Q. What is college tuition insurance?
A. It’s just what it sounds like — insurance coverage typically purchased by parents of college students so if their child has to unexpectedly withdraw from school during a semester, the family will be reimbursed the cost of the previously paid tuition.
However, there’s a lot more to it than that, and parents have a lot to consider. Like most kinds of insurance, there are different levels of coverage. Some policies cover just tuition; others include the prorated lost cost of room and board; some cover student loans. Some cover medical withdrawals due to physical illness or an injury such as an accident; others offer coverage for mental health issues.
Some offer a percentage back if the student withdraws for any reason, even just homesickness, which may be valuable during freshman year when students face the transition to college, says Joe Mason, chief marketing officer for Virginia-based Allianz Global Assistance, which launched its tuition insurance in early 2015 and will sell in New York beginning in the fall. “It provides peace of mind for the parents of the student. If something unexpected happens, their investment is protected,” he says. “With the skyrocketing cost of tuition, parents are more concerned than ever.”
Costs vary with the amount of tuition and/or room and board protected and whether student loan repayment is covered, Mason says. Parents whose children receive grants should determine whether they should cover that as well, if they will be expected to “repay” financial aid allocated to the child.
Certain companies operate in certain states, and whether parents can purchase protection may be determined by the student’s permanent address, not the state in which he or she attends college, Mason says. Whether a policy is available may also depend on what school the child attends.