If your kids aspire to attend college one day, they’re no doubt focused on maintaining their grades – as they should be. But with the astronomical (and continually rising) costs of a college education, grades really will be the least of their worries over the long term. When they graduate, they will need a high-paying job to repay their burdensome student loans and begin saving for their own financial futures. Let’s explore all of the ways that college debt is going to hinder your children’s financial futures – and what you can do about it.
All the ways college debt is going to hinder your children’s financial future.
- Your kids will be financially handicapped for decades: Before your children ever get their first job, they will be saddled with crushing debt that will eat into their paychecks and long-term savings goals for years, perhaps decades. This debt will stay attached to their credit profile until they pay it off; it cannot even be discharged if they declare bankruptcy.
- Your kids will be stuck with rigid, costly repayment terms: Student loans are frequently not set based on market rates or credit worthiness (after all, most students have never held a full-time job); rather, interest rates are set arbitrarily and will often hover at around 6%. If a student miss a payment after graduation, their credit score will take a hit, whether they’ve been able to secure a good-paying job or not.
- Your kids will delay buying homes and having families: We all want to see our children graduate and find a solid career that makes them happy, so they can buy a home and give us grandchildren. But studies have shown that the more student debt that recent graduates carry, the longer they will postpone buying their first house and having kids. This delay, in turn, affects their ability to save for their own children’s college education – and their own retirement.
- You should be helping them – without risking your own financial security: There is no reason for a college graduate to emerge with any student debt financed through traditional banks. By investing in a whole life insurance policy, you can become your kids’ bank. You can access your policy’s cash value to either pay for their education outright, or give them a loan using repayment terms that are more flexible and less financially burdensome; these are repayment terms that you set.
No one wants to see their children drown in student debt after graduating from college. Your kids’ ability to succeed in life is your legacy, after all, and you want to do everything you can to set them up for success without jeopardizing your own financial security. With a whole life insurance policy, you can eliminate rigid, costly repayment terms on student loans, and not force them to delay important milestones in their own lives as they juggle hefty student loans.
For more information about using a whole life insurance policy to pay for college, visit Paradigm Life’s article about How to Safely Fund Your Kids’ College.
