Wade Eyerly wants to sell insurance. Not to you, for you.
He wants you to have an insurance policy that guarantees the money you’ll make after college. And he wants colleges to pay for it.
Eyerly is co-founder of EIC, Education Insurance Corporation and the company’s plan is pretty simple. They want colleges and universities to pay premiums on an insurance product that will guarantee the income of a graduate. If a graduate earns less than an expected baseline, the policy pays the student the difference.
That’s smart in at least four ways.
Most importantly, the idea of private insurance guaranteeing a salary after college underscores that getting a college degree is not much of a gamble at all.
Despite what some people will tell you, going to college, getting through college, is a win. It’s a win financially, socially, personally – in nearly any way you can imagine. On average and in almost every case, even if someone graduates with loans or in debt, college pays off. The fact is, college pays off so much, so predictably, that now a private company is willing to bet on it.
“Higher education works,” Eyerly said. “Which is why we can do this.”
Eyerly’s plans make sense too for college recruiting. Where a student is choosing between two local schools, for example, one that guarantees a post-graduation income could really set itself apart. Swallowing a set premium per student to buy those policies may pay dividends in finding, enticing students to enroll.
Another reason schools may want to insure the salaries of their graduates is the boost such a policy could provide in retention, keeping students in school, on a path to graduation. That’s where Eyerly is putting his money.
“The whole idea we have was built to improve the graduation rates, which are abysmal,” Eyerly said. “When people start college, they tend to come in with optimism,” he said, “but then they see some hardships, their debt going up, the future uncertain, they struggle and fall behind and start feeling miserable,” Eyerly said. “Then they wonder if college is something they can justify if they think they are going to wind up a bartender anyway.”
“When mom got sick, and you have to go home, we can’t fix that.” But Eyerly is betting that, when general college challenges set in, if there’s a guarantee to gutting it out, a few more students may. “Can we help save two to 12 percent? Can we help four or nine in a hundred stay in school? We think maybe we can,” he said.
If he can, that would be a big deal.
Insuring graduate income feels like good business too. Since the policies only pay out on graduates, the company stands to profit when a student drops out. That’s unseemly but probably profitable, as dropouts are inevitable. On the other hand, it puts the company squarely on the side of getting graduates to earn more once they do. At the same time, the company will need to demonstrate some boost in retention to justify its benefit to schools, which they may be able to do. Which, again, would be significant.
With the speculated benefits to schools and students, the main question is whether schools can afford it or whether the costs of these new policies would simply be baked in, passed along in rising student costs. Neither feels like a good deal.
But Eyerly is betting any costs will trade out to the benefit of schools. “The value of lost tuition walking about the door due to dropping out is significant,” he said. “We think on average, it pays for itself in three years, in the black in four years.” That does not even count any advantage in recruiting, attracting new students who may be wooed by the salary guarantee. A better return in either area could be significant for a school’s bottom line, especially in this era of enrollment stagnation.
The company is closest to being able to offer their coverage in Illinois and Utah – they have to seek approval state by state. “Both have been really great about welcoming us,” Eyerly said, and he said they are “very close” to getting the green light.
It would be a shame to see the more exploitive, frequently for-profit, online “schools” use a product like EIC as a recruiting tool when their graduation rates and outcomes are roundly horrific. But if EIC can avoid those entanglements, and if it’s approved, it could be a big deal in higher education.
The biggest deal may be repeating the certainty of a degree’s benefits, assuming it’s earned from a public school or an actual non-profit one. That’s a message that cannot be repeated often enough. It’s refreshing and encouraging to see private interests in agreement and offering such an innovative solution to some of higher education’s more complex problems.