Sallie Mae Health Insurance

Is Widow on Hook for Student Loan?

Dear Dr. Don,

If I were to die, would my wife be responsible for my college loans, and what could Sallie Mae do to help her out?

-- David Debts

Dear David,

I hope this letter finds you well. You're smart to think through the potential claims on your estate if you die, even if you're in perfect health. That way, you can plan for your family's economic future. Along those lines, you and your wife also should have valid wills, and review the beneficiary designations on your retirement and other accounts.

I asked Patricia Nash Christel, spokeswoman for Sallie Mae, about your question. She told me Sallie Mae's private education loan program, called the Smart Option Student Loan, launched in March 2009. It provides automatic loan forgiveness to the borrower and co-signer (if there is one) if a primary borrower dies or becomes permanently disabled. I expect your loans aren't that recent and wouldn't have this protection.

For non-Smart Option private loan programs, the student loan obligation would be part of the probate process and a claim on your estate. If the loan was co-signed, Sallie Mae would work with the co-signer to assess his or her ability to repay or modify the loan terms, if necessary. If your wife is a co-signer on your Sallie Mae student loans, she may need this provision to stay current on the monthly payments if you die.

In contrast, for federally guaranteed student loans, the government guarantee of the loan also provides for loan cancellation in the case of death of the borrower. If a student loan customer dies, the outstanding balance is forgiven, and the estate is not expected to repay the loan.

A term life insurance policy could be just the ticket to pair off against your older Sallie Mae student loan. I'd rather see you in this product than for you to use a credit insurance policy. The premium would be based on your age and health, and it could be very affordable.

Sallie Mae to Offer Tuition Insurance and Student Health Insurance ...

“Before today, investing your money in the education of yourself or your children was a choice that had to be made outright, without little insurance or security provided that would cover student loans and other necessary expenditures of college students. On July 11, 2011, the nations leading insurance company that focuses on education, Sallie Mae, announced an entirely new insurance portfolio that will help families protect the investments they make in higher education. Entitled Sallie Mae Insurance Services, this new insurance company that will be focused entirely on providing insurance for college students in America.

“”Since its founding nearly 40 years ago, Sallie Mae has helped more than 31 million people pursue their education dreams,”" said president and chief operating officer of Sallie Mae, Jack Remondi. “”These new insurance products will help students and families protect their investment in higher education.”"

In partnership and conjunction with Next Generation Insurance LLC, Sallie Mae Insurance Services plans to be the first insurance agency to truly provide complete protection for the investments that are included in paying for a college education. The Next Generation Insurance Group, in cooperation with Sallie Mae, will be licensed in all 50 states and will provide personalized insurance portfolios to the 23 million students who act as customers to Sallie Mae.

The already popular Upromise program currently offered by Sallie Mae has helped to raise $600 million towards college payments for students, and the company manages or services a whopping $238 billion in education loans and $37 billion in college savings plans. The amount that Sallie Mae already administers in collegiate insurance services is huge, and placing these new insurance portfolios on the market will only increase those numbers, making this new business move quite a hot topic for the investor crowd.

Some of the changes that Sallie Mae has put into action today includes direct tuition insurance packages to American college students, student health insurance, and renters insurance to protect the monthly expenses on living. Sallie Mae will also be offering complete offers that will provide all of the above mentioned services, as well as identify theft protection and other insurance policies designed to protect all types of investments made into greater education.

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