Students Should Insure an Investment as Important as College

"It can be scary to borrow large student loans to finance an expensive college degree. There is a market failure, however, every time a student does not attend their preferred college, study their preferred major, or pursue their preferred career because they are afraid of student loans. Students should be free to pursue their passions - not forced into second-best choices because of the cost of the degree or the prospect of a lower income in the future."

"Society also loses out - especially if the lower-income career a student wants to pursue is a human service profession, such as education, where they will invest in improving the lives of others. Most purchases come with a warranty or guarantee. Why should college be different? Colleges promise to provide value to students. We applaud those colleges and universities that stand behind that promise with a financial guarantee."

LRAPs operate as student loan insurance to reduce the financial risk of borrowing for college. Fear of debt causes students to avoid preferred colleges, majors, or careers and creates a market failure. That loss of choice can deter entry into lower-paying public service professions like education, reducing societal benefit. Colleges that offer financial guarantees assert responsibility for delivering economic value and help protect students from disproportionate income risk. Insuring a costly college investment aligns with common consumer protections and spreads risk that an individual student cannot diversify.

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