Is Tuition Insurance Worth the Money?

Most colleges come with a hefty price tag, and you might be looking for ways to protect your investment – especially if you might need to leave school early due to a medical condition. One way to protect yourself financially is with tuition insurance.

Tuition insurance can refund your money in the event of an illness or injury. To learn how it works and whether this form of college insurance could be right for you, we’ll ask and try to answer these four questions:

What is tuition insurance?

Tuition insurance, which is also commonly referred to as “tuition refund insurance,” provides a safety net of coverage for students in the event that they must withdraw from school, typically for medical or mental health reasons.

Let’s say a student experiences a life-changing illness or accident and is unable to continue with their schooling. Under a tuition insurance plan, that student may qualify for a reimbursement of school-related expenses to help cover costs.

This can ensure that whatever money has gone toward school is recouped in the event a student can’t continue.

What is covered?

Tuition refund insurance varies by plan, but typically only covers certain qualified events. So if a student drops out just because they’re no longer interested in pursuing their education, they likely won’t qualify for a tuition reimbursement.

In order to qualify for a tuition insurance reimbursement, students typically must have a qualifying medical event.

As you can imagine, there are many medical events that could result in a withdrawal from school. According to GradGuard, a provider of tuition insurance, students can receive some tuition reimbursement (depending on the type of plan) for the following reasons:

• Serious injury or illness, such as mononucleosis.
• Chronic illness, such as diabetes.
• Mental health conditions, such as anxiety, depression or severe stress.

Your overall reimbursement depends on the type of policy you get and the reason for withdrawal. For example, you may get a certain percentage of qualifying losses based on the price of tuition and room and board, as well as other fees.

How much you pay for tuition insurance can vary by provider and coverage amounts. To give an example, a quote from GradGuard shows that the cost of tuition insurance for an UC Berkeley student living on campus with $10,000 in coverage would be $370 for the year.

Tuition insurance isn’t terribly expensive for a policy, and it could be worth it to protect your investment. But depending on your situation, a college tuition insurance plan may not be worth the expense.

Who should get college insurance?

If you’re thinking of getting a college tuition insurance plan, you may be wondering if it’s the right fit for your situation. While a tuition insurance plan can provide much-needed peace of mind if anything happens, you may not need it.

Getting a tuition insurance plan is typically a good idea if the student has a prior medical history, or if you or your child are attending an expensive college and the peace of mind will ease some of your worries.

However, as with any contract, it’s important to read the fine print. Some tuition insurance plans may have preexisting medical condition exclusions. Some plans may only cover partial tuition or have high deductibles.

If you do opt for a plan, you want to make sure to read the fine print and know exactly what type of plan you are getting and what the tuition insurance plan covers – and most importantly, what it doesn’t.

Is tuition insurance worth the cost?

Some experts say that tuition insurance simply isn’t worth the cost. While it may provide some peace of mind for those “what if” situations, it typically doesn’t have a high return on investment – either because you (hopefully) never need to use it or it only covers a portion of your expenses.

If potential illness is a concern, one thing students and parents can do is look into any refund policies at their schools. Your school may or may not provide such a policy, but it doesn’t hurt to ask. Also, if you withdraw within the first few weeks of school, you may be able to recoup some of your costs.

If you’re a parent or soon-to-be student, think carefully before opting for tuition insurance. If you have reason to believe it will be of benefit, it could help, but in many cases it may just be an unnecessary added expense to your cost of attendance.