March 21, 2013
By Jennifer De Paul
When my parents first announced at Thanksgiving that they were taking out a life insurance policy on me, I was taken aback and slightly offended. In fact, I thought it was a cruel joke.
Why would they need to do such a thing? I’m only 27. The mere thought of it was grim.
But they did have a reason: my student loan debt. Since they co-signed with me for the loans, they’d be left with the debt if I ever—god forbid—died.
I asked several friends whether they’d heard of such a preposterous idea, and one friend told me his parents, too, took out life insurance on him immediately following his college graduation.
This is apparently becoming a trend—a disturbing one
An increasing number of parents are taking out life insurance policies on their college graduates in an effort to avoid being left tens of thousands of dollars in debt if their child dies and can’t repay the loans, The Financial Times reports. With unemployment above seven percent and many baby boomers having already tapped their retirement savings just to weather the difficult economic times, the last burden a grieving parent needs is a loan company hounding them to make payments.
We all know student loan debt is nearing bubble-bursting levels and ready to swallow students and parents. In 2012, outstanding student loan debt exceeded a breathtaking $1 trillion, surpassing other types of debt including credit cards and car loans to become the second largest source of consumer debt behind home mortgages.
Read more: here
Well, it contributes to the GDP…