The Case for Tuition Insurance

The most gratifying experience as a founder of a business is to hear directly from customers who benefit from a product you have helped to create. Indeed, as our GradGuard tuition insurance customer says in this brief testimonial video and statement.

“Tuition Insurance was such a lifesaver. It should be an option on every college and university website.” – Mindy D., parent of a college student daughter who used GradGuard’s tuition insurance from Allianz.

Bill Suneson and I co-founded GradGuard 10 years ago with the mission to help protect the investment students and families make in higher education. Thanks to GradGuard’s collaboration with Allianz Global Assistance – it is now easier than ever before for college students and their families to receive valuable protection for the investment they make in higher education.

If you have a student in college, you need to be sure you know what the refund policy is and ask the school if they provide tuition insurance. Though today only about 300 colleges and universities offer tuition insurance, most school leaders surveyed agree that it should be as convenient for families to protect a $30,000 or more investment in college as it is for consumers to protect a $300 vacation with travel insurance.

For good reason, according to the College Board’s 2019 Trends in College Pricing – the average published prices in 2019-20 including room and board are $38,330 for public institutions and $46,870 for private non-profit institutions.

According to the 2018 Allianz Tuition Insurance College Confidence Index, parents are growing more concerned about their child’s ability to finish college without needing to withdraw, though students’ level of confidence in finishing held steady. However, both still see significant financial implications of an early college withdrawal, estimating a loss of about $10,000. What is equally concerning is that the 2018 Index indicates 73% of parents are unaware of the refund policy of their college or university.

With so much money at stake, it is smart for college families to make a plan in case their student is forced to withdraw from school due to a bad bout of mono, mental illness or injury. The Fall 2019 study by the American College Health Association, demonstrates the impact of student health issues on academics. Below is a partial list of the conditions that students report impact their academic performance, defined as: received a lower grade on an exam, or an important project; received a lower grade in the course; received an incomplete or dropped the course; or experienced a significant disruption in thesis, dissertation, research, or practicum work;

• Depression: 23 %
• Cold/Flu/Sore throat: 16 %
• Death of a friend or family member: 9 %
• Bronchitis/Strep throat: 2.3 %
• Chronic health problem or serious illness: 22.8 %
• Alcohol use: 2.2 %
• Injury: 2.7 %
• Drug use: 1.7 %

This is where tuition insurance can be particularly valuable to a family or student that finds one of these conditions to be serious enough to force them to withdraw from college. Though it may seem a bit like an advertisement, here are some conclusions for why tuition insurance is a smart decision.

  1. If you can’t afford to lose the investment you are making in your semester of school – Tuition insurance can provide up to 100% refund for your expenses if a student gets sick, injured or is forced to leave school for a covered reason. Tuition insurance can cover those costs and help you get back on your feet in the event of a withdrawal, without the added stress of a financial loss.
  2. If your school does not provide a 100% refund – Do you know what your school’s refund policy is? A majority of school refund policies do not extend beyond the fifth week of the semester, and many don’t refund the full cost of tuition after the start of classes. Be sure to check with your school to see what their policy is and how much money is at risk.
  3. If you have additional academic expenses – Even if the school provides a 100% refund for tuition, most schools do not refund academic fees or student housing. Many tuition insurance plans provide coverage for not only tuition but also for expenses related to academic fees and student housing.

Tuition insurance is available through GradGuard and more than a hundred school-specific programs. Remember, tuition insurance must be purchased prior to the start of school and, like all insurance plans, be sure to check the specific terms, conditions, and exclusions of your policy.

This article was updated in July 2020

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