new college graduate has taken on student loan debt, it is important for them to consider the burden it could place on their family in the event of their death. It is difficult for a 20-some-year-old to worry about life insurance. None-the-less, life insurance is cheap at that age. What should be more of a concern is not being able to work. Being disabled and not being able to pay student loan payments is a higher possibility than dying (SSA, 2011). A college graduate in their 20’s has a 1-in-4 chance of being disabled (SSA, Pub. 05-10570). Permanent disability is possible; however consider that having two broken legs from a snowboarding accident is a disability too. Not just any disability insurance will suffice for a college graduate trying to protect their income. The definition of disability is essential. Disability insurance that will pay if the graduate cannot perform the substantial duties of the job that they have the education and training to perform is critical. A disability insurance policy with the same definition of disability as Social Security would not be a wise choice (SSA, Pub. 64-030). Click below to
Snider, S. (2015, February 17). 10 colleges that leave graduates with the most student loan debt. U.S. News & World Report. Retrieved from http://www.usnews.com/education/best-colleges/the-short-list-college/articles/2015/02/17/10-colleges-that-leave-graduates-with-the-most-student-loan-debt
Social Security Administration. (2011). Actuarial life table. Retrieved from https://www.ssa.gov/oact/STATS/table4c6.html
Social Security Administration. (2015). The facts about social security’s disability program (05-10570). Retrieved from https://www.socialsecurity.gov/disabilityfacts/materials/pdf/factsheet.pdf
Social Security Administration. (2015). 2015 red book (64-030). Retrieved from https://www.ssa.gov/redbook/documents/TheRedBook2015.pdf
The Institute For College Access and Success. (2014). State by state data. Retrieved from http://ticas.org/posd/map-state-data-2015#