Americans are being crushed under student loan debt. College graduates who succeed in getting a good job may be able to keep up with their monthly payments, but what happens when an injury or illness prevents them from earning a paycheck? A disability insurance policy with a student loan rider could help them keep their heads above water if they’re unable to work due to illness or injury.
Student Loan Debt Has Reached Record Highs
Experian says that student loan debt reached a record high of $1.57 trillion in 2020. Individual balances increased 9%, reaching a record high of $38,792.
The pandemic appears to be at least partially to blame. Many people have been out of work. Unable to make student loan payments, they’ve turned to forbearance or deferral. Experian says that the amount of student loan debt that is not in repayment surged by 114% in 2020. The lack of repayment has caused the total debt to increase.
In this case, people are unable to pay back their loans because of COVID-related closures, but an individual could find themselves in a similar situation after an injury or illness. Student loan debt is notoriously hard to discharge during bankruptcy, and many people don’t qualify for student loan forgiveness programs. As a result, debt can balloon out of control when borrowers can’t make payments.
How Does the Student Loan Rider Work?
The student loan rider is designed to help disability insurance policyholders with any student loan debt. If the policyholder has a qualifying claim, the student loan rider will kick in to provide an additional monthly benefit to go toward student loan payments.
Imagine a woman who can’t work after an injury. Thankfully, she qualifies for benefits through her disability insurance policy, but the benefits only replace 60% of her previous income. It’s better than nothing, but it means her finances are extremely tight. To make matters worse, she has medical bills that aren’t fully covered by her health insurance. She also has large student loan bills that are due every month. She might be able to qualify for a deferment or forbearance, but she doesn’t want the debt hanging over her head. With a student loan rider, from The Standard or Ameritas, she’ll have one less thing to worry about.
Student loan riders are available with a 10-year or 15-year term for occupation classes 5A, 5P, 4A, 4P, 4S, 3A, 3P and 3D. The amount of the benefit is tied to the both the occupation class and the amount of the loan payment.
Who Needs the Student Loan Rider?
According to EducationData.org, the average medical school graduate has $241,600 in student loan debt. This includes medical school debt as well as pre-medical school debt.
Doctors and other medical professionals have a tremendous amount of student loan debt, so they are excellent candidates for the student loan rider. However, anyone with student loan debt may be interested in this option.
Talk to Your Clients
Brookings says that 42 million Americans have student loan debt. That’s about one in eight Americans. Younger workers and recent college graduates are especially likely to carry student loan debt.
The odds are high that many of your clients have significant student loan debt. Ask them how they would manage their student loan payments if they were unable to work because of an illness or injury. Most likely, they won’t have a good plan. This is your opportunity to suggest a disability insurance policy with a student loan rider.
Contact the DIS sales team to learn more.