What You Should Know About College Tuition Insurance
Tuition insurance is likely something you’ve never had to consider, and maybe you’ve never even heard of it. This type of insurance isn’t something every family invests in..neither is it something every college student and their family even has to consider.
Depending on whether or not it’s necessary for your circumstances, tuition insurance can either be very beneficial… or completely unnecessary.
But what is tuition insurance?
Tuition insurance is meant to cover the cost of college tuition should a student have to withdraw (most commonly for medical purposes). However, depending on your policy, and the broadness of coverage, tuition insurance can cover a number of things: social, emotional, or academic purposes. Policies vary in what they do and do not cover. For instance, tuition insurance policies that cover pre-existing conditions are more expensive, but more likely to come upon as opposed to coverage providing reimbursement because of drug use or flunking out.
Many families who have students attending college and suffering from a mental illness or have chronic medical issues will research tuition insurance and consider taking out a policy in order to be sure their investment is safe. Should their student end up leaving school, they won’t recoup their money. However, depending on what kind of tuition insurance policy you take out will determine the amount of reimbursement you’re able to receive. The more you pay for a policy, the more likely it is that your policy will cover a wider range of things.
Some possibilities of events covered under a tuition insurance plan are:
- withdrawing for medical reasons (most common)
- withdrawing for mental health reasons
- medical absence (for on-going, serious medical concerns)
- death of a parent
- death of the student
- family relocation
- voluntary withdrawal from school
- academic dismissal (because of grades or behavior)
Depending on what you and your family think you need coverage for will determine the price you pay for a policy. The more you want to be covered, the more expensive your policy will end up being.
How does tuition insurance work?
Tuition insurance is often provided by the university, but if not, or if you simply decide to go in another direction, it can be purchased through a third-party company as well. You must purchase tuition insurance before the first day of school, so don’t try to be sneaky and get a policy after school starts — it won’t work.
Your tuition insurance policy will vary depending on what coverage you’ve chosen, but typically tuition insurance policies will reimburse students and their families for tuition, room, board, and other various fees the family has paid. Oftentimes, families see tuition insurance policies as a “backup plan” for their college student. Should you have to withdraw from school, a tuition insurance policy will see to it that your family isn’t out of the money they spent hoping to educate you. And with the average cost of tuition for an in-state, public university sitting at over $25,000 per year, tuition insurance policies are sure to see an increase in demand.
How do I find the right tuition insurance policy?
Research, research, research! You should begin by looking into the policies that might be offered by the university you’re going to be attending. The Office of Financial Aid should be able to help you and your family out with finding a policy that really works for you and your family.
Talk with your parents (or whoever is helping fund your education) to decide how much coverage you think you’ll need, and how much money you’re willing to pay up front on a policy for school.
After doing some research and discussing your options with professionals, there’s a chance you won’t be happy with what your university provides. Should this happen, it might be time to start looking into third-party options.
Some popular tuition insurance options are available through companies like A.W.G. Dewar or Allianz. A quick search on Dewar’s website can quickly answer your questions regarding coverage and price. Allianz has a bit of an easier-to-understand breakdown of their policies, which you can find here.
Additionally, you should check to see if the insurance company you use for things like auto and home insurance provide an option for tuition insurance as well. More than likely, bundling your insurance policies will save you money in the end. So if you already have Liberty Mutual insurance, look into whether or not they offer tuition insurance as well!
When you’re looking at different types of policies, be sure to scrutinize how much coverage they really provide. While some policies will reimburse 100% of expenses, others will only refund 50-90%. You should be sure you understand exactly what your policy covers.
What are the advantages of taking out a tuition insurance policy through my school?
All Universities are bound to offer some kind of tuition refund should a student withdraw from the University within days after school begins. However, this timeline approaches quickly, and the percentage of tuition and fees the school is willing to refund declines drastically within a small period of time. Taking out an actual tuition insurance policy through the school will allow you to get that refund/reimbursement regardless of how many weeks of classes have gone by.
Typically, students with medical complications benefit from tuition insurance, but a policy is also a good thing to have should you be severely injured on a spring break trip or suffer injuries from a bad car accident. Tuition insurance is a big part of giving you and your family peace of mind while you’re in school.
Who should get tuition insurance?
This type of insurance is usually recommended for students who have a prior medical history, or if you’re paying for an extremely expensive college/university and you’re looking for a little peace of mind. It’s completely up to you as to whether you decide to take out an insurance policy.
