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Augustana College to be the first in the United States to test income insurance for graduates

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Augustana College, a small liberal arts college in Rock Island, Ill., Will be the first college in the United States to test the concept of diploma – or income – insurance for its graduates. Augustana officials announced the pilot program on Tuesday.

The college has formed a partnership with Degree Insurance through which it will provide post-graduation income guarantee to the first 20 new transfer students who apply and are admitted between July 15 and August 23, and register for the fall 2021. The 20 students covered by the agreement will have the average annual income for their academic field guaranteed for the first five years after graduating from Augustana.

Augustana, with a total enrollment of 2,500 students, averages around 40 transfer students per year, so attracting 20 more transfers would increase that number by 50%.

The program is a pilot test of Degree Insurance’s unique insurance product, American Dream Insurance (ADI), which a college or university can purchase for an entire class of undergraduate students. The insurance guarantees graduates of this institution that they will receive a given annual salary for five years after graduation.

The guaranteed salary is actuarially calculated and depends on the majors of the students and the college they attend. As an example, suppose an Augustana psychology student expects to earn $ 50,000 per year, while an Augustana business graduate might expect an average annual salary of $ 60,000. . For graduates who earn less than the guarantee in the first five years after graduation, the insurance makes a payment that covers the difference between what they actually did (verified by W2 and federal income tax returns). ) and the guaranteed amount.

If the psychology graduate only earns $ 45,000 per year, she would receive the cumulative five-year difference in the form of a lump sum payment of $ 25,000 after five years. If the business graduate only earns $ 52,000 per year, they would be owed a variance payment of $ 40,000 after five years.

To remain eligible for the Income Guarantee, participating students must work in the United States after graduating from Augustana. If the graduate decides to attend college or vocational school, volunteers for something like a church mission, or participates in a program such as Teach for America, coverage is discontinued during those years. Once a graduate accepts their first job in the appropriate field, coverage goes into effect.

In the Augustana experience, Degree Insurance will cover all payments that must be made in order for the program to be offered free of charge to neither students nor Augustana.

It is a good deal for both entities. Degree Insurance has the opportunity to promote and test its new product. Augustana needs to assess whether a subsequent investment in income insurance could help increase her enrollment and net tuition income.

“This is yet another great reason transfer students are considering enrolling at Augustana in the fall of 2021,” Vice President of External Relations Kent Barnds said in the college announcement. “If the graduate does not earn the expected salary for his major, the difference will be paid by the insurance program.

“Augustana and Degree Insurance are teaming up because we know that students who enrolled as new students at other institutions last fall may not have had the experience they dreamed of for them- same, ”added Barnds. “This may be the extra incentive they need to pursue an Augustana education.”

Wade Eyerly, Founder and CEO of Degree Insurance, told me, “We couldn’t be more excited to partner with Augustana College on this pilot project. It is a university that prides itself on curiosity and innovation. For the first time, we are seeing a university backing its product – and guaranteeing students that they will see a return on their education investment. This is a whole new direction for higher education, and Augustana is stepping out to lead the way. “

The Income Guarantee experience is the latest example of Augustana creating unique opportunities for her students, a feature that has earned her recognition by US News as one of the most innovative colleges in the country for 2021. Another example, since 2009, the college offers Augie Choice, which allows each student to apply for a scholarship of up to $ 2,000 for study abroad , research or an internship. Over the past decade, an average of approximately 550 students per year from all majors have received a total of $ 9 million in Augie Choice funding to pursue international studies, conduct supervised research, or explore a career.

It is a program that has been emulated by other colleges and universities. We will now see if income insurance is another innovation taking hold on the higher education scene.