Should you buy tuition refund insurance?

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College students
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Paying for higher education is one of the biggest investments — both financially and personally — you can possibly make in yourself.

With rising college expenses, it’s only natural that the idea of “insuring” the money you pay toward your education would arise, along with a third-party marketplace for the sale of tuition insurance, also known as tuition refund insurance.

But is it wise to buy a tuition insurance policy?

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Tuition insurance: Deal or dud?

The average annual cost of tuition, fees, room and board ranges from $18,943 at a public four-year university to $42,419 at a private university, according to the latest numbers from the College Board.

That high cost has driven some parents to seek out a tuition refund insurance policy that will reimburse them in whole or part for money paid out of their pocket or borrowed via student loans.

Among the insurers offering tuition refund insurance are Allianz, A.W.G. Dewar and GradGuard.

What does tuition refund insurance cover?

Tuition insurance policies typically cover tuition, fees and the cost of on-campus housing if a student withdraws from school.

What qualified events would trigger a tuition insurance policy to pay out?

Most policies are designed to pay out if a student develops a serious health condition and can no longer attend school after tuition has been paid.

Mental health issues may be covered if a student is hospitalized for anywhere between 24 to 48 hours.

Are qualified events covered at 100%?

Not necessarily. Depending on the level of coverage you buy, your payout may be capped at a fixed dollar amount or a certain percentage of the tuition you paid for that semester.

What are some common exclusions?

Exclusions usually include withdrawing for academic reasons, getting expelled from school or suddenly deciding college just isn’t your thing.

How much does tuition insurance cost?

$29.95 is a common price point for basic coverage per semester.

Plan costs go up from there, often expressed as a percent of covered expenses. So, for example, it would be more expensive to purchase coverage while attending a private school versus while attending a public school.

Allianz tuition insurance plans
Allianz tuition insurance plans
GradGuard tuition insurance plan
GradGuard tuition insurance plan

So…is tuition insurance a good buy?

In reality, most schools will work with you if you develop a serious health issue that prevents you from advancing in your studies. There’s no need to pay for any additional insurance.

Refund policies are common with certain time frames. And, unlike tuition insurance, your school’s existing refund policy likely won’t exclude you if you want a refund for something other than a medical or mental health reason.

So the bottom-line is ask your school about their refund policy before you even consider buying tuition insurance!

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