As the cost of tuition continues to rise each year, parents and students should be aware of tuition refund insurance as one option to reduce the risk of losing this money. Though college students are typically young and healthy, illnesses can strike at any age. Should a student become seriously ill after the school’s permitted withdrawal date, the school will keep the tuition regardless of whether or not the student can attend class.
The primary purpose of tuition refund insurance is to provide coverage for students who become ill and are not able to attend classes for a period of time, forcing them to withdraw from school. Policies commonly exclude illnesses related to pre-existing conditions. However, some policies also cover other events. For example, a policy may pay the remaining amount of tuition if a parent who is paying for school becomes unemployed, disabled or dies.
The amount of coverage a policy provides will vary depending on the company, but many policies cover a full 100% of the tuition costs. Companies provide this amount even if the student or parent has not paid the full amount. If the entire balance of the tuition is not paid, the tuition refund insurance will pay the remaining balance to the school while returning the amount paid to the student or parent. Some policies may offer reduced benefit amounts for withdraws due to psychological or emotional illnesses. Tuition refund insurance policies will also reimburse federal and private student loan programs that pay tuition costs for a student.
Cost of Coverage
Though the cost of tuition refund insurance will vary depending on the insurance company providing coverage, generally the cost equals only a small percentage of the cost of tuition. Costs often run between one and five percent of the cost of tuition, but some plans may be lower than one percent. For example, if a school’s tuition is $10,000 per year, parents or students may expect tuition refund insurance to cost between $100 and $500.
The relative cost of the tuition is another factor to consider. Tuition refund insurance plans may be most attractive for students attending private colleges with very high tuition costs. Parents and students should also consider how long into a semester a college allows a student to withdraw and receive a full or partial refund of tuition. Though many colleges and universities offer insurance, a student or parent should shop other companies to find the best deals. However, some schools require the purchase of tuition refund insurance and include the costs in the student fees assessed by the college.