What Is Tuition Insurance?

Tuition can easily run into the tens of thousands of dollars per year. And tuition insurance can protect your financial investment in your education.

Every term, students withdraw from college because of illnesses, injuries, or mental health conditions. Tuition insurance repays part or all of your tuition if you need to leave school.

But how do you get tuition insurance? And is tuition insurance worth it?

College tuition represents a major cost for many students. On average, undergraduates pay $9,350-$32,770 per year in tuition and fees, as of the 2019-2020 academic year. That’s one reason students sued colleges to reimburse tuition during the COVID-19 lockdown. Tuition insurance helps families protect themselves if a student needs to withdraw during the semester.

Tuition refund insurance is different from tuition reimbursement, which is when a company pays tuition for employees. Instead, tuition insurance operates like other forms of insurance. Students pay a premium to receive insurance coverage. If they need to leave school for a covered reason — like a medical issue — the insurance repays part or all of the tuition.

Tuition insurance typically costs around 1% of tuition. Students can purchase tuition insurance from an insurance company, through their college, or even as an add-on to student loans. The exact cost depends on the coverage and the tuition cost. For example, students with a higher tuition rate will need to purchase more coverage than those paying a lower rate.

Companies like GradGuard and Dewar provide tuition insurance quotes, for example. Students considering tuition refund insurance can also contact their school to ask about options.

Does tuition insurance make sense for you? Consider the following situations where purchasing a tuition insurance plan might be a good option.

Students leave college during the term for several reasons, including for medical emergencies, mental health conditions, or a flare-up of a pre-existing medical condition. While you cannot predict emergencies, if you have a medical condition that could affect your education, consider insurance.

Before purchasing a plan, however, it’s important to understand what exactly is covered, what’s excluded, and the process of filing a claim. For example, policies may exclude pre-existing conditions, pay out less than 100%, or require a doctor’s approval.

Is tuition a major part of your budget, or could you afford to pay tuition for a semester if you had to withdraw? The answer depends on your circumstances. However, students attending the most expensive schools might benefit more from insurance. While many public colleges charge under $10,000 per year, a single semester at an elite private school can run $25,000 or more.

Check your school’s policy. Some schools automatically enroll new students into a tuition insurance plan. And some provide more flexible options than others. For example, at most schools, students who withdraw during the first few weeks receive a refund. But withdrawing later in the semester could mean losing your tuition payment. Contact the financial aid office to learn more.

If tuition refund insurance makes sense for you, how should you get an insurance plan? Here are the steps you’ll need to take when purchasing tuition insurance.

First, make sure you have the documentation you’ll need. Make sure you can document the cost of tuition and related expenses like room and board. Use this information to seek out insurance plans that meet your needs.

In some cases, such as for students with pre-existing medical conditions, you may need a doctor’s note that says you can attend school. Keep in mind that you’ll also need documentation to make a claim on your insurance plan.

Contact your school to ask whether they provide a tuition insurance plan. Many schools partner with insurers to provide plans or automatically enroll students. The student accounts office or financial aid office can typically answer questions about tuition refunds and insurance options.

Compare tuition insurance plans by requesting quotes. Research the cost of the plan and what it covers. Pay attention to details like what percentage of costs the plan repays — many plans cover 80% of expenses. Check whether the plan offers semester-to-semester coverage or annual coverage. And look into the claim process.

Check the fine print before you sign up for tuition refund insurance. Some pre-existing illnesses might not be covered. And most plans do not cover pandemics, drug-related withdrawals, or withdrawals where students earn credit. Contact the insurance agency to discuss specific concerns or circumstances.

Is tuition insurance worth it? The answer depends on your circumstances.

Purchasing tuition insurance is a personal decision. If you’ve faced medical or mental health conditions that might disrupt your education, tuition insurance can protect your investment. Generally, healthy students might not see tuition insurance as a worthwhile investment.

Weigh factors like the cost of tuition against the likelihood of needing to withdraw. Look at the policies offered through your school or private insurers. And then make an informed decision about tuition refund insurance.

DISCLAIMER: The information provided on this website does not, and is not intended to, constitute professional financial advice; instead, all information, content, and materials available on this site are for general informational purposes only. Readers of this website should contact a professional advisor before making decisions about financial issues.