It’s tough enough to pay your child’s college tuition bill. Worse still, if he or she doesn’t finish the semester. Given the amount of money involved, some are finding tuition insurance a safety net.
“Safeguarding your tuition investment is a smart financial decision. Even the best students can struggle with adjusting to the demands of a university, fall ill or need to take time off during the middle of the semester for a personal reason,” explains Joe Mason, chief marketing officer in Richmond, Virginia, for Allianz Global Assistance, a provider of tuition insurance.
- Get the facts: Many people don’t know college tuition insurance exists. Typically, it covers illness, injury or other unforeseen circumstances. “It doesn’t cover poor academic performance, substance abuse or extreme sports accidents,” Mason says.
- How much does it cost? The most commonly purchased preferred plan would cost a family about $202.50 per semester if the student’s annual tuition, fees and room and board were $30,000, he says.
Kristen Moon, an independent college counselor in Bellmore, is cautious: “Many plans are over $500 a year. For example, GradGuard policies start around $50 a month and cover up to $25,000 of expenses.”
- Be clear about what’s covered: “This insurance does not help if a student wants to change schools or the family can no longer afford the tuition,” says Moon.
Some plans pay a percentage of your total outlay, with the amount depending on the reason, she says.
Inquire about your school’s refund policy. NerdWallet.com insurance expert Amy Danise says, “Your college might give you some of the money back.”