Paying for college is tough. And on July 1st, it didn't become any easier. Not only are college tuition prices high, but interest rates on Federal Stafford Loans are on the rise.
For new borrowers, the interest rate on Federal Stafford Loans distributed between July 1, 2014 and June 30, 2015 will increase from 3.86% to 4.66%. For graduate students, the jump is larger; increasing from 5.41% to 6.21%.
What does this mean for families looking for the best way to pay for college? The solution they are looking for may be found in a permanent life insurance policy. Cash accumulations from a permanent life insurance policy are income tax-deferred and the cash value can be accessed tax free. Using these accumulations to pay for college has become an increasingly viable option. They can be used as either a primary or secondary funding vehicle for their child’s education.
When speaking with clients about retirement, don’t leave college planning out of the conversation. Make sure they recognize the ability of a permanent life insurance policy to pay for school. Explain the advantage this has over merely draining their retirement account.