I was talking to our college counselor for my daughter who is going to be a freshman in college. He recommended that we buy insurance to protect tuition fee in case of any emergency or illness etc. Is it really necessary?
Insurance packages exist for just about every large purchase you make in life: a home, a car, and valuables, like jewelry, art, and collectible items. Given that college is a pretty significant financial commitment, it makes sense that there are insurance options to help protect that investment as well.
However, coverage for your college education is not a must-have, like home or car insurance, making many people wonder if it’s truly necessary. Before you make the decision about whether or not tuition insurance is right for you, learn more about what policies typically cover and cost.
What is tuition insurance for college students?
College students are not immune to life circumstances, and sometimes things happen which require a student to leave school. Tuition insurance works to cover college costs that are owed so that the student can leave school without having to continue to pay for their education.
Typically, college insurance covers tuition, room and board, and fees. Eligible circumstances include, but are not limited to, serious covered injury or illness, chronic illness, or mental health conditions. Policies vary, so it would be important to find the most inclusive one.
How much does it cost?
According to NerdWallet, tuition insurance policies are available for under $200 per semester. If you intend to graduate college within four years, your coverage costs for your total education would be just under $1,600. When you compare that to the thousands of dollars you’re spending on your college education, it’s not that expensive.
NerdWallet reports that some schools have their own tuition insurance, and fees hover around 1% of college costs. Other colleges have agreements with third-party providers, making fees lower in those instances as well. However, if your college does not have tuition insurance or an agreement with a provider, third party companies will charge higher fees for their services.
Is it really necessary?
For some colleges and universities, tuition insurance is not necessary. Before you enroll, look up your school’s leave policies. Determine if they provide refunds for medical and/or mental health related withdrawals. You should also check to see what else is covered under their withdraw and refund policies.
In a post-COVID world, more and more families may flock to tuition insurance policies, especially those that provide coverage for global pandemics. In 2020, many students were not refunded when campuses went 100% virtual, requiring families to pay for an in-person college education when that’s not what they were receiving. In light of that, some third-party providers will reimburse students for college costs if they have to return to virtual learning again.
Finally, students that contracted COVID-19 and were not able to attend classes, or who suffered long-term effects and had to withdraw, may not have been reimbursed for their college costs that they did not use. In that event, tuition insurance could have saved them hundreds or thousands of dollars.
How do I purchase tuition insurance?
Again, some colleges and universities offer tuition coverage, while others partner with specific providers. If your college does not have any tuition insurance or provider recommendations, there are plenty of companies to help you.
One of the largest such companies is GradGuard. However, companies that provide home, renters, and automobile coverage, may also provide tuition insurance. Oftentimes, you can bundle this option with your other insurance needs and get a discount. Check with your current provider to see if they offer this amenity.
Is tuition insurance right for you?
Ultimately, tuition insurance needs will vary from student to student. A majority of students will never utilize their tuition insurance. However, having this type of coverage may provide peace of mind to students and families as they make one of the largest investments of their lives. If you can afford tuition insurance, and it will alleviate anxieties, go for it. If you can’t afford tuition coverage, look carefully at your school’s withdrawal policies, and be ok with taking a chance that you’ll finish your degree without facing the prospect of leaving. It’s very likely that you wouldn’t even need it.
If you have financial aid questions or concerns, please visit our Answering Your Questions for more information.