Do College Graduates Pay Less for Car Insurance?

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

Today, we’re explaining everything you need to know about how your education level affects car insurance premiums, including whether or not college grads pay less for car insurance.

Do College Graduates Pay Less for Car Insurance?

Yes, Your Education Level Affects Auto Insurance Rates

Insurance companies use hundreds of factors to calculate your insurance premiums. They look at your age, driving history, and credit score, for example. They also look at your level of education.

Generally, drivers who have achieved a higher level of education are less risky to insure than drivers who have not.

That’s why someone with a Ph.D. will typically pay less for car insurance than someone who never graduated high school, all other things being equal.

This discount remains true for all levels of education. Someone with a bachelor’s degree will pay less for car insurance than someone with a high school degree. Someone with a master’s degree will pay less than someone with just a bachelor’s degree.

How Big is the Discount for College Graduates?

Studies have shown that high school dropouts will pay approximately 20% more for car insurance than someone with a doctorate.

A higher education of any type, meanwhile, can save you $300 to $500 per year on car insurance.

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.

Don’t Forget About Alumni Discounts

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.

Student and Good Grade Discounts

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.

Some insurance companies may extend these good grade discounts as you get additional degrees – like a master’s degree or a doctorate. Talk to your insurance company to ensure you’re paying the lowest possible rates on car insurance.

Why Does a College Degree Matter?

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. They may not necessarily be better drivers. However, 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.

Not All Insurers Offer 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.

Shop around today to ensure you’re paying the lowest possible rates on car insurance.

Four States Do Not Allow Education-based Car Insurance Discounts

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:

Final Word on Education Level and Auto Insurance

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 your college graduate insurance discount by shopping around for car insurance today.

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