Tuition Insurance: A Lesser-Known Lifesaver

By Julia Dunn on September 21, 2017

When starting college, you make sure to get health insurance and maybe renter’s insurance, but students (and their caregivers) don’t often think of tuition insurance.

Consider the following scenarios:

1. You move across the country to attend a university, confident you’ll be able to adjust perfectly without family close by to ease the transition. You find yourself unhappy in your new environment and anxious about daily life at school because things are unfamiliar. Once several weeks go by and it’s the middle of the term, you come to terms with your decision: you want to withdraw. You go to your school registrar/bursar’s department and realize they aren’t going to refund you for the student fees, tuition, food, and housing you just paid for a few weeks ago. What now?

2. You start to attend classes and realize you might have needed some more support (or more time) to learn foundational concepts in your field before jumping into things at a large institution. You decide to withdraw from the university to go to a community college, after which you’ll reassess where you may want to transfer. You contact the department on campus that manages billing, and they tell you they’ll only cover about half of your expenses. What do you do about the other half?

These are just a few scenarios that could occur for a college student. Other common reasons you might need to withdraw from college could include illness and injury, along with other accidents or emergencies pertaining to physical and mental health. These unfortunate events take place when you least expect them, and emergencies are more common than we tend to remember (in particular, mental health issues are rapidly on the rise).

Image via Wikipedia Commons

In a nutshell, tuition insurance protects you if your university does not give you a refund in the event that you must withdraw from college unexpectedly. It allows you peace of mind and safety knowing that your investment is secure. However, to be insured, you must purchase tuition insurance before school starts — not just as soon as you know that you/your student is going to be withdrawing from college.

While most tuition insurance plans refund some amount of tuition and on-campus housing fees upon a student’s withdrawal from their university, it’s imperative to know that “policies often exclude pre-existing conditions and will not pay out in cases of self-inflicted injury, drug use or expulsion. And while insurers generally offer full reimbursement for medical withdrawal, most only provide a partial refund for mental health-related withdrawals” (source: The Washington Post).

Many students wonder if they can get tuition insurance from companies such as GradGuard if they are paying for school with financial aid. According to GradGuard’s Frequently Asked Questions page, the answer is yes (for their insurance).

“Students who pay for all or part of their tuition using a student loan are still eligible for our insurance and for a refund of their tuition. If the student is still responsible for paying back the student loan after they withdraw, then GradGuard Tuition Protection Plan may refund that amount minus any refunds given by the school. The same applies for any financial aid. However, tuition reimbursement insurance only reimburses expenses paid out of pocket, not grants or scholarships paid directly to the school.”

It’s rare that a university will provide a 100 percent refund for tuition and fees, even if you withdraw by a certain deadline (usually after the first few weeks of classes). To determine whether tuition insurance is a worthwhile cost for yourself or your family, make sure to examine your university’s policies surrounding payment and withdrawal. If you are unclear about the policy, contact your university’s registrar or bursar’s office to get your questions answered — if you’re lucky and your school has a generous payment policy for withdrawal cases, you may choose not to pursue tuition insurance. However, if you do, know that tuition insurance can supply up to a 100 percent refund if you or your student must withdraw.

To recap, you’ll want to start thinking about tuition insurance if you have a lot of academic expenses (academic expenses do not count as tuition, so although your school may completely reimburse your tuition, it won’t compensate you for your academic costs). The great part about tuition insurance is that it usually offers coverage for housing costs along with academic costs. You’ll also want to remember that if you’ve taken out student loans, you are still responsible for paying that off even if you withdraw. Insurance can help pay the loan balance for you!

You might not think this situation could happen to you/your student; in truth, it could, and withdrawal can emerge as the best option for a tricky scenario. Paying for tuition insurance is a much better option when the alternative could cost you much more out of pocket.

By Julia Dunn

Uloop Writer
A writer, editor and educator based in Northern California.

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