As nearly 3 million new college students and their families prepare to start college this year, now is an excellent time for parents and students to examine important financial issues that can impact the entire family. The cost of college is frequently among the largest investments a family and student make. As a result, it is important to prepare for and reduce the potential and unintended costs surrounding college life. According to GradGuard™, an insurance and benefits service for college students, a key place to start is to evaluate your assumptions about college life and explore alternatives for how you can protect your investment in a college education.
1. My child’s health insurance is covered by his school
Some schools offer health insurance, others do not. First, you should check to see if your student is covered by your family health insurance plan. Be sure to verify what the college’s coverage requirements are and be sure to check the bursar’s statement bill to see if you have been billed for health insurance. If your student does not have access to an employer-sponsored plan or you are not satisfied with the coverage provided by a school-sponsored plan, there are alternatives. For example, College Parents of America offers a Student Health Plan that is available through eHealth.com and CollegeParents.org.
2. Campus housing will pay for my student’s damaged or stolen property
With an annual average of 3,840 structure fires in dormitories, fraternities, sororities, and barracks (source: National Fire Protection Association) and over 24,000 burglaries reported annually on campuses according to the U.S. Department of Education, students need to know that they are responsible for the damage or loss that occurs in their college housing. Parents should review their home insurance policies closely for certain limitations. Most policies provide some coverage for students away at college but may limit that coverage to full time or on-campus students only. Additionally, filing small claims against a home policy may result in higher premiums or be subjected to high deductibles. If a student lives away from home he or she will likely benefit from buying a renters insurance policy. Renters insurance typically offers a low deductible ($100.00) and includes protection for both personal liability and property. With an average annual cost of $160 per year (complete with $50,000 of liability coverage), this is a minimal cost that could potentially save a student thousands.
3. If my child gets sick or injured, the college will refund tuition and fees
Most colleges do not provide a complete refund to students who have an unexpected need to withdrawal that is a result of a medical injury or illness. American College Health Association research from 2011 indicates that students surveyed report that 16 percent had a cold, flu or illness, 11.9 percent had depression and approximately 2 percent of students reported having been injured or diagnosed with mononucleosis in the past 12 months which impacted their academic performance. Many students can overcome these unexpected events, but the financial loss can be large if they are unable to complete the semester. Though some schools may provide a partial refund for tuition up through the fifth week of school, nearly all schools do not refund the costs beyond tuition such as books and academic fees. As a result, tuition insurance may be a smart alternative to protect your college investment from a potential loss. (Note, tuition insurance is not drop-out insurance but instead protects a student and their family from the potential loss that may result from a student completing a medical withdrawal.)
4. What happens if something unforeseen prevents a parent from making tuition payments?
If a parent is the primary payer of tuition and the student’s ability to complete an education is contingent on the health and financial well being, be certain to review your life insurance and allocate part of the face value to higher education payments. It may be that a simple and affordable accidental life policy provides some additional protection to cover college expenses in the event of an accidental death. Other events that cause financial hardship and may prevent the completion of an education are disability and involuntary unemployment and these risks can be covered through third party insurance policies as well.
5. My child’s identity is protected by her credit card company
According to a 2010 Identity Fraud Survey Report from Javelin Strategy and Research students (ages 18 – 24) are among the most vulnerable to identity theft and, even worse, take an average of 132 days to realize they’ve been affected by identity theft. As a result, it is useful for students to consider protecting themselves with Identity Theft Insurance and Resolution Service which offers protection beyond what a credit card company can provide.
“Remember that the best way to manage risks facing your student and the investment you are making in college is to be aware of where your student may be vulnerable,” said John Fees, CEO, Next Generation Insurance Group, creators of GradGuard. “The right insurance will give your family the security and ability to overcome setbacks and financial losses that may occur as a result of the risks of college life.”
GradGuard is a service of Next Generation Insurance Group, LLC (NGI). Founded by veteran collegiate, affinity and insurance marketing executives, NGI has established the nation’s first comprehensive insurance and benefits solution specifically designed for the collegiate market. GradGuard.com aims to offer protection for college life. Its products include tuition refund insurance, renters insurance and student health insurance. For more information, visit www.gradguard.com or call 877-556-3984. Follow the company on Twitter @gradguard for life-stage risk news, information and product updates.