More students and parents are looking into tuition insurance on their college tuition since the pandemic began. But before you buy it, it's important to know what's covered and what's not.
Interest in tuition insurance has risen with the risk of catching the Coronavirus and after campuses shut down this Spring. Most policies do not cover epidemics and only one will cover a student who catches COVID-19.
"This will be a record year for families using tuition insurance to protect themselves," said GradGuard tuition insurance co-founder John Fees.
Fees says more families and colleges are inquiring about coverage this year. Typically, tuition insurance reimburses you if a student withdraws from school for a medical reason.
Explains Shannon Vasconcelos, college finance consultant with Bright Horizons, "The amount that you paid for tuition is insured if your child has to withdrw for a covered reason. You will get your money back."
Adds Fees, "What it does pay for though are the medical withdrawals students have to make because they became ill say with mono, or an ordinary illness, a mental health condition, an injury like a concussion, even substance abuse or the death of a tuition payer."
But tuition insurance typically does not cover epidemics or schools having to close campuses.
Explains Vasconcelos, "Withdrawals having to do with the school closing down would never have been covered under one of these tuition policies because it's not a medical reason."
GradGuard, through its partner Allianz Global Assistance, is the only tuition insurance to now cover students forced to withdraw for catching COVID-19.
"They are currently paying for claims due to student withdrawals due to COVID-19," said Fees.
But a student withdrawing out of fear of catching the virus is not covered.
The average cost of tuition insurance is about one percent of the insured amount, or $100 per $10,000 in tuition.
While many colleges offer pro-rated tuition refunds for students who withdraw in the first few weeks, tuition insurance also covers room and board and other fees.
"Our tuition insurance pays for the academic fees, the deposits, and the housing expenses that students have paid. So it really gives families a chance to get a do-over," said Fees.
Ask your college for their refund policy and whether they offer tuition insurance. If you choose to buy insurance, Fees says it can be cheaper to buy it through the school than independently.