Bankruptcy Resources Student Loan • Author Mark Martella, Esq • Oct 02, 2015
AS A BANKRUPTCY attorney, one of the most frustrating things for me is helping people get rid of their unsecured debt to get a fresh start, but still having them saddled with a huge student loan debt of $25,000, $50,000 or even $100,000.
Unless you are destitute and have no ability to earn a living, it is almost impossible to discharge student loan debt.
Because this situation is so exasperating, to me, it was of great interest that I read an article by Jeff Carman of Carman Financial Strategies entitled “A Guaranteed Way to fund the Grandkid’s College.” After the reading the article, I sat down to interview Jeff to get more of the details.
His concept is really quite simple. With college tuition exceeding $50,000 a year in many institutions, it is easier to climb Mt. Everest than to save for a child’s college tuition, especially if the parents are paying off their own loans, while also paying a mortgage as well.
Jeff’s concept is to insure the lives of the grandparents and, upon their passing, use the tax free proceeds to pay off student loans. Either the grandparents can purchase the policy or even the parents can purchase the policy insuring the grandparents.
Upon the passing of the grandparents, the beneficiaries could be the parents of the kids or the grandkids themselves. If the grandparents want to exercise control to make sure the funds are used for college, the beneficiary can be a trust with the trust setting out the terms of how the funds must be used and how they can be used or not used should the kids not go to college.
This sounded too good to be true to me so I asked Jeff what the cost is and I was surprised to hear how reasonable it is. For example, to get a $100,000 life insurance policy on a 71 year old female would be about $250 a month and a male of the same age about $300.
If you were to get a second to die policy, meaning you insure two lives (and they don’t even have to be related) the premium is reduced to almost half that of a 71 year old male or about $150 a month. Even if both parties lived 15 years, that’s only a $27,000 investment resulting in a $100,000 return.
Next, if you compare the payment to having to pay back $100,000 over 10 years even at no interest, the payment is $833 a month!
Obviously this takes some planning and good family relationships. But under the right circumstances, this can be a great way to payoff student debt. While the ridiculous cost of a college education is the subject of another article, if you have any questions about these types of policies, please call Jeff Carman at 941-889-9094 to get your answers.
If you would like assistance setting up a trust or creating a Family Protection Plan™ of estate planning documents to insure that you and your loved ones are taken care of, I will be happy to assist you. Simply give me a call at 941-206-3700 to schedule a complimentary consultation.
Contact a Bankruptcy Attorney
If you have a situation as we described in this article and have questions or concerns, please don’t hesitate to contact us to answer your bankruptcy legal questions.
Martella Bankruptcy Firm
18501 Murdock Circle, Suite 304
Port Charlotte, FL 33948
5237 Summerlin Commons, Suite 411
Fort Myers, FL 33907