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Student Life

Don’t Rely on College Refunds: Why Tuition Insurance is Important

January 4, 2021

This year has left many individuals uncertain what their academic futures will look like. With COVID forcing colleges and universities to change their business tactics, many students are finding it nearly impossible to get tuition refunds if they are forced to withdraw from school.


How can you protect your investment in your education and get a full refund for your college tuition?

Tuition insurance is a great way to keep your finances secure in a time of crisis. Here’s a guide to help you understand tuition insurance and how it could benefit you.


How COVID has Affected Refund Policies


Most colleges and universities offer a refund policy allowing you to get your money back after deciding to withdraw from school. This usually applies only to the first five weeks of college. However, most schools do not refund 100% of the money you paid to attend.


COVID has affected college life in many ways as most students shift to online classes. Many institutions are continuing to charge room and board, even while students study from home. Some classes also lack certain classroom fundamentals. This includes mock trials, clinical experiences, and more.


Some colleges have found themselves unable to give refunds at all. The virus has brought many new changes that universities aren’t sure how to cope with; some schools are citing a lack of funding as a reason to hold onto college tuition. Due to this lack of funding, among other issues that universities are facing with the virus, you may have a hard time getting a refund.


What That Means for You

If you decide to attend college or a university in the near future and decide to withdraw yourself, you may be out of luck when trying to get a refund. Some students have taken their universities to court over the matter. Many cases are still pending and waiting for a resolution. 


Not only will you be paying for things you won’t actually receive, such as room and board, but you may not even get your money back after dropping out. At most, you may receive a small fraction of what you paid. 


What is Tuition Insurance?


Are you considering applying for college in the coming year? If so, then you should strongly consider getting tuition insurance for yourself. This will help you protect your money in case you decide not to follow through with your education.


Tuition insurance, otherwise known as tuition refund insurance, is exactly what it sounds like; it protects you from being denied a tuition refund after withdrawing from school. The reasoning behind your withdrawal, however, must be due to your medical or mental state. For example, if you received a serious injury that prevents you from attending your classes, then you can get your tuition funds back with tuition insurance.


Your reimbursement may depend on the type of coverage you apply for. This means that you are not guaranteed a 100% refund just because you have tuition insurance; however, it is better to receive a percentage of your tuition because of your insurance than to be denied any refund.


Tuition insurance commonly covers one academic term. However, you are able to purchase additional insurance policies in order to protect yourself throughout your academic career. 


The Benefits of Tuition Insurance


Tuition insurance can grant you peace of mind when it comes to paying for your education. You can know that your investment in your education is safe and that if the worst happens, you can get your money refunded. 


If you are wondering whether or not tuition insurance is right for you, there are a couple of things you can consider.


First off, consider the overall cost of your tuition. Is the institution you are attending particularly expensive? If so, then tuition insurance can greatly ease your mind and is a great way to protect your investment.


If you have a chronic illness or severe mental illness or disability that may make it hard for you to attend college, then tuition insurance is a great way to protect yourself. The last thing you want is to enter into your institution and realize you cannot continue due to your physical or mental health.


With COVID as a serious threat to your physical health, you should strongly consider tuition insurance in case you do contract the virus. This disease can leave you bedridden for weeks, which would make you incapable of completing your schoolwork and attending your classes even if they are online.


How to Get Tuition Insurance


If you are considering tuition insurance, you will need to apply for coverage before beginning the academic year. You are not required to purchase tuition insurance for the entirety of your academic career, so choose your plan and coverage wisely.


There are many different plans that you can choose from, so do your research before settling on a plan. Your school likely offers various forms of tuition insurance, so don’t hesitate to look and see what plans they are offering as well. 


Protect Yourself and Your Money


There’s no need to worry about where your money is going when it comes to your college tuition. With tuition insurance, you can keep your assets safe and get a college refund without being denied by your university.


Are you considering attending a university in the near future but are concerned about needing to have your tuition refunded?


We’re here to help. Contact us with any questions or concerns you have about our tuition insurance and continue reading our blog for more helpful information.

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What would happen if your college student unexpectedly needs to withdraw from college?

August 7, 2019

GradGuard’s tuition insurance provides a refund when schools don’t.

Nationwide, college families are busy preparing to pay their final tuition bill before arriving on campus.  Among the many questions, families of college-bound students are smart to ask is – What will happen to my tuition payment if my child must withdraw from college?

According to John Fees, co-founder of GradGuard™, a leading authority in helping students and their families protect their investment in higher education for over a decade, “The thousands of dollars students and families are paying for college are at risk. As a result, it is a smart move for anyone paying tuition to understand their school’s refund policy and to consider protecting their investment with tuition insurance.”

In fact, a survey of university bursars and health administrators confirmed the vast majority of colleges and universities (about 84%) do not provide a complete refund should a student withdraw after the first few weeks of school.  Many schools may refund a portion of tuition through the first few weeks of school, but you can safely assume tuition will likely not be refunded after the 5th week of classes and academic fees are usually not eligible for a refund.

This risk can often surprise college parents. In fact, according to a 2018 College Parents of America survey, only 24% of parents surveyed indicated that the college refund policy was disclosed to them during the enrollment process.

Families are often aware that their college student may be vulnerable to the stress of college life. The National College Health Assessment produced by the American College Health Association demonstrates growth in chronic illnesses and rapid growth in serious mental health incidents during the past five years.

It is important for families to note that student health incidents force thousands of students to withdraw from classes annually without the ability to recover the thousands of dollars paid for classes and housing.

