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Some of you may have noticed that a Return of Premium section was added to our Premiums and Coverages list this morning.

Every time we have asked about how we could improve our products, people have asked about a savings component, or a way to get some of their money back in case they don’t use the insurance.

To address these needs, we are restructuring our policies as options contracts. Essentially, you would still pay monthly premiums, but when your child turns 18, you will have a choice between the benefits of a Studious Insurance Policy or a lump sum payment equal to the Return of Premium for your policy!

The suggested policy our agents recommended through 2023 were 50% of our maximum coverage for 6-Year plans, and 75% of our maximum coverage for

1-Year plans.

We did not suggest maximum coverage because we expect that students are not going to need student loans for every cent of their college expenses.

Recently, the Education Data Initiative inflation rate for college tuition went up considerably compared to the inflation assumption we were using to price our policies this year.

That means the prices on our premiums and coverage page are about to jump. They may look considerably higher for 6-Year plans. The jump will not be as pronounced for 1-Year plans, but they will be affected.

But, our policies are tied to their coverage. If you look at the total coverage changes due to this change in assumptions, our old suggested policies of 6-Year 50% and 1-Year 75% are roughly equivalent to the new year’s policies of 6-Year 25% and 1-Year 50%.

What does this mean for you? Maybe nothing. If you were interested in our policies, just be aware that the plans we would quote to you before are still there, and with the same coverage.

It means the expected amount of student loans your child might need has increased, but that does not necessarily mean that your child will need more coverage from a Studious Solutions policy.

With all this in mind, we are faced with a concern about our suggested policies. We could suggest the 6-Year 50% and 1-Year 75% plans as before, and the suggested prices would be higher than what you have seen before, but the coverage would also be tens of thousands of dollars higher. Or we could start suggesting the 6-Year 25% and 1-Year 50% plans.

As a parent, being informed of this change is really all you need. If you expect to send your child to the Ivy Leagues, you should go for the more expensive plans. If you think your child is likely to go to a local school, community college, or trade school, you should go for the cheaper plans. In state universities would be somewhere in the middle.

But for parents who do not read this article, the suggested policies may be the best information they have coming in to Studious. To help make the best decision for them, I am going to ask you all for advice.

Tell us through our contact page! Do you think Studious should recommend policies that are a little more expensive for greater student loan protection, or do you think we should recommend policies with less coverage that are cheap and encourage more children to go to college in the first place?

Thank you for answering and consider getting a Studious Solutions policy to protect your child’s education!

Today we will be looking at a Studious Solutions coverage example. In yesterday’s post, I gave pricing examples for a 3rd grader in order to compare them to a 529 plan. As a follow up, I will now show you how our coverage maximums work with those same 3rd grade plans as our example.

6-Year Maximum Coverage Plan

The chart above is cropped directly from our premiums and coverages page for December 2023. It shows the coverage schedule for the $60.36/month plan we covered yesterday, with the coverage amount of $53,834.15.

That maximum coverage is available to pay a student’s loans if they drop out during their 12th semester of college. If they drop out during a different semester, they will be subject to a different coverage amount. For example, this student would get a coverage amount of $43,083.53 if they dropped out of college in their sixth semester. We calculate these coverage amounts using a combination of current tuition, average student debt, and the growth rate of tuition.

6-Year Recommended Coverage Plan

We used our maximum coverage plan to compare to 529 plans yesterday, but I also mentioned that our recommended plan for this student would be $32.85/month with less total coverage. You can see the schedule for this coverage in the image above.

Note that coverage in both this chart and the one above it do not extend beyond the 12th semester! What if your child is in their sixth year and has not completed their degree program? It may be time to sit down and figure out if they will finish or if they need to drop out sooner rather than later.

1-Year Recommended Coverage Plan

Finally, we have our recommended 1-year plan. This plan only covers the first two semesters, but it also costs substantially less at $15.63 a month. You may notice that it has better coverage in those two semesters than our recommended 6-year plan. We expect families who need to budget with the 1-year plan will also need to take on more student loans in the future, so we suggest this improved coverage.

