Just the Facts: Tuition Insurance

By Danni White on February 1, 2017
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College tuition costs continue to rise across the country at many universities and institutions. As they do, many parents and students can expect to pay a very heavy price to complete their education. With so many variables in life, however, some are looking to protect their educational investments.

Tuition refund insurance, also known as just tuition insurance, is one such investment some parents and students make. Some colleges include tuition insurance in the tuition plan as an option for some students. Tuition insurance reimburses a student or his/her family if the student has to withdraw from college due to an illness.

Typical tuition insurance plans cover a student’s withdrawal from college due to mental health issues, medical problems, serious injuries, psychological conditions, or death. Third-party companies and some colleges offer this option to help parents recoup losses due to withdrawal. It would be a waste to invest $30,000 of hard-earned and hard-saved money only to risk losing much of it later.

In many cases, almost 100 percent of paid tuition, books, fees, and room and board can be returned under this type of insurance. In other cases, schools will reimburse a certain percentage less than what covers the weeks the student attended. For example, if a student withdraws after three weeks of school and the college reimburses 60 percent of the payment, the insurance would cover the leftover 40 percent.

It’s important to know when you’re making a good investment and when you’re being sold a false sense of security. Here are some things to know about tuition insurance.

COVERAGE

Tuition insurance typically is event specific. This means it will cover withdrawal from school due to a serious health issue or medical condition. [Be sure to ask about specificities surrounding pre-existing health conditions as some insurance providers will follow certain rules and have different pricing scales for that].

Compared to other forms of insurance and already high tuition, this type of insurance is considerably expensive because it is for a rare occasion which only means probably 1 out of 1,000 students or even 1 out of 2,500 students at a university may need it.

There are other reasons students drop out or withdraw too. So for example, if you find it difficult to adjust to college life, don’t like the school choice, or are making poor grades, this insurance likely won’t help you.

BENEFITS

Tuition insurance plans generally come in two forms: coverage of tuition and fees only and coverage of tuition, fees, and room and board.

According to College Board, tuition for a public four-year college for in-state students is around $9,410.00; for a public four-year college for out-of-state students, approximately $23,890; and for a private four-year college, approximately $32,410.

So you can imagine what the reimbursement might be like if you fall ill while in college. If you do opt for such a plan, be sure to read the fine print and know what you’re getting and exactly what it covers — and what it does not cover.

RISKS

Some experts agree that tuition insurance is not a good return on investment. While it may provide some security in the event of a “what if” situation, it may turn out that you never need to use it or that it doesn’t cover as much of your expenses as you would like or need.

If current illness or potential reoccurring illness is a concern, you would first want to look at the school’s refund policy. Some schools have it and some schools don’t but it doesn’t hurt to ask questions. If it is less of a benefit after careful thought, it may just be an extra expense that you don’t need.

OFFERS

Tuition insurance policies are offered through some select colleges and universities or through third-party plans. Only a few insurance groups seem to offer such plans. Here are some companies offering tuition insurance:

GradGuard Tuition Assistance is the only company that offers both school specific and individual policies. In conjunction with College Parents of America, families who are members of CPOA can enroll at any time during the school year. Annual coverage begins at $5,000 and runs up to $50,000. CPOA offers $5,000 automatically with membership so if your parents are members, this will work well and it is useful if $5,000 is all you need.

GradGuard is available through more than 200 colleges and universities. These school-based programs often contain unique features or pricing. Visit GradGuard to see if your school offers a program or choose from the generic policy available to all students attending 4-year non-profit institutions

Also at GradGuard, if your parent or family purchases $15,000 in tuition insurance coverage, you will receive the Student Protection Plan which includes protection against other damages or disasters. For example, if your MacBook Air is stolen from your dorm room, it can be replaced or you will be reimbursed for the total. The SPP also assumes protection for things such as virus damage to computers and physical damage [Do not confuse this with renters insurance, health insurance, and car insurance.]

Other companies include A.W.G. Dewar Inc. Nearly 200 colleges and over 1,000 private schools at the elementary and secondary level use Dewar as their tuition insurance provider. The real benefit here is that they offer 100 percent coverage for withdrawals that are medically induced.

Allianz Tuition Insurance provides reimbursement for tuition, room and board, and fees, even if you have to withdraw from school in the middle of the semester. This is also a rare instance in which the company will provide assistance if you are struggling academically or encounter a non-medical situation in which you are prevented from succeeding in college.

Paying for college is a huge expense and an even bigger responsibility. Before you apply for tuition insurance, be sure to read the fine print and weigh whether the investment will be worth it.

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Danni White is a graduate of Liberty University and is engaged in grad studies in developmental psychology. She is also an author and contributing writer to INC and The Huffington Post. At the current moment, she is going through the rigorous application process to pursue doctoral studies in social psychology. In her limited spare time, she enjoys sports, coffee, good music, even better books, and meeting new people.

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