The Top Three Reasons GradGuard’s Tuition Insurance Is A Smart Decision:

  • If the school does not provide a 100% refund  – Do you know your school’s refund policy? A majority of school refund policies do not extend beyond the fifth week of school, and many don’t refund the full cost of tuition after the start of classes.  
  • If the student has more than $1,000 of academic expenses – Even if the school provides a 100% refund for tuition, most do not refund academic fees or student housing costs. Many tuition insurance plans provide coverage not only for tuition but also for expenses related to academic fees and student housing.
  • If the student or family is taking out a student loan – Student (and parent) loans must be repaid even if a student must take a medical withdrawal. Tuition insurance can be used to repay the balance of these loans or help pay for the next term when the student is healthy enough to return to school.

“With so much money at stake, it is vital that families develop a plan in case their student has to withdraw from school due to a serious illness or injury,” said Mr.  Fees. “No matter where a student attends college, families deserve the opportunity to protect their investment in higher education and nearly all students will benefit from securing a minimum level of coverage. Just remember tuition insurance must be purchased before school starts.”

The good news is that college families can easily protect their investment by purchasing tuition insurance through GradGuard.

Adulting Other

WSJ – Tuition Insurance Catches On as Costs Rise, Students Struggle to Adjust

August 19, 2018

Appeared in the August 20, 2018, print edition as ‘Demand for Tuition Insurance Is Surging.’

‘The cost of college is driving this,’ ‘

Families cannot afford the loss of $30,000, John Fees – Co-Founder of GradGuard.

As college tuition rises so too has demand for insurance to cover what in many cases is among a family’s biggest investments.

For Mindy DiCostra, a tuition-insurance policy was a life-saver last year after her daughter withdrew mid-semester in her junior year at Marymount Manhattan College in New York following an allergic reaction to an anxiety medication.

Because Ms. DiCostra agreed to pay $238 for tuition insurance when doing paperwork for the school, she was eligible to receive a full reimbursement for the $16,000 in tuition she and her husband had paid for the semester.

“I had no idea how important it would be when I checked that box,” she said.

Tuition insurance protects families in case their son or daughter has to drop out of school past the point at which a school offers tuition reimbursement, usually around halfway through the semester. Driving the increased demand are higher college costs and, to a lesser extent, rising mental-health disorders among college students that have raised concerns among parents that their children may struggle away from home.

About 70,000 policies were written across the U.S. market last year, up from 20,000 five years ago, said John Fees, co-founder of GradGuard, which started selling tuition-reimbursement insurance seven years ago. It works with campuses including the University of Pennsylvania, Auburn University and New York University, its website says.

“The cost of college is driving this,” said Mr. Fees. “Families cannot afford the loss of $30,000.”

The average published tuition and fees at a private college has increased to $34,740 in 2017 from $15,160 in 1988 according to the College Board. The numbers are adjusted for inflation.

“I think a lot of families don’t fully grasp that if they have to withdraw midterm it can have a significant financial impact,” said Paige Lee Director of Tuition Insurance at Allianz. College is “the second largest investment most families will ever make” after a home.

Most schools have some sort of reimbursement policy but they generally don’t cover withdrawals during the second half of the semester. At Vanderbilt University, a student will be reimbursed for some portion of his or her tuition and room and board up until about halfway through the semester. After that, they don’t receive anything.

Tuition and housing at Vanderbilt costs about $59,000, and 80% of that can be reimbursed with insurance, which costs about $530, said Chris Cook, who oversees the financial accounts of students at the school.

Several companies provide tuition insurance, Most policies charge in the neighborhood of 1% of the cost of school. A semester that runs $30,000 would cost about $300. At least 200 schools now work with insurers, offering the coverage to families when the pay the tuition bill.

Liberty Mutual Insurance started offering tuition-reimbursement policies this year, in part because of consumer demand. When a student drops out mid-semester parents are often “very surprised to learn that you may not get anything back,” said Michele Chevalier, a senior director at Liberty Mutual.

Not everyone thinks the plans are necessary. Jodi Okun, a college financial adviser in Los Angeles, said she has so far steered her clients away from tuition insurance because she doesn’t feel it is necessary in most cases. However, she has but counseled them to be aware of the timeline for withdrawals, so if a student is struggling with a mental-health issue they can leave in time to recoup the cost.

“I tell them, make sure you know when the deadlines are, especially if they are going far away to school,” she said.

Plans don’t typically cover students who drop out for academic or disciplinary reasons but will for medical reasons. Generally, insurers don’t ask about pre-existing conditions, either mental or physical. The idea, GradGuard’s Mr. Fees said, is: “If a student is healthy enough to start to a semester, they qualify.”

Insurers say that the number of claims they receive citing mental health incidents has risen. As many as one in four students at some elite U.S. colleges are now classified as disabled, largely because of mental-health issues such as depression or anxiety, according to the National Center for Education Statistics and interviews with schools.

Carmen Duarte, a spokesperson for A.W.G. Dewar, Inc. which has been offering tuition-reimbursement policies since the 1930s, said claims have remained flat for physical-health incidents but increased for mental-health reasons. She said policies are most likely to be bought by families of first year students. Allianz Insurance, which began selling the policies in 2015, said about 20% of claims were for mental health and 70% were for physical health.

Write to Douglas Belkin at doug.belkin@wsj.com

Corrections & Amplifications
Michele Chevalier is a senior director at Liberty Mutual. An earlier version of this article misspelled her first name. (Aug. 19)