There’s a reason why college students are often on the ramen diet (as in pre-packaged, dried noodles three times per day; not the fancy, restaurant-style ramen that has appeared on the scene in recent years). Life as a college student is expensive, and there’s not a lot of flexible income when your budget is so limited. Room and board cost a lot of money, and books and other class materials cut into what is left.
Most students need to watch their expenses, especially when car insurance for college students is so pricey. With rates so high for college and teen drivers, the right car insurance can be hard to find, but it’s not impossible — and teen and young drivers can not afford to go without it.
There are some important things college students should know before purchasing or renewing an auto insurance policy.
Why do students pay more?
College students are often quoted higher car insurance rates than older drivers, mainly due to the added risk.
According to the CDC, teens between the ages of 16 and 19 are at the highest risk of a motor vehicle accident. In addition to general inexperience on the road, alcohol is a significant concern for teen drivers. According to the National Highway Transportation Safety Administration (NHTSA), more than a third of all fatal alcohol-related accidents involved drivers between 21 and 24 years of age. The Substance Abuse and Mental Health Services Administration (SAMHSA) also reports that 37% of college-aged adults are considered binge drinkers, with 18% of drivers readily admitting to driving under the influence of alcohol. Additionally, younger drivers lack the experience of older, more experienced drivers.
Insurance companies know that college students are more likely to have an incident on the road and file a car insurance claim, so they account for that added risk in their rates.
Ways to save on driving
Before we dive deeper into how college students can find decent car insurance at affordable rates, there are other ways to keep transportation expenses down when working with a limited budget.
How to save on gas
- Choose a car with good gas mileage. College students commute a lot between home and school, so a car with excellent gas mileage can easily save hundreds of dollars each year. Cars like the Hyundai Ioniq, Toyota Prius, Honda Civic and Mitsubishi Mirage are all vehicles known for great gas mileage — and there are plenty more out there.
- Keep cash on hand. Paying with cash can keep gas costs down. Cash payments eliminate fees and surcharges commonly attached to credit card transactions. Many gas stations encourage cash sales and even charge a lower price for gas that is paid for with cash.
- Utilize public transportation. Public transportation can almost entirely eliminate transportation expenses. Buses, trains or subways are a fraction of the cost of driving and are usually accessible at most colleges or universities.
- Invest in a bicycle. A bicycle can be an even better substitute for public transportation, especially for students in urban areas. Using a personal bicycle is free after purchase, and there are also typically lots of options for low-cost bike sharing or rentals in more populated areas.
- Carpool with your classmates or colleagues. If you must drive, consider setting up a carpool or car-sharing arrangement with classmates or colleagues who live along your route. They will probably appreciate the opportunity to save money and it gives you the added benefit of some company during the commute.
How to save on maintenance
- Find car deals for new graduates. Many car manufacturers offer special purchase deals for current college students or recent graduates to buy a new car. There may also be short-term leasing specials available for students for those not ready to purchase a new car.
- Ask about student savings programs for oil changes. Another potential place to save is regular oil changes. College students can burn through many miles and require more frequent oil changes, but many of the larger chains, such as Jiffy Lube, offer students discounts.
- Utilize free tire and air fill-up services. To save extra money on diagnostic and professional services, check your tire pressure yourself. Most gas stations offer free or cheap stations to check tire pressure and add air if necessary.
- Research DIY repairs. There are several basic car repairs that can be done at home. Learning how to do essential maintenance can save money on parts and high labor costs. It will also save time to repair the car on your own schedule. These basic repairs are easy to learn and can save hundreds of dollars:
- Change the battery.
- Change the oil.
- Change your spark plugs.
- Replace tail lights or headlights.
- Swap out windshield wipers.
It’s commonly known that most car insurance carriers offer discounts, but some discounts can save college students and younger drivers more money than others.
- Good student discount: Earning good grades in school demonstrates to insurers that you are responsible, making it more likely that you are a responsible driver.
