If you have PRIVATE LOANS. READ THIS!

[LoanGrl]

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Members don't see this ad.

In light of the somber anniversary of this date, and the tragic loss of a KCOM student this week, this is a subject that is extremely important.

If you have PRIVATE LOANS, we strongly recommend that you take out a life insurance policy. If the worst should happen, and you die or become totally and permanently disabled, your Stafford (Federal) loans will be forgiven.

Not so with private loans.
Your estate and/or your co-borrowers will remain responsible for that debt.

While I am no expert on life insurance, I do know that term life insurance policies can be purchased for something like $15 per month. If you have a co-borrower, make them your beneficiary. This is especially important if you have a family. Don't leave your loved ones a mountain of debt to remember you by.

Please examine your personal situation and have a plan.

 

[DW]

wow, thats awful 🙁

 

[edmadison]

This is the normal situation for loans. If you don't pay them your estate becomes liable. If you don't have any assets then the debts die with you. In other words, when you die, the executor of your estate adds all the pluses and minuses. If you net positive, your heirs get the dough. If you net negative, the debts die with you. Of course then there won't be any money to bury you....

The exception to this is if there are cosigners. In that case, they can be held responsible. If you are worried about this, think about regular term life insuance. For young folks it costs almost nothing. DO NOT get "credit life insurance", this is a massive rip-off.

Ed

 

[LoanGrl]

To say that "your debts die with you" is a misleading statement. I am not a lawyer (and I don't play one on TV) so I couldn't answer whether or not your immediate heirs are responsible if you are a single person. If you are married, your spouse inherits your private loan debt. If you have a co-borrower, they are DEFINITELY responsible for your debt.

 

[Yosh]

That was a good point that you guys rasised!!!

Thanks for the heads up!!!


Good Work!!!

 

[edmadison]

Originally posted by LoanGrl
To say that "your debts die with you" is a misleading statement. I am not a lawyer (and I don't play one on TV) so I couldn't answer whether or not your immediate heirs are responsible if you are a single person. If you are married, your spouse inherits your private loan debt. If you have a co-borrower, they are DEFINITELY responsible for your debt.

Sorry, but this is not true. You spouse is not responsible for you debts if you die, if he or she was not a cosigner. Both assets and liabilities (debts) can be held as individuals or jointly between the couple. Many of the assets that you own you may own together and they (or half of them, actually) are part of the estate and thus, theoretically, they could come after half of your car, your sofa, your dog.

Ed

 

[gwyn779]

I know the AAFP has term life insurance for students for ~ $30/yr. Totally reasonable anyway.

 

[LoanGrl]

I am not talking about consumer debt or mortgages or anything else. I am talking about STUDENT LOANS. Student loans do not go away.
Private loan lenders have differnet rules and regulations.

The point I'm making is this:
1. Examine your personal situation.
2. If you have private loans, check with your lender to find out what happens in YOUR situation.
3. Protect your loved ones.

Knowledge is power.

 

[msl2007]

About the debt going to your spouse. It depends if you are in a joint property state (like WI) or not (like SC.)
When I marry, all my debts will be my husbands, adn his mine. I will automatically own half his car (and its debt). In fact, I can use his income for my FAFSA and am required to know about adn let him know about my new credit lines for student loans.

So in this way, even though he is not an official cosigner, he becomes one.

So I agree with LoanGrl- check out your personal situation and decide.

And for Life Insurance, check what you are allowed to die of. We are most liekly to die of accidents/ inury, then suicide, then homicide. So make sure you know what is covered!

And in terms of having money to be buried- it is free to donate your body to med schools. Since we take advantage, let's give back! (If you can't give your organs.)

msl