There’s insurance for the rest of life’s costly items — health, home, car — so why not college? Average annual tuition and fees are $9,410 at public four-year colleges and $32,405 at private ones, according to The College Board. Tuition insurance may be helpful if you hit a significant bump in the road.
What is it?
Tuition insurance is designed to cover tuition, academic fees and room and board for students who have to drop out due to serious illness, medical emergency or death of the tuition payer (or the student). It usually won’t pay out if you decide to leave school because you skipped all your classes, or decided to take a year off to find yourself.
Who offers it?
Tuition insurance is offered through some schools, the College Parents of America membership group and via third-party insurance companies like A.W.G. Dewar and Next Generation Insurance Group, which also offers tuition insurance in partnership with Sallie Mae. It typically costs about 1 percent to 3 percent of the tuition price, according to investopedia.com. Coverage varies by plan and school.
Do you really need it?
Tuition insurance is a worst-case scenario kind of thing. The odds that you’re going to have to completely bail on school because of a serious illness, medical emergency or death aren’t very high. For example, less than 1 percent of those who bought tuition insurance at the University of Southern California made a claim, according to The Wall Street Journal. That said, it could be a good idea if you have a serious illness or pre-existing condition that you think could prevent you from finishing school.
Another thing to consider before signing up is tuition costs. If you’re attending a spendy, private university on your own dime it makes a lot more sense than if you’re going to school at a public college on federal grant money. Also be sure to check your college’s refund policy. Many schools will reimburse or partially reimburse tuition for unexpected withdrawals.
Tuition insurance might come in handy if your health is in question or you’re paying nearly $50,000 a year to attend Columbia University, but it’s not a necessity for most students.