Do College Graduates Pay Less for Car Insurance?

Last Updated on May 12, 2020

You worked hard to graduate from college. But do you really pay less for car insurance as a college graduate?

Statistics show that college graduates are safer to insure than people who did not graduate from college. For that reason, college graduates tend to pay lower rates for car insurance than others.

However, most insurers do not offer a direct discount to college graduates; instead, they check other risk factors, then charge college graduates lower rates based on these risk factors.

Yes, Your Education Level Affects Auto Insurance Rates

To determine insurance premiums, insurers check your age, driving history, and credit score, among other factors. Some insurance companies also check your highest attained level of education.

Insurance is all about risk and statistics. After checking millions of driver profiles, insurers have determined that people with higher education tend to be less risky to insure than people with lower education.

Someone with a bachelor’s degree, for example, is less likely to make a claim than someone who never graduated high school. Someone with a Ph.D. will typically pay less for car insurance than someone with a twelfth-grade education.

Insurers have also found that risk decreases with further education. The more education you get, the less likely you will make a claim.

How Big is the Discount for College Graduates?

Education-related car insurance discounts vary based on your level of education. With each new level of education you attain, you will pay lower and lower rates on car insurance.

How much can you save? Studies have shown that high school dropouts will pay approximately 20% more for car insurance than someone with a doctorate.

Getting any type of post-secondary education, meanwhile, will save you $200 to $400 per year on car insurance compared to a high school graduate.

The price difference is particularly significant with the first level of higher education attained (i.e. a bachelor’s degree). Someone with a bachelor’s degree may pay 10% less for car insurance than someone with just a high school degree.

The difference is less significant when moving to the highest levels of education. Someone with a Ph.D., for example, may only pay 2% less for car insurance than someone with a master’s degree.

In other words, you might immediately notice the college graduate discount after getting your first degree, but the discounts will be less significant with each additional level of education attained.

Nevertheless, rates continue dropping with more education. With almost all insurance companies, you will pay less for car insurance with each additional degree.

Take Advantage of Alumni Discounts

As a college graduate, you may pay lower rates for car insurance just because you graduated from college. Many college graduates also take advantage of alumni discounts to unlock even more savings.

As an alumnus, you may qualify for certain additional insurance discounts. Certain alumni groups qualify for group discounts of 5% to 10%. Check with your school’s alumni group to see if discounted insurance options are available.

Take Advantage of Professional Association Discounts After College

If you received higher education for a specific career, then you may qualify for further auto insurance discounts.

Nurses, doctors, and other professionals, for example, may qualify for first responder or emergency personnel discounts.

Or, you may be a member of a union or other professional group, in which case you can access specific group-related discounts.

Take Advantage of Student and Good Grade Discounts During College

If you are still in school or recently left school, then you may qualify for good grade discounts. Insurance companies often offer good grade discounts to drivers with an average of B+ or higher.

If you are a high school or college student with good grades, then you may be able to save 5% to 10% on car insurance. So don’t throw away that report card!

Why College Graduates Pay Less for Car Insurance

Why do insurance companies provide discounts to drivers with a higher education? Why are college grads entitled to lower insurance rates?

Generally, educated people tend to take fewer risks – even if they’re not better drivers. Statistics show that they engage in fewer high-risk behaviors like drinking and driving, speeding, or disobeying other traffic laws.

Many college graduates will pay lower rates for car insurance indirectly. College graduates tend to make more money, for example, which makes it more likely that they’ll have a solid financial status, a good job, a good credit score, their own home, and other factors that insurance companies like to see. All of these factors can lead to significant discounts from the insurer.

There are plenty of exceptions to this rule, and many college graduates are horrible drivers. However, insurance is about statistics, and statistics show that drivers with higher levels of education are less risky to insure than drivers without higher levels of education.

Some States Block Insurers from Awarding Discounts to College Graduates

Many of America’s largest insurance companies offer discounts to college graduates. However, it’s not a universal discount offered by all insurance companies.

Some have argued that it’s discriminatory to give discounts based on education. That’s why four states have banned insurance companies from using education level to determine car insurance rates, including:

• California
• Hawaii
• Georgia
• Massachusetts

Three of these states (California, Hawaii, and Massachusetts) also block insurers from using credit scores to calculate insurance premiums. These laws prevent insurance companies from directly discriminating against drivers based on their wealth or education level.

So, Do College Graduates Pay Lower Auto Insurance Rates?

Yes, college graduates should pay lower rates for car insurance. A college graduate can expect to pay 5% to 15% less for car insurance than someone with just a high school education.

Insurance premiums continue dropping with additional education. You may save 2% to 5% on car insurance by completing a master’s degree or doctorate, for example.

These discounts may not be specifically linked to your college degree. College graduates tend to make more money, take fewer risks, and have a better financial status than non-graduates. All of these factors can lower the cost of car insurance.

Statistics show that drivers with a higher education are less risky to insure. Take advantage of college graduate insurance discounts by shopping around for car insurance today.