The first year of college is the likeliest time for a student to drop out. With an 82% persistence rate and 64% of students completing their degree withing six years, we calculate that approximately half of drop outs do it within the first year. With a Studious policy, you can also evaluate how your child is doing in school during that first year and try to make an informed decision of whether or not to drop out and have us pay for student loans.

Hopefully this was a useful Studious Solutions coverage example for you!

Knowing how this coverage works, you can contact an agent today. Your agent will follow up with you and include a chart similar to the ones above when they email you.

Studious Solutions policies offer a low cost plan for college savings compared to 529 plans or traditional saving for your child’s education.

As an example, we will consider a child going into Kindergarten in December 2023. We will assume we need to pay for six years of college. Contrary to the name, students regularly take up to six years to complete a 4-year degree program. We will also assume that parents stop contributing to the Studious or 529 plan on September 1st of the year the child goes to college.

Studious Solutions Policy Example

A Studious policy assumes the expected amount of debt for this student to be $53,834.15 or less. A Studious policy will offer coverage up to this amount for $60.36 a month.

529 Plan Cost Example

Online tools tend to use a generous 7% growth rate for 529 plans. With a growth rate of 7% annually, the expected monthly payment to reach $53,834.15 is a whopping $200.12 a month. More than 3 times the cost of a Studious policy!

Try both!

The Studious recommended policy for this student would actually be $32.85 a month for $26,917.08 in coverage because we expect your child will not need to take out a loan for every penny they need. For struggling families, we even offer lower cost plans that cover students just as well for the first year of school! The first year is the most likely time for a student to drop out. We can offer substantial coverage at a fraction of the price by focusing on the first year. The recommended 1-year policy for this student would only be $15.63 a month!

Ideally, you will combine these two plans for college, a 529 plan and a Studious policy to build up your child’s future. We discuss this idea more in another blog post.

The rate of return on a 529 plan will not be guaranteed either, so that $200.12 a month may not actually get you to your target balance. With that said, a Studious policy and a 529 plan do not need to compete. Roughly 45% of the cost of college is paid by the parents. The remaining 55% may come from scholarships or student loans. A student who does not finish their degree can end up with more debt than the entire amount you saved for their tuition over many years! A Studious policy can cover that 55% to keep your child from crushing debt.

Consider opening a Studious Solutions policy to to protect your child’s future!

1. Financial concerns

89% of students from the first generation in low-earning families tend to drop out of college. Many students work full time jobs to support their education. Jobs like this and student loans put a great deal of strain on these students.

With a Studious Solutions policy, we believe the cost of education can be comfortably deferred. That means a student can take out loans without immediately worrying about a job. If they do not finish school, their loans will already be covered, so they can focus on getting a good education and only have to pay for their loans once they have a degree and better job opportunities.

2. Don’t have time

College is a commitment, and students may drop out just because they don’t have time to complete their degrees. Things happen in life, like health concerns, big family changes, or a worldwide pandemic.

A Studious Solutions policy will cover a good number of things that may disrupt your child’s education in addition to bad grades. We cover in the event of serious injury or illness, new mental health concerns, and the death or impairment of parents or guardians. If any of these things lead to your child not having the time for school, we have their loans covered. And if a reason isn’t covered, we can still pay out if the reason has a clear negative impact on their grades.

3. College social life

College is a huge departure from the life students are used to, and it puts a lot of pressure on them to fit into new social norms. This can bring back high school dynamics or make students compare themselves to their peers and feel like they aren’t cutting it academically. Students can easily feel like an outsider who doesn’t fit into the college social scene.

Not fitting in is a tough thing to cover, but it is a reason a good deal of students drop out. To cover this, we at Studious decided that our policies will cover students who drop out during their first two semesters even if the only reason is they didn’t like it! If college isn’t right for your child, that is fine, but with our policies there won’t be any harm in trying!

