For most high school seniors and their parents, the costs of college tuition become more and more real every day. Whether you’ve planned ahead or not, college is one of the biggest investments families will ever make. But what if you pay for college only to have something traumatic happen that requires leaving school. What if you get sick or injured? Are you able to recover tuition costs if you’re forced to leave school?
College is one of your biggest investments, yet it often goes unprotected. You insure your home, you insure your car, but what about the thousands you pay in tuition? One way to protect your college investment is through something called college tuition insurance. Insurance for your tuition? Yes, it’s an actual thing! What is college tuition insurance and is it a good idea? Let’s look at it more in depth and find out.
What is College Tuition Insurance?
College tuition insurance, often referred to as tuition refund insurance, provides security for college students or their parents in case a traumatic event forces the student to withdraw from school. Typically this would be some type of medical condition, mental health condition or injury that would prevent a student from completing the semester.
Under a tuition insurance plan, students may qualify for reimbursement of several school-related expenses, including:
- Room and Board
- Miscellaneous school fees
Tuition insurance carriers partner with schools to provide insurance options for students - including, for example, health insurance. It is not available at every school. You will need to check with your school or an insurance carrier for availability. Only a few insurance carriers offer tuition insurance and most of the plans are similar in structure.
Tuition insurance can cost several hundred dollars per year depending on the specific plan or carrier.
What is Covered by College Tuition Insurance
You should become familiar with all the fine print before signing up since tuition insurance does not cover every cost category. Plans vary from carrier to carrier, but as a general rule, coverage includes reimbursement for:
- Serious Illness or injury
- Death of the student
- Mental or psychological disorders, such as severe depression, anxiety, etc.
Paul Richardson, Managing Director of Tuition Insurance at Liberty Mutual, says that, “if an insured student withdraws from school due to a covered reason, such as an illness, accident or mental health condition, 100% of their insured tuition, room and board and mandatory fees will be reimbursed to them. We have also found that students and parents often don’t realize that if they have to withdraw outside of a school’s refund window, they will often get no money back from the school at all.”
What is Not Covered by College Tuition Insurance
Every year college students withdraw or leave school for various reasons. Not all of them are covered under tuition insurance. This is not “dropout” insurance. You will not be eligible for reimbursement if you simply drop out of school or are expelled for any reason. You also won’t be eligible if you transfer to another school.
Who Should Think about College Tuition Insurance?
College tuition insurance may be a good idea for some students or parents of college students. You may want to explore tuition insurance if:
There is prior medical history: If you have reservations about starting college because of past medical issues, having tuition insurance could make sense. Check your policy first regarding exclusions for pre-existing medical conditions. These could affect coverage and payout amounts.
You are paying for your child’s education: Are you a parent who’s paying for your child’s college tuition? Are you a co-signer on their loan? If so, you might want tuition insurance coverage so that you aren’t left with a large bill in case anything happens to them while they are in school.
You want peace of mind: Tuition insurance is like any other insurance. You hope you never have to use it, but you’ll be glad you have it if an issue does arise. It’s just like insuring your other big purchases – you hope you never get in an accident, but if you do you’ll be really glad you are covered. There’s something to be said for not having to stress out about one more thing during college. Save that for midterms and final exams!
Is College Tuition Insurance Worth It?
Your particular situation will determine whether tuition insurance is worth the cost for you. Obviously, if you experience a medical emergency or tragic event that forces you or your child out of school, you will wish you had the insurance. But keep in mind that often, it only covers a portion of your expenses. And on the whole, most students aren’t going to get sick or injured.
One other thing to point out: schools have refund policies. If you have to withdraw early into a semester, it’s possible that you’d be partially covered in terms of reimbursement directly from the college. However, most schools only offer partial refunds if the student leaves school after the first week and many offer no refund after the first 5-6 weeks. It’s worth checking your school’s withdrawal policy before attending or signing up for insurance.
Tuition insurance can provide extra peace of mind in certain situations - but but it’s always wise to do your research – review the policy and consult the insurance companies to determine what’s right for your family.
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