Tuition Refund Insurance

Tuition Refund Insurance

If you have kids in college, you probably carry insurance to cover trips to the hospital ER, automobile accidents, and perhaps even dorm or apartment thefts. But what about the thousands of dollars in college tuition tab you have sweated and saved to stockpile?

Are you protected in case your son or daughter withdraws from school because of medical reasons or because you have lost your job and can no longer afford the tuition bill?

An obscure policy that’s been around since the 1930s reimburses you for all or the most your tuition and other fees in the event that the unexpected happens. It’s called tuition refund insurance.

The policies are offered by most school or can be bought directly from some insurance companies. Rates are based on a percentage of the tuition, typically 3 to 5 percent – and premiums can cost several hundred dollars. “What you are buying is peace of mind,” said Kal Chany, author of The Princeton Review’s Paying for College without going broke.

But base your buying on more than just comfort. After all, colleges will reimburse most of the tuition if the student is forced to leave school before the end of the term. Naturally, the deeper into the semester the smaller the refund you will receive. And there’s another caveat – Only certain situations are covered, typically medical or psychological issues that force a relatively small percentage of the students to withdraw every year.

  A few schools also refund money for job loss reasons, though more colleges are looking to add that option given the current economic malaise, said David Galvin, president of the Education Insurance Plans insurance brokerage.

Still, with thousands of dollars in tuition, books and dorm expenses at stake, paying a few hundred more for refund insurance is worth at least a look. If you are getting ready to pay the fall semester bill, or even if you already have, there’s still time to purchase tuition refund insurance. The first day of class generally marks the deadline for adding coverage.

First, start with the school’s refund policy and read all the fine print. Do they offer an insurance option, and if so, what situations are covered? Is coverage purely voluntary, or is the premium paid for by the school?

Mark Kantrowitz, publisher of the FinAid.org college financing website, does not recommend the purchasing the coverage unless there is a medical issue known in advance that might prevent a student from finishing the semester. Because most school have generous refund policies, Chany said, tuition insurance probably makes the most sense for families sending their kids to a higher-cost institution.

Search the web for College Tuition Refund Insurance to learn more.

Steven Rosen
Sun Sentinal