Frequently Asked Questions About Tuition Insurance
What is Tuition Insurance?
I’m sending my oldest kid off to college soon. I keep reading about tuition insurance. What is tuition insurance? Do I need it?
Tuition insurance pays to refund the cost of tuition if a college student needs to take a semester off without warning. Only certain scenarios are covered that are usually health related, like if a student gets a critical injury or suffers a flare-up of a chronic health condition like diabetes.
Adjusting to college can be stressful even for otherwise healthy, well-adjusted young adults. Tuition insurance is designed to make it easier for students to take the time off they need.
What Does Tuition Insurance Cover?
My daughter is heading off to college and has a chronic illness that has a history of long-term effects. I want to ensure that if this happens and she is unable to attend her classes, she will be covered for the financial loss.
Tuition insurance covers health problems, including chronic illnesses like your daughter’s. Some tuition insurance policies may exclude pre-existing conditions, though, so that’s definitely something to check. An independent insurance agent can help you evaluate the exact terms of a potential policy.
Here are examples of situations that could be covered by tuition insurance:
- Head injuries such as concussions
- Catastrophic injuries from car accidents or recreational activities
- Severe contagious illness such as meningitis or mononucleosis
- Severe mental illnesses like bipolar disorder, schizophrenia, and major depression
- Chronic illnesses and autoimmune disorders such as diabetes, lupus, and multiple sclerosis
Some tuition insurance policies may also cover milder conditions like stress and anxiety. The payout for these situations may be lower than payouts for more severe and life-threatening illnesses.
In some cases tuition insurance may cover other major events such as the death of a family member that significantly impacts the student’s ability to stay in school. If the parents or guardians were the ones who purchased the policy, the student’s death may be covered by tuition insurance.
When refunding the cost of tuition, tuition insurance policies generally take into account and refund the amount of:
- Costs per credit hour
- Room and board costs
- Administrative fees associated with withdrawing
How Much Does Tuition Insurance Cost?
I think I want tuition insurance, but I'm not sure how much I should budget for it. Can you give me a ballpark?
It’s impossible to know the exact dollar amount you should be planning for since the cost of tuition insurance varies widely depending on the student’s health and the cost of the institution they’re planning to attend.
Typically, however, the cost of tuition insurance is in the hundreds of dollars per year.
The higher the tuition, the higher the premiums on your tuition insurance are likely to be. That’s simple math. The more money the insurance company might have to pay out, the more they’re going to charge you. But it also means that your payout will be higher if you get it.
An independent insurance agent can help you navigate the sometimes overwhelming field of tuition insurance. They’re not bound to any one insurance company, so they can shop around for something with the coverage you want at a price that’s affordable for you.
Is it Worth it to Get Tuition Insurance?
Do I really need to pay for tuition insurance on top of what I’m already paying for tuition? What are the pros and cons?
The exact pros and cons will vary depending on your situation, but here are two main reasons tuition insurance is a smart buy:
- Many serious health conditions such as autoimmune disorders and mental illnesses do not onset until someone’s late teens or early twenties, meaning a student could get blindsided by a life-changing condition in their first semesters with no warning
- College stress can cause health problems even in otherwise healthy young adults
College is expensive, and it’s only getting more expensive. Paying upwards of $10,000 for a semester of college only for the student to need to withdraw is an extremely expensive bummer.
Tuition insurance can:
- Reduce the guilt and stress associated with needing to withdraw, helping a student get better faster
- Alleviate student debt from an incomplete semester, meaning the student will have fewer barriers to returning to school someday if their health allows
- Give a chronically ill student more safeguards and confidence to allow them to succeed in school
Not all tuition insurance policies will cover pre-existing conditions, so be sure to check the fine print of a policy before relying on tuition insurance for a student who is already dealing with a health condition. An independent insurance agent can help find the right policy for you.
Whatever you decide, good luck to you and all the other parents, guardians, and students preparing for college. It’s smart to think ahead about tuition insurance.