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College Tuition Insurance: Do I Need It?

Let's face it - college is expensive. Have you heard of college tuition insurance? Are you wondering if you need it? Let's dive in to understand when and if college tuition insurance is right for your student!



Statue of Ben Franklin at the campus entrance of Franklin College located in Franklin, Indiana.
Ben Franklin statue located at Franklin College in Franklin, Indiana.

College Tuition Insurance: What is it?

College tuition insurance is insurance that you can purchase that will reimburse the balance owed if a student must withdraw for reasons outlined by the insurance policy. When you commit to a university, you are required to pay the amount you agree to. However, sometimes students must withdraw for reasons they didn't initially account for when committing to their dream college.


College Tuition Insurance: What does it typically cover?

Often times, college tuition insurance policies will cover reasons such as the following:

  • illness

  • injury - such as a car accident or sports injury (varies)

  • unexpected student's death

  • parent or tuition payer's death

  • mental health conditions - such as anxiety or severe depression

  • subsidized or unsubsidized loans

  • non-extendable scholarships

  • 529 savings plans

  • pre-existing health conditions (as long as something was not filed at least 120-180 days prior to the start of college, varies by state)

Not all college tuition insurance offers the same coverage so be sure to read the terms and conditions to understand the policy offered. Some standard exclusions might include:

  • drug use

  • extreme risk activities like skydiving

  • taking part in a riot or demonstration

  • "drop-out" protection - such as failing classes and not liking a school

College tuition insurance coverage should at a minimum cover the costs of tuition and room and board. Consider adding on coverage for non-refundable fees such as books, parking, student activities or scholarships/grants you would have to pay back early if there is a penalty.


College Tuition Insurance: How much is it?

Typically college tuition insurance costs around 1% of the total tuition cost. For example, if the tuition for the semester was $15,000, the insurance premium for the semester would be $150. Price can vary based on the type of coverage you select.


College Tuition Insurance: Do I really need it?

According to a survey in 2019, only 6% of universities reported offering 100% refund for reasons outlined above. None of the public colleges surveyed offered any full reimbursement and less than half didn't provide refunds on additional student fees. At the same time, we have seen a 70% increase in student medical withdrawals in the college setting.


Consider calling your student's financial aid office to inquire what is covered and what is not covered if your student must withdraw unexpectedly. If your student has an inconsistent medical history or struggles with their mental health, it would be worth the investment. Additionally, if your student is taking out substantial loans that aren't federal, you should get a tuition insurance plan to cover them. Sadly, many student loans are still required to be paid back even if a student were to die unexpectedly.


College Tuition Insurance: How do I get it?

Consider checking out GradGuard, one of the most popular resources for college tuition insurance, which can be found here: https://gradguard.com/tuition


For more information about maximizing a student's opportunities for college, reach out to us at info@hoosieracademiccoaching.com today!

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