- Driver’s education discount: Another way to save money on car insurance is to complete a driver’s education course. For example, drivers with a Geico insurance policy could save as much as $200 each year on their policy by taking a quick refresher on the rules of the road.
- Distant college student discount: You can save money by leaving your car at home when you are away at school. Most car insurance carriers will discount your total insurance premium, prorating your premium to reflect the months you are away at school and not using your vehicle.
Affiliation discounts for students
Many insurance companies also offer discounts for students who participate in certain organizations or associations, such as:
- Sororities, fraternities or honor societies: Geico offers car insurance discounts for fraternities, sororities and even honor societies, along with an extensive list of other organizations.
- University and alumni discounts: Like Geico, Liberty Mutual is another company that offers discounts for many universities and alumni policyholders. Students at the University of Maryland, University of Pennsylvania, Drexel University and more can save extra money on their car insurance.
- Military discounts: If a parent is a veteran or military member, you can save extra money on your car insurance through military discounts. As a military-only provider, USAA is one option for military discounts for your car insurance, but many other companies offer military discounts, too, such as Allstate, Farmers Insurance and Esurance.
Other ways to save
In addition to affiliation discounts, there are other ways college students can lower car insurance premiums using these additional savings programs:
- Lower your mileage. When you spend less time on the road, there’s a much lower risk of incident, so many carriers will offer lower car insurance premiums to drivers who rack up fewer miles.
- Drive a used or “safe” car. Newer cars are more expensive, so damages cost more to repair. A used car is generally cheaper to fix and may qualify you for lower car insurance premiums than a new car. Driving a vehicle with extra safety features is another way to lower premiums, so explore models with safety features like anti-lock brakes, electronic stability control, forward-collision warnings, and automatic emergency braking.
- Explore pay-as-you-go insurance. Instead of paying full-price for car insurance, you can sign up for usage-based insurance that monitors your driving habits and charges your car insurance accordingly. It’s a popular option with several car insurance companies: Allstate offers its Milewise program, Nationwide has a SmartMile program, and Progressive offers Snapshot savings.
- Car additions. Some additions and upgrades make your car safer and save extra money on car insurance premiums.
- Dashcams: Dash cameras are a newer technology that can reduce car insurance rates by not only reducing the likelihood of crime involving your vehicle but also protecting you against false liability claims that could cost your insurer money.
- Navigation systems: A GPS navigation system can help keep you prepared on the road, so you drive slower and more safely.
- Anti-theft device: A car alarm or other anti-theft device can earn you extra discounts by lowering the risk of theft or vandalism.
How much can you save?
Using Quadrant data, we regularly analyze car insurance trends for younger drivers and college students.
Good student discounts can save college students an average of $400 per year. That’s no small change. While the average experienced driver pays about $1,555 per year, car insurance premiums for college students average about $5,335 per year. That means an enormous payment of almost $450 a month. However, that premium lowers to less than $5,000 a year when the average 18-year-old applies a good student discount to their policy.
Where you live matters, too. The average annual cost of car insurance differs significantly by state, with the average discount also varying quite a bit from area to area. However, some states are far more expensive than others. While the average Florida premium costs $7,128 without discounts, you could pay less than $6,500 when you add student discounts. Minnesota has one of the most significant differences between discounted and undiscounted car insurance, with premiums costing 20% less for a total of $3,226 per year instead of $3,866 annually.
No matter where you live and what you drive, you should always shop and compare car insurance rates to see which company is the best for you. Every company offers different savings programs and coverage options that can have an enormous impact on what you spend. When in doubt, speak with a licensed insurance expert to find out what will work best for you.
Car insurance for college students is a necessary expense, but it does not have to be exorbitant. Car insurance companies know that life is expensive for college students and offer some great discounts. A thrifty college student can use their savvy to keep their other car expenses down, too — and maybe splurge on a meal other than ramen noodles once in a while.