College Tuition Insurance: is it Actually Helpful?

It seems like there’s an insurance policy for everything these days. In addition to the basic policies like homeowners, auto and life insurance, you can purchase policies on rental cars, rental bikes, rental properties, vacations and more.

One type of insurance that’s beginning to increase in popularity is college tuition insurance. Being that schools only offer insurance/refunds themselves on a limited basis, more students and parents are taking matters into their own hands to ensure they’re not out of thousands of dollars should a withdrawal occur.

College is expensive and only getting more expensive. Even as coronavirus concerns continue with a recent uptick of cases, many universities throughout the country have approved tuition hikes for the 2021-22 academic year.

Before we get into the nitty gritty of tuition insurance and why you may or may not need it, it’s first worth noting that according to a report from CNBC, only about 6 percent of the nation’s colleges offer 100 percent refunds for medical withdrawal. Colleges typically offer some sort of tuition refund for withdrawals – medical or otherwise – but these refunds are often staggered based on when the student withdraws from classes. For instance, if a student makes it too deep into the semester before withdrawing, they may not be eligible for any type of refund at all – regardless of the circumstances behind their exit.

So is college tuition insurance right for you? If the college that you’re paying tuition to has gaps in its refund policy, then it could be worth it to consider. Simply put, tuition insurance covers families should a student have to withdraw for medical or mental health reasons. We should note that it does not offer reimbursement if a student were to flunk out of school. The price of tuition insurance is also fairly affordable, especially when you consider the high cost of college tuition in the first place. Third-party services like GradGuard, for instance, offer coverage for $2,500 of tuition fees for about $40. Coverage on $10,000 of tuition fees runs a little more than $100.

But the million dollar question is still whether or not this makes sense to purchase. We think it does for certain individuals. For instance, if a student hasn’t been vaccinated or is immunocompromised, then certainly the chances of COVID-19 or any other type of illness disrupting the academic year becomes more likely. It could also be worth it for students who have a history of anxiety or depression, and may not do well in situations where more than just their academics could be having an effect on their psyche. Finally, it’s also for families who would just rather not gamble on the unthinkable and don’t mind spending another $100 for some peace of mind.


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