4. Academic disqualification

College is tough, and students may be unprepared for the challenges they are presented with in higher education. In fact, 28% of students who drop out of college are unable to meet the set academic requirements. Stress and effort with understanding new concepts plus pressure to complete projects and homework under deadlines only add to this stress, especially since professors tend to put different deadlines on work than the students are used to from high school. Higher level courses can simply move too fast for a student to learn in this high stress environment.

This is why we are here! If college turns out to be too much, Studious Solutions policies will pay off a student’s loans and let students make decisions about their future without debt hanging over them. Bad grades will be less stressful when the consequence of failure is lessened, and we hope that reduced stress will allow your child to succeed in their education.

According to Imed Bouchrika, Chief Data Scientist at Research.com, “Finishing a college degree is a proven, first step towards a bright and successful future, as statistics often present a strong correlation between higher education and job security.”

We know you want the very best for your children. We’d love to learn about the obstacles you face and help you overcome them. Our agents will suggest a policy that is right for you, so you know you have prepared your child for college and given them every opportunity they need to pursue any future they want. Let us help you today with a Studious policy that fits your budget and leads your child to a bright, safe academic future.

December rates are now posted, and I want to remind people this holiday season that Studious policies are not limited to parents. Grandparents, aunts and uncles, even siblings or other caregivers can sign up with us to ensure a child’s future.

So consider taking the load off for someone else! Peace of mind and a guarantee for their child’s future would make a great holiday gift!

Student debt has been an ongoing debate for my entire life, whether student loans can or can’t be forgiven. When I went to college myself, I found that many of my fellow students would base all of their financial and political opinions on ways to solve the crisis of student debt. The debate has made the two sides opposed to each other on principle. They do not work together to solve the problem and instead constantly fight about the question, “Should the government forgive student loan debt?”

I believe the debate is too focused on this question, this one and only solution that has been offered. The free market has the power to solve or relive issues like this if business owners can be careful. I believe a problem like student debt can be drastically improved by businesses that align their goals and products toward a sustainable future. To do that the company needs to be able to keep these ideals once the founders are no longer making key decisions.

Businesses exist to make money, but the individual people involved want to make good decisions. Individuals will make decisions that they believe are moral, and that is why small businesses can often stay on a moral path even if it isn’t as good for the bottom line. The trouble comes when a company is publicly owned or is large enough that key decisions are being made to appease the bottom line. Good people who want to do the right thing will then start making decisions based on their fiduciary duty to the company instead of for the greater good.

Consider colleges for instance. Once fiduciary duty is governing the decisions of the college, they have two ways of making money. They can increase tuition, or they can admit more students. The trouble is, a college cannot admit more students endlessly. There is only so much housing near a school, only so many students a professor can teach at a time, and only so many students that can be handled administratively. That means colleges hit a cap regularly on how many students they can admit, and the only way to fulfil their fiduciary duty is to increase the price of tuition. Student loans are offered to decrease the burden of this high tuition on students, but in effect they have allowed colleges to increase prices more easily by using the loans as a subsidy. Furthermore, increases in the price of tuition can be a tool to limit the number of applicants to a college so the high prices can offset the need for higher admittance. As demand for college increases, supply cannot increase at the same rate, which results in much higher prices as time goes on.

Of course, the college can improve their bottom line by cutting costs instead of increasing revenue. To do that, they can put more students in the same class, resulting in a less useful generalized education. They can get rid of their buildings and offer education online, but that will be much less useful to many kinds of learners. These are just some examples, but the way colleges can cut costs are generally bad for the quality of education.

In contrast, Studious Solutions is a low-cost producer that relies on scale. The price of our plans is relative to the probability of students dropping out of their degree programs, which means we cannot increase prices beyond a certain point for our products to make any financial sense. Studious makes more money by selling more policies at a low cost, which will keep us from becoming a predatory company even when all the key decision makers change. To increase revenue for Studious, future decision makers will have to focus on selling more policies.

What about decreasing costs for Studious? Similar to the prices of our plans, the expenses to Studious are linked to the probability of students dropping out. That means we cannot cut costs by reducing the quality of our products. Instead, future decision makers for Studious will have to cut costs by making students less likely to drop out of college with initiatives like free academic counseling, tutoring for underperforming students, or aid programs that allow injured students to attend regular classes.

