Guaranteed Income Insurance Upon Graduation

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For most people, college is a very, very good bet — the best thing they can do with their money. The problem is that any individual is not the average.

Wade Eyerly, CEO and Co-Founder at Degree Insurance, joined the Enrollment Growth University podcast to talk about incentivizing prospective students with a guaranteed income promise post-graduation, and the massive enrollment and retention motivation potential in doing so.

What Is Guaranteed-income Insurance?

A college uses guaranteed-income insurance to recruit and retain students.

For 5 years after students graduate, they send Degree Insurance a copy of their tax returns. It’s a third-party document — objective and verifiable. Everyone knows what that return says.

If the student didn’t earn what Degree Insurance promised them they would earn, the company cuts the insured a check.

Could insurance solve the current post-college outcomes equity gap?

If a college degree was a stock on the stock market, it would outperform the market by double and is the most consistent performer in history. But the one thing that determines whether or not your college degree pays off is none of the things you hear about — the school you attend, major you choose, GPA you earn. The thing that determines the value of your degree is the state of the macroeconomy in the year you graduate. For nine out of ten graduates, that’s good news. For one, it’s a disaster. 

The wealthy students who graduate in bad times can hide from the economy in graduate school for a year or two. Pell-eligible kids…well…some never recover. Guaranteed income insurance helps build persistence in these graduates so they can also win in the long term.

How Students Understand Degree Insurance

You don’t buy something at Costco thinking you’re going to take it back, but you shop there because you know you could return it if you needed to. 

Simple process: Buy a TV at Costco and it’s pixelated in one corner? Take it back.

For a car loan, the lender asks what payment you can afford. But not for an education. Student loans are the only debt you borrow where you don’t talk about the payment level. You talk about the total debt.

Students understand Costco and cars. College, on the other hand, doesn’t work that way.

When asked how much their student loan payment would be, 80% of students surveyed said $100 a month regardless of what they borrowed. They’ve never made a payment on anything. They have no cognitive framework for it. They don’t understand non-dischargeable debt. 

And student loans stroke your ego because you’re making a bet on you. It’s toxic.

That’s especially true when a private school offers a 50% scholarship and the price still requires a bigger loan than a state school. That scholarship feels like an investment in you so you take it even though you burden yourself with more debt.

Next Steps for Institutions Considering Guaranteed Income Insurance

Guaranteed-income insurance offers an amazing potential for students, especially those at risk who may graduate into a slack economy. Insuring the degree can also help schools grow enrollment up front and tell a better retention story.

When you could have a billboard on the side of the road that says, “Equal pay for equal study. Where everybody gets the same guarantee,” or, “Come to our institution where business majors are guaranteed $42,000 a year.” That moves the needle on recruiting and retention, and it will matter.

 

This post is based on a podcast interview with Wade Eyerly of Degree Insurance. To hear this episode and many more like it, you can subscribe to Enrollment Growth University.

If you don’t use iTunes, you can listen to every episode here.