The ever-increasing cost of a college education carries a multitude of financial risks, including the burden of student loans. Yet, families might underestimate another potential peril — the unforeseen circumstances that could force a student to abruptly leave school mid-semester, resulting in lost tuition and unearned credits.
This is where tuition insurance becomes invaluable, safeguarding the substantial investments made in college expenses. Here’s what you need to know about college tuition insurance.
What Is College Tuition Insurance?
College tuition insurance, also known as tuition refund insurance, provides reimbursement for lost college expenses, including tuition and qualifying costs, in situations where an emergency forces a student to withdraw from their academic program before a semester or academic term concludes.
Tuition insurance policies have gained popularity, especially since the onset of the COVID-19 pandemic, with more students concerned about the potential for chronic illnesses or mental health issues, and as college housing costs continue to rise.
Over the years, tuition costs at both public and private universities have soared, making tuition insurance an important consideration for families.
Covered and Excluded Situations
Tuition insurance can cover various scenarios, including academic withdrawals due to COVID-19, chronic illnesses like autoimmune disorders, serious injuries, and mental health conditions such as severe anxiety or depression. However, coverage may vary depending on the insurer and the specific policy, so it’s crucial to scrutinize the policy details before selecting an insurance provider and plan. Pre-existing medical conditions, drug usage, participation in extreme sports, and academic failure are typically not covered.
Regarding covered expenses, college tuition insurance typically includes room and board, in addition to tuition and fees, but does not extend to books and supplies.
To fully comprehend what is and isn’t covered in a tuition insurance plan, it’s essential to thoroughly review the policy’s fine print, advises Shannon Vasconcelos, a college finance consultant.
Reimbursement Amounts
Tuition insurance typically reimburses students for 75% to 100% of the expenses they incur due to withdrawing from college mid-semester. The exact reimbursement amount depends on the reason for withdrawal and the type of insurance policy purchased.
Cost of Tuition Insurance
The cost of tuition insurance can vary widely, based on the educational institution and the type of coverage chosen. Generally, this expense falls within the range of 0.5% to 2.5% of the total annual cost of one academic year. The affordability of tuition insurance depends on the specific situation; for instance, 0.5% of a $5,000 tuition charge equals $25 and may be seen as very affordable, whereas 2.5% of a $40,000 tuition, or $1,000, may appear less so.
Is Tuition Insurance Worth It?
While many students may never need to use their college tuition insurance, it proves invaluable for mid-semester withdrawals, especially when refunds are minimal but coursework remains substantial. Before purchasing an insurance policy, it’s advisable to consider your college’s tuition refund policy, as well as the fact that many common reasons for academic withdrawals, such as social, emotional, academic, disciplinary, or financial issues, are typically not covered by tuition insurance.
How to Obtain Coverage
To acquire tuition insurance, first, check your university’s bursar’s office webpage to see if they have partnered with an insurance company to offer optional tuition insurance coverage. Purchasing insurance through your institution during the tuition payment process can simplify the process and may enhance the college’s existing tuition refund policy.
If your institution doesn’t provide coverage, you can still purchase insurance directly from the insurance provider’s website. Students and their families can usually buy tuition insurance up until the first day of classes.
Tuition insurance is typically offered on a semester-by-semester basis, requiring renewal before each academic term. While annual coverage may be an option, it generally does not come with discounts.