Everyone knows the strain paying for college can put on the family finances. But few people realize what can happen to the dream of a college education if the primary wage earner dies without making any provision for future costs.
To gauge the magnitude of this problem, The Life and Health Insurance Foundation for Education conducted a study in which researchers asked parents with life insurance of at least five times their annual income about the likely effects of the primary wage earner’s death on children’s plans for college. Twenty-one percent said their children would have to take out additional loans, while just 5 percent said their children would be unable to afford college. The study also indicated that because these parents had life insurance, they felt confident that their children could achieve their dream of a college education with or without the chief wage earner in the picture. However, when the researchers asked the same question of parents with no life insurance, 65 percent answered that their children would have to take out additional loans, and 34 percent felt that their children wouldn’t be able to afford college.
What’s the Research
KRC Research was surveyed in September 2006. The researchers used a random national telephone survey of 541 Americans with children under 18. They asked participants to consider how likely it would be for their children to attend college, their financial ability to cover the costs, and the impact the death of the primary wage earner would have on their child’s college plans. Here are most results:
- 94 percent of parents say it is definite or likely that their children will go to college
- 77 percent of parents expect to be wholly or primarily responsible for financing their children’s education
- 14 percent of parents say their family is well prepared to pay for their child’s college education
- 44 percent are doing okay but need to continue saving steadily
- 22 percent are behind in saving
- 18 percent are unprepared
Among adults with children under 18 at home, 68 percent say they have life insurance, 13 percent have none, and 19 percent did not respond. In addition, 42 percent say they have life insurance coverage worth four times their annual income or less, 21 percent have a range worth five times or more, and 5 percent were unsure of their life insurance coverage.