What Is Tuition Insurance? And Is It Worth It?August 12, 2023
Unfortunately, nobody has a crystal ball that can accurately predict the future. Attending college can be a worthy investment, but it also comes with some risk that life might interfere with your ability to complete your degree. Given the cost of college, this risk is unsettling for many.
Fortunately, a product called tuition insurance may help offset some of this risk and provide valuable peace of mind. But what does it cover? And is it worth the cost? Here’s what to know.
What Is Tuition Insurance?
Tuition insurance can help protect you if you can’t complete your degree program for a reason covered by your policy. For instance, if you develop a severe illness requiring hospitalization for several months, your tuition insurance may kick in. Likewise, if you experience a mental health crisis that interferes with your ability to attend college, you could get reimbursed for tuition and fees (assuming your policy covers mental health conditions).
Different tuition insurance policies have further exclusions, so it’s essential to understand what’s covered and what isn’t before you get a policy. Compare options through your school and third-party providers to find the best coverage.
Pros and Cons of Tuition Insurance
- May provide reimbursement for tuition and fees if you need to leave school for a covered reason.
- It could help you avoid taking on additional debt or struggling financially to repay your college loans.
- It can offer some financial security if you’re unable to complete your education due to a covered issue.
- Tuition insurance isn’t free and may be cost-prohibitive, depending on your degree program’s cost.
- It may only cover tuition and specific fees, not necessarily every expense associated with school.
- Pre-existing conditions are likely excluded from tuition insurance policies.
What Is and Isn’t Covered?
Tuition insurance often covers you if you withdraw from school due to medical issues not associated with a pre-existing condition. For example, if you get mononucleosis or long COVID, you might be eligible for reimbursement under your tuition insurance policy. But as mentioned, complications from a pre-existing medical condition probably aren’t covered.
But if you decide college isn’t for you or drop out because you’re struggling to keep your grades up, your tuition insurance policy probably won’t do you much good. These likely won’t be considered covered issues under your policy.
When Does It Make Sense to Get Tuition Insurance?
Before you explore tuition insurance, look into your college’s withdrawal policies. You may be reimbursed for tuition and fees—or a portion of them—if you withdraw from school due to a medical issue. But tuition insurance could be worth considering if your school doesn’t offer decent reimbursement for unexpected withdrawals due to medical difficulties.
But if you’re a generally healthy person with no history of medical issues, tuition insurance may not make sense at all. Whether it’s a good option depends on your attitude towards risk, overall health, and other factors.
Where to Get Tuition Insurance Coverage
If you’re considering getting tuition insurance, your school’s financial services office is an excellent place to start. Some colleges and universities partner with third-party insurers to provide tuition insurance coverage, often at reduced rates.
But some companies specialize in these policies if your college or university doesn’t offer a tuition insurance option. For instance, GradGuard is a popular choice for tuition insurance.
How Much Does Tuition Insurance Cost?
One key factor to consider is your budget. Tuition insurance isn’t free; costs can vary depending on your degree program and insurer. In general, you could pay up to 1% of the cost of your degree program per semester if your college offers tuition insurance coverage. So if you pay $18,000 in tuition and fees each semester, your tuition insurance may cost around $180.
But again, costs vary, and you may also pay more for coverage—around 2% of your degree program’s cost—if your school doesn’t offer it.
The Bottom Line
Whether tuition insurance makes sense for you depends on your situation, and you’ll need to weigh the pros and cons and look at your budget before deciding. If you’re worried about unexpected medical issues, tuition insurance may provide peace of mind. But it might not be worth it if you’re in excellent health overall and don’t foresee any future issues.