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Good grades can save college students over $800 a year

Fact-checked with HomeInsurance.com

Article Highlights

College is expensive. Students pay an average of $30,500 a year — and that’s just for tuition. Add books, housing and meals, and it gets costly. 

To add insult to injury, students pay steep premiums when they get car insurance while in college. Unfortunately, insurers look at people in their late teens and early twenties in a specific way: as inexperienced and high-risk drivers. Most college graduates will get their diploma with less than a decade of driving experience.

The problem? Since insurance providers see inexperienced drivers as high-risk, to protect themselves against the risk of offering coverage, they charge more. 

We can’t change insurers’ perspectives, but we can help students find ways to get the most affordable insurance possible. In this guide, Coverage deep-dives into one of the best ways to lower auto insurance cost. 

It’s called a good student discount, and it can save hundreds of dollars a year. As Roslyn McKenna, insurance expert and publisher at Finder.com, explains,

“Kids who get good grades tend to be better drivers, according to risk studies. That’s why car insurers want to reward good grades with cheaper car insurance.”

We talked to Pete Ducich, Head of Product Development at Farmers Insurance, and he echoed that.

“At Farmers®, our research has shown that typically, students who perform better in school tend to also be safer drivers with fewer losses,” he says. 

Generally, a grade point average (GPA) of 3.0 or above will earn these savings. 

With this discount, students can keep more money in their pockets at a time when they’re probably managing more expenses than ever before. With the hundreds of dollars in savings, they can get that textbook needed or fill up their gas tank to head home for the holidays. 

$400

On average, a good student discount can save you annually around

So, how much can students save with a good student discount? On average, a good student discount can save around $400 a year. We’ll give you hard numbers so you can take a look. In this study, we analyzed auto insurance premiums for 18-year-old male and female drivers who have their own policies. (These theoretical individuals are driving a 2016 Honda Civic and have $500 deductibles on their auto insurance policy, by the way.) 

Good student discount impact on rates for college students

College and money stress pretty frequently go hand-in-hand. It’s part of the college experience, just like pulling an all-nighter to study for an exam. But students shouldn’t add unnecessary expenses to their budget. And with the money they can save with a good driver discount, they won’t have to. 

The thought here is that good grades directly combat insurers’ perceptions of young drivers. When they see a younger age, it’s assumed the individual is high-risk. But serious students who work hard to earn a 3.0 GPA or better usually prove these assumptions wrong. 

And that means savings. The average auto insurance rate for 18-year-old drivers is $5,335. That means students need to be ready to pay the steep cost of about $445 a month to protect themselves and their car out on the road. 

That’s pretty high since older, experienced drivers are probably paying closer to $1,555 for the year. And it really is an age issue. In states where insurers can evaluate risk based on demographic factors like age (which is most states), younger drivers pay more.

Unfortunately, the only way to get to that $1,555-ish annual premium is to wait. 

But students are not completely stuck with high premiums. They can take steps now to save money, one of which includes earning good grades. With a good student discount, the average 18-year-old driver is going to pay $4,925 a year, or $410 a month. That means keeping a few hundred dollars in their pockets over the course of the year. 

All that said, some states reward good students more than others.

“Good student discounts can vary by state. You may find a lower discount in some states compared to others. Some states also have laws that prohibit discrimination based on certain factors,” McKenna says. 

Average annual premium difference based on discount 

StateWithout discountWith discount% Saved
Alabama$5,157$4,70410%
Alaska$4,808$4,5156%
Arizona$5,340$4,82211%
Arkansas$4,569$4,04213%
California$5,484$5,0788%
Colorado$5,632$5,2028%
Connecticut$6,764$6,02812%
Delaware$6,594$6,0499%
Florida$7,128$6,46010%
Georgia$5,310$4,9218%
Hawaii$1,186$1,1771%
Idaho$3,320$2,94313%
Illinois$4,788$4,21614%
Indiana$3,141$2,83311%
Iowa$2,688$2,4619%
Kansas$4,262$3,8959%
Kentucky$5,340$5,0087%
Louisiana$7,218$6,7138%
Maine$2,668$2,25818%
Maryland$5,669$5,3057%
Massachusetts$4,941$4,5818%
Michigan$7,262$7,0014%
Minnesota$3,866$3,22620%
Mississippi$4,448$4,04410%
Missouri$4,986$4,42213%
Montana$4,159$3,76810%
Nebraska$3,712$3,28813%
Nevada$7,391$6,8867%
New Hampshire$4,811$4,4438%
New Jersey$7,647$7,4103%
New Mexico$4,216$3,8859%
New York$7,978$7,5276%
North Carolina$2,605$2,6060%
North Dakota$4,190$3,77711%
Ohio$3,294$3,0667%
Oklahoma $4,770$4,4537%
Oregon $4,448$4,0969%
Pennsylvania$4,800$4,4757%
Rhode Island$7,954$7,3878%
South Carolina$4,058$3,69910%
South Dakota$4,079$3,60713%
Tennessee$4,099$3,8846%
Texas$5,967$5,37111%
Utah$4,858$4,42610%
Vermont$3,518$3,02516%
Virginia$3,320$3,0389%
Washington$3,756$3,4569%
Washington D.C.$5,613$5,08910%
West Virginia$4,877$4,4589%
Wisconsin$4,364$3,88512%
Wyoming$4,146$3,66513%
National Average$5,335$4,9258%

Quadrant Information Services, 2020

How gender affects auto insurance savings for 18-year-old college students

Sorry, gentlemen. McKenna says,

“Men almost always pay more for car insurance than women because they’re statistically more likely to drive fast, get in accidents or get a DUI. And drivers under the age of 25 tend to pay more for car insurance because they’re less experienced. Combine those factors, and you’ll often find outrageous auto insurance rates for young men.”

