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College & Workforce Readiness Opinion

Can College-Going Be Less Risky Without Being ‘Free’?

By Rick Hess — August 25, 2021 5 min read
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While calls for “free” college and student debt cancellation currently dominate conversations about higher education financing, I’m less interested in solutions that make lucrative degrees a freebie than in those that make them less risky. An intriguing example of the latter is the college “safety net” offered by Ardeo Education Solutions. Since 2008, Ardeo has worked with students at more than 200 colleges and universities to help insure their college educations. I recently spoke with Peter Samuelson, president and founder of Ardeo, about how this works.

—Rick

Rick: What does Ardeo do?

Peter: Ardeo Education Solutions partners with colleges to provide Loan Repayment Assistance Programs, or LRAPs, to their students, improving access and enrollment by providing students with financial peace of mind and helping them overcome their fear of student debt.

Rick: How does this model work?

Peter: When a college offers a student a Loan Repayment Assistance Program, that college is saying they are so confident in the value of their degree, they guarantee the student will earn above a certain amount after graduation. If the student does not earn above that amount—typically ranging between forty-five and fifty thousand dollars per year—after graduation, the program will help repay any student and parent loans. For instance, if the student’s income is below twenty thousand dollars, the program will reimburse the graduate for one hundred percent of their loan payments on a quarterly basis. That assistance will continue every year on a sliding scale until their income increases above the forty-five to fifty thousand dollar upper-income threshold or until the loans are repaid. By offering this program to students who feel anxious about borrowing student loans, colleges can provide a safety net.

Rick: How did you get started in this work?

Peter: Yale Law School created LRAPs in the late 1980s to reduce the burden of student debt on its students, and that program enabled me to attend Yale Law School. Later, when I was on the board of Central Christian College in Kansas, I realized the college and its students would benefit from that kind of program. It would help students attend their preferred college and choose their preferred job, which would increase access and enrollment. It took some time to build the actuarial model and to find the right insurance company to partner with, so we launched the program in 2008—right as the United States entered the “Great Recession.” That was very unfortunate timing for launching a new business, but the silver lining was the recession made students and parents even more anxious about student loans, which made it easier for the early adopting colleges to see how this program could help them increase their enrollment.

Rick: You say that you do this by “partnering” with colleges. How does that work?

Peter: We work with a wide variety of colleges and universities, who typically hear about us at a conference or from friends at other institutions, to identify which prospective students will be most receptive to the program offer. Every college has a few low-yield segments of prospective students. LRAPs will increase yield for those segments, providing a competitive advantage to colleges that offer the program and a real benefit to the students who receive them. Colleges pay for the program—pricing for each college varies based on our proprietary actuarial model—and offer it at no cost to the students or their families. We help our partner colleges communicate to students about the program through email, direct mail, and calls—they think of these services as an extension of their own admissions team. Once a student graduates, we work directly with them to provide assistance. Our program is backed by an A-plus rated insurance company, which gives our graduates perpetual peace of mind.

Rick: In addition to boosting the share of students who choose to attend, are there other reasons a college might partner with Ardeo?

Peter: Some universities choose to offer this program to a small group of students to advance a specific institutional goal. For example, the University of Wisconsin-Platteville is using LRAPs to help more students become teachers, specifically in rural communities where salaries are modest. Others, such as Louisiana College, offer it to their entire incoming class to demonstrate their commitment to the success of their students.

Rick: Are there any qualifications a student must meet in order to be eligible for your service?

Peter: There are three key criteria the student must meet to qualify for assistance: First, students must attend the institution that offered them an LRAP. Second, they must graduate. Third, they must be employed at least thirty hours per week. The terms and conditions that determine how much assistance they receive are designed to balance providing real and substantial assistance to students who need it while managing the overall cost of the program, so the college that pays for it will receive a positive return on their investment.

Rick: Readers who follow these sorts of things might wonder how this is different, if at all, from the federal government’s income-based repayment plans. What would you say to them?

Peter: Our LRAPs offer a significant advantage for students over the federal government’s income-based repayment plans, or IBRs. Whereas IBRs simply change the monthly loan payment amounts graduates owe based on their income level, we actually send money to graduates enrolled in our program to reimburse them for what they have paid. In that sense, we put money back in the pockets of graduates who need it most. Additionally, Ardeo’s service covers all types of debt, including federal student loans, parent PLUS loans, and private alternative loans. IBRs only cover the federal student loan portion. We regularly hear from students about how our service has enabled them to enroll at their preferred institution. Our program also encourages persistence and completion by keeping students enrolled who might otherwise drop out because of concerns about cost and student debt.

Rick: Where do you see Ardeo in five years?

Peter: Ultimately, every student who needs to borrow should receive the protection of an LRAP. Over the next five years, we will remain committed to our mission of increasing access to the life-changing impact of higher education. We will grow. We will work with more colleges and universities to help students from all walks of life invest in their futures. We have typically worked with private, nonprofit universities, and have only covered bachelor’s degrees. In the next five years, we will also work with public universities and will expand our program to include law schools and other graduate programs.

This interview has been edited and condensed for clarity.

The opinions expressed in Rick Hess Straight Up are strictly those of the author(s) and do not reflect the opinions or endorsement of Editorial Projects in Education, or any of its publications.

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