The student debt complex is a mess of colleges and loans that have opted to prey on students. Studious can fit into the complex without derailing the existing industry, and therefore without ruffling the feathers of these large profit driven institutions. Studious can provide relief to the students and their families. We can structure ourselves in a way that will force us to always help our customers, even when I am no longer making the decisions.

I believe the problems of a free market can be solved like this, with good natured clever people setting up the next generation to be a little better than the last, and to ease these problems where we can instead of looking for an all or nothing solution.

The Studious Solutions sign up process has changed! Studious is back to offer plans for your children’s student loans. If you were interested in our policies before we updated our process, you probably remember that you could choose a child’s age and be directed to a store page with all your options presented to you, and it may have been overwhelming. Now our process will be slower, but more personalized.

When you click the link on our home page or at the bottom of this post, you will be taken to a short form where you can fill in your name, email, your child’s name, your child’s age/grade level, and the state you live in. Once you submit the form, it will generate an email automatically to your state’s agent (this will almost certainly be me for the next year or two). Your agent will then reach out to you by email with an explanation of the different plans we offer for your child’s age/grade level with two in particular highlighted or recommended. We present four levels of coverage for 6 year plans and the same four levels of coverage for 1 year plans. Our agents will recommend one of the 6 year plans and one of the 1 year plans.

These two that we recommend are the plans that we expect to be most useful to you and your child when it comes time for our policies to pay out, and we make sure to recommend a suitable 1 year plan because these are our much cheaper options for parents who may be worried about being able to send their child to school.

Your agent will then ask if you have anything you would like to ask him or her, and which coverage you want to purchase if you would like to continue. We then set up a secure payment page for you and your agent will email a link to this page along with a policy for you to keep for your records.

You will be charged once when you sign up for the policy and then once at the start of each month until September 1st of the year your child is expected to start college. Your policy will specify an exact number of payments as well.

From there, you are covered! If something happens and your child is unable to finish their degree, you can return here and submit the claim for reimbursement.

Loan forgiveness is an important topic, whether it is a concern or a strategy for you. When I started explaining Studious Solutions’ policies to my friends and families, the number one response I got was “What if student loans get forgiven?” and if they ever truly go away, then I will pack up the company, give America and pat on the back, and find something else to do with my life.

That said, student debt won’t be going away. Even if there is a successful debt forgiveness program during the Biden administration, students will still take out loans. The cost of college will not decrease, and the forgiveness may result in relief for you now, but it does nothing to protect your children from the cost of college by the time they would be taking out their own loans.

Outside of Biden’s current plans and program, student loan debt can be forgiven after 20 to 25 years of repayment. That is a substantial amount of time to have loans hanging over you and hampering your income. On top of this, most forms of debt forgiveness are considered taxable income. That means after 25 years of repayment, your may get your loans forgiven and then receive a huge tax bill! Certain forgiveness programs can remove your federal tax liability for this forgiveness, but they do not remove state tax liability, and this kind of legislature can change with every election.

Insurance payments, on the other hand, are very rarely considered taxable income. Insurance indemnifies you; it tries to restore what you have lost to you. By putting a valuation on your lost education, Studious is restoring you or your child to the wealth you should have if you finished your education or did something entirely different with your time.

This concept means you will not get an unexpected tax bill if Studious pays for your loans, but you can if your loans are forgiven by the government. Also, Studious plans pay for your loans right after school, so there won’t be 25 years of debt hanging over your children.

If this isn’t enough to convince you, consider reading my earlier post about the benefits of a Studious policy compared to a traditional 529 plan.

Studious policies are valuable even if you expect loan forgiveness, and it is a strategy that can set your child up for a bright future.

Studious Solutions is back! That’s right, it has been nearly 4 months and we are finished setting up our new flow. With an updated policy and account representatives who can answer your questions or explain our product, we are excited to offer protection for your child’s student loans again!