But there is a silver lining here. Because men usually top the charts as far as cost-of-coverage goes, they stand to save the most. 

In fact, a good student discount saves males much more than females. In Minnesota, for example, they’ll earn a nearly 20% discount for a solid GPA. 

Students living in North Carolina or Hawaii might be disappointed to look at these state-specific breakdowns. Our Nationwide contact explained that because North Carolina state law mandates how insurance policies are rated, companies are limited in how they determine — and discount — premiums. 

Hawaiians, we have good news. Hawaii state law specifically prohibits insurers from rating drivers based on age or driving experience. While students might not save much for good grades, they’re probably already paying a lot less for coverage than friends in other states. 

Top 5 states where 18-year-old males save the most with a good student discount

StateSavings %Savings $
Florida10.6%$820
Connecticut11.3%$815
Minnesota19.1%$799
Texas11.0%$726
Delaware9.7%$702

Quadrant Information Services, 2020

Top 5 states where 18-year-old males save the least with a good student discount

StateSavings %Savings $
North Carolina0.0%$0
Hawaii1.0%$12
New Jersey1.7%$137
Michigan2.9%$215
Tennessee5.7%$248

Quadrant Information Services, 2020

Top 5 states where 18-year-old females save the most with a good student discount:

StateSavings %Savings $
StateSavings %Savings $
Connecticut10.4%$658
Rhode Island8.8%$657
Florida7.9%$516
Wyoming13.3%$485
Illinois11.1%$485

Quadrant Information Services, 2020

Top 5 states where 18-year-old females save the least with a good student discount:

StateSavings %Savings $
North Carolina0.0%$0
Hawaii0.5%$5
Iowa7.0%$172
Tennessee4.7%$182
Ohio6.4%$197

Quadrant Information Services, 2020

How to earn the good student discount

Students residing in states where a good student discount can save some serious cash are probably wondering how to earn it. Here are the parameters:

  • Students usually need to be between the ages of 16 and 24 or 25 (the exact age range varies by insurer), although our Nationwide contact told us that post-graduate students over the age of 25 might qualify for this discount.
  • They need to be enrolled in school full-time.
  • They generally need a GPA of 3.0 or above or in the top 20% of their class. If homeschooled, scoring in the top 20% on major tests (like the SAT or ACT) may make students eligible for this discount.
  • Proof of good grades, either via a report card, school transcript, honor roll certificate, Dean’s List certificate or an official test score document, is usually required.

Be advised that insurers will probably ask for proof of good marks at each policy renewal. Students should be prepared to submit proof of current good grades in order to maintain their discount. 

Other ways to save while in college

Student status can help save in other areas, too. Apple and Samsung offer student discounts on some electronics, for example, while Spotify and Amazon Prime offer discounted rates just for students. A quick Google search for student discounts will help find ways to save. 

In addition to general student discounts, drivers can take additional steps to save on their auto insurance, too. 

Ducich had quite a few tips to help make coverage affordable.

“A great tip to keep in mind is that the safer you are as a driver, the lower your premium will be. A key component of becoming a safer driver is understanding your driving habits and behaviors. With the Farmers Signal® app, drivers can see their driving habits and how those habits impact their insurance, and of course, safer driving habits can help earn bigger discounts. Also, drivers who are 24 years old and younger can receive an additional discount for signing up with Signal.”

If you’re not a Farmers customer, don’t worry. Other insurers offer driver tracking technology, like Nationwide’s SmartRide, Progressive’s Snapshot or Safeco’s RightTrack.

“College students can also get a discount on their Farmers auto insurance policy by enrolling in electronic document delivery, as well as by enrolling in Automatic Bank Payment (EFT),” Duchich says.

Plus, signing up for auto-pay means not having to worry about missing a payment.  

Students can also save by adjusting their coverage. However, they should talk to their agent to understand the risk of reducing coverage to save money. 

Also, if they’re a renter, bundling insurance by buying renter’s insurance and car insurance from the same company may help save. Insurers typically offer a discount for bundling with them. 

All told, students have ways to offset these higher premiums.

“Essentially,” Ducich says, “Be a better student, drive safer and reach out to your agent for information on other discounts.”

The takeaway

When in college, auto insurance is expensive. Three times more expensive than the average American’s rate, in fact. But students can take steps to lower the cost.

  • Enroll in school full-time and maintain a GPA of 3.0 or above
  • Submit proof of good grades 
  • Save potentially hundreds of dollars each year with good student discount 

Good grades do much more than make parents proud. Showing them off to insurers helps combat their view of students as a risky driver. 

Methodology

Coverage utilizes Quadrant Information Services to analyze quoted rates from thousands of zip codes across all 50 states including Washington D.C. Quoted rates are based on the profiles of 18-year-old males and females, each with a clean record driving a 2016 Honda Civic. The drivers had the following coverage details:

  • $50k bodily injury liability per person
  • $100k bodily injury liability coverage per crash
  • $50k property damage liability coverage per crash
  • $500 collision coverage deductible
  • $500 comprehensive coverage deductible

To look at the effect of a Good Driver discount, we analyzed rates for the profile both with and without the discount applied.

Kacie Goff

Kacie Goff is an insurance writer for Coverage.com. She loves taking complex concepts and distilling them down to make it easier for people to understand their coverage options. Over the last five years, she’s written about personal and commercial coverage for Bankrate, Freshome, The Simple Dollar, local insurance providers and more.

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