Tuition insurance: Is it worth it?
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Tuition insurance is a type of coverage that refunds students a portion of their education expenses if they have to drop out due to injury or illness. Tuition insurance can save you thousands of dollars in tuition and related expenses in the event of an emergency, but it’s not always necessary. Many colleges offer their own leave policies that serve a similar purpose, so it’s important to research all of your options before signing up.
What is college tuition insurance?
College tuition insurance, also known as tuition refund insurance, covers tuition and qualifying expenses in the case of an emergency situation that results in an unexpected withdrawal during an academic semester.
While every policy will have different regulations, the illness, accident or emergency generally must be considered debilitating and render the student unable to continue with their studies. In some cases, chronic or preexisting conditions may be eligible for coverage in addition to unforeseen illness and injury.
What tuition insurance covers
The specifics of tuition insurance coverage varies by the provider and your school. However, most providers cover tuition, room and board and fees after:
- A death in the family.
- A life-altering illness or injury.
- A chronic illness, disability or injury.
- A debilitating mental health condition or illness.
In the wake of the COVID-19 pandemic, providers are also starting to offer pandemic or epidemic coverage. GradGuard, a prominent tuition insurance company, includes COVID-19 coverage on all plans purchased on or after Feb. 18, 2022.
How much tuition insurance costs
On average, tuition insurance costs roughly 1 percent of your total tuition costs, according to the National Association of Insurance Commissioners. However, the amount of coverage is flexible.
Depending on the policy, some providers may allow you to cover a portion of your tuition, although most cover the costs per academic semester and require you to renew your coverage each semester.
When is college tuition insurance worth it?
It’s not uncommon for students to withdraw from college for a semester or longer due to health challenges. Because of this, many schools have safeguards in place that allow students to do so without an additional charge, at least for the first few weeks of school. If your school has clear refund policies for withdrawals, tuition insurance ultimately may not make sense. The biggest risk is withdrawing near the end of the semester, when schools may be more reluctant to offer even partial refunds.
College tuition insurance may be worth it if your school doesn’t offer a medical withdrawal refund or if it doesn’t cover your anticipated needs. For instance, if you have a preexisting mental health condition and your school does not cover it in its refund policy, you may consider tuition insurance. If you can’t find the information you need or if the details are murky, contact the office of financial aid or the registrar’s office for more information.
Tuition insurance can save you thousands of dollars in the event that you withdraw, but it’s only worth it after you’ve done the proper research on your school’s policy and the cost of insurance; otherwise, you’re wasting money on coverage that you’re given for free by your school.