Students 'should buy life insurance in future'

12 February 2010 11:55:20

Life insurance could protect student loan repayments.

A policy think-tank has suggested that students should take out life insurance in the future to ensure their loan payments are covered in the event of their death.

Policy Exchange has published a series of recommendations designed to ensure Britain retains its position as a global leader in higher education.

The think-tank predicts the government's student loan debt will reach £55bn by 2018 and suggested that the wealthiest households should be removed from the public student loans scheme, instead accessing a regulated private loan scheme to ease the pressure on the public purse.

Its report also highlights the need to protect against graduates defaulting on their loan repayments, such as in the event of disability or death.

One possible solution would be to "require students to take out life insurance to minimise the impact of death or incapacity from severe illness or accident", the think-tank said.

"This would protect banks (and those who contribute to a subsidised reserve fund) and reduce the rate of repayment."

Policy Exchange also suggested that students' parents could guarantee the value of young people's loans against major assets, such as property.

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