Like pet health insurance, travel insurance, or renters insurance, tuition insurance is just another insurance policy that you don’t think about until you need it. Tuition refund insurance, commonly referred to as tuition insurance, comes in mighty handy if your child needs to withdraw from college suddenly.
One of the most common reasons students withdraw from college is due to medical issues. If your son or daughter has a serious or chronic illness, tuition insurance might be worth looking into. Be forewarned though, that some pre-existing conditions require a 6-12 month “waiting period” before coverage kicks in, possibly negating the point of having a policy.
Because the vast majority of college age students are in excellent health, it often does not make sense to tack on the additional expense of tuition insurance. However, if you are paying for all or most of the tuition and other expenses out of your own pocket, tuition insurance can provide you with peace of mind.
So, what exactly is covered under these policies? Coverage generally includes illness, injury, or death of the student, parent, or guardian. Some policies also cover involuntary job loss or relocation, mental health withdrawals, voluntary withdrawal, and dismissal or suspension for academic or disciplinary reasons. Be sure to ask whether coverage is full or partial and for a list of exclusions.
Policies are issued by the college or a third-party. College-issued tuition policies—big surprise—favor the college and tend to be stingy. Third-party policies are issued either through select colleges or group plans. For more information on these, click here.
I know you have a lot to think about already, but keep in mind that refund policies can be complicated. Federal student aid, for example, is prorated. If your child completes 60% or more of the enrollment period*, they have earned 100% of the aid and you would not need a refund on any of the aid. But if your child completes less than 60% of the enrollment period, financial aid that has not been used must be returned to the government or student loan lender. College refund policies are not regulated like federal student aid, so they can basically do whatever they like. Some colleges will refund all or a portion of tuition and room and board within 30 days. You’ll need to check with the Admissions Office of your student’s college for their specific policy.
And, as with all insurance policies or legal documents, it’s in your best interest to read the fine print and ask questions of the insurance provider to ensure you clearly understand the policy and its terms.
*Enrollment period usually ranges from the first day of class through the end of final exams.
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