Imagine a situation where a middle-class family has to give up everything to fund their student’s undergraduate education. Resources like scholarships and federal grants are wonderful things, but not everyone who doesn’t qualify for these resources has an incredible savings account waiting for them to get into college. For a family who doesn’t qualify for many resources, their expected contribution might be higher than what’s reasonable; $20K per year in college tuition isn’t something everyone just has lying around the house. It’s a bit more than just pocket-change. So should their student have to withdraw due to unforeseen reasons, it’s a true blessing to have a tuition insurance policy that will cover things like room and board, tuition, and other academic-related expenses.
How much does tuition insurance policies cost?
As you can see above, the cost of tuition insurance for Stanford University through Dewar’s tuition insurance program is an annual cost of just over $400. This is if you’d like tuition, room, and board covered in your policy. If you or your child is living off-campus, and you only need your policy to cover tuition, you’ll save about $100.
At Lehigh University in Pennsylvania, tuition insurance costs a bit more, at just over $600 for on-campus policies, and right under $500 for off-campus:
Because Dewar isn’t the only option out there for tuition insurance, you should research some other companies who also have options.
GradGuard.com has policies that cost anywhere from $239 – $599, with each policy covering more as the total amount increases. In order to receive $25,000 worth of coverage for a semester, you’ll be paying a $600 insurance policy. It might not seem too bad. But should your student not ever need to use the policy, you’ll be out of $600.
How will we receive reimbursement, should we have to follow through with our insurance policy?
Like any other kind of insurance, there’s paperwork and documentation to be taken care of should you need to follow up on the tuition insurance policy you have. If you’re withdrawing because of medical reasons, you will need to submit a doctor’s recommendation that withdrawing is best.
Mental health reasons, however, are a bit trickier. Unlike a substantially severe injury, mental health claims require a little bit more documentation. You’ll likely have to provide proof that you were hospitalized for 24-48 hours because of your mental health condition.
Do the experts recommend tuition insurance? Is it really worth it?
Generally speaking, no, tuition insurance is typically not worth the cost. If you are a healthy student, there is likely no reason that you would need a tuition insurance policy. So for the better part of today’s college students, tuition insurance policies are not common.
When we think of “insurance,” we usually envision auto and home insurance. It’s for the drastic events — like your house burning down or your car getting totaled. These types of insurance policies are very popular with American families, as it is illegal in all 50 states to drive without car insurance. But tuition insurance is a bit of a different ball-game. It is not a requirement of today’s college students to have a policy that will refund their family the amount of money they spend on tuition, room, and board. Instead, only families who decide it’s a good financial investment will look into taking out a policy.
Most universities provide some kind of “grace period” to get your tuition money back. This is usually capped after the first few days of classes. But by taking out a tuition insurance policy, you could be covered when it comes to medical conditions, mental health crises, or even severe financial changes. Depending on the broadness of your policy, a variety of circumstances are covered.
Are there any alternatives to having a tuition insurance policy?
Absolutely. Without having to take out a policy through a third-party company, your university likely has some kind of rules for refunding tuition. If you withdraw within a certain period of time, you’ll receive some of your money back.
If you think you could really benefit from having insurance, but you’re disappointed in what’s covered by a tuition insurance policy, look into life insurance. This type of insurance is best if you and your family are worried about a life-threatening medical condition that you have. It will ensure your family is taken care of should the worst of the worst happen.
All in all…
When it comes to paying for college, many families have to sacrifice. Your younger sibling might not get the car they’ve been hoping for… your parents are probably trying to eat out less and less… and you’re monetarily restricted to the money you make at your part-time job because your parents just don’t have a lot of extra “dough” sitting around. Because it’s such a big investment to send a child to school, making sure you’re covered should something happen is one of the greatest things your family can do for itself, especially if your tuition is costing more than the mortgage!
Regardless of whether a tuition insurance policy is a “backup plan” for your family, your parents are taking out a policy to give them a little piece of mind, or you’re positive you’re going to need this type of plan, the fact that tuition insurance is even available is a huge benefit to our country’s college students. College tuition is increasing every year and is typically a burden to families. Student loans are the highest we’ve ever seen them, and it doesn’t look like they’ll be decreasing in the coming years. As a nation, we owe trillions of dollars in student loans.
So if there’s even a possibility that you’re going to need to withdraw from school, at least check into the tuition insurance policies that are available. That way, if you do end up needing to leave school for any reason, there’s a chance your younger sibling will get the car they’ve been wanting and all the money your parents invested in trying to educate you won’t go to complete waste. Spending some time at least researching policies could really help your family out.
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