How can you prevent a big loss in tuition fees if your child suddenly withdraws from college due to unforeseen circumstances?
How can you prevent a big loss in tuition fees if your child suddenly withdraws from college due to unforeseen circumstances?
College tuition is rising and there seems no respite from high tuition fees. In addition from buying a house and saving for retirement, college tuition is a huge investment for families. In 2016-2017, average tuition and fees plus room and board cost $45,370 at private colleges and $20,090 at in-state public colleges, according to the College Board.
Unforeseen Circumstances and Tuition Fees
Insurance companies are quite happy to provide you with insurance coverage. For example, Allianz provides reimbursement for tuition, housing and other fees in the event of a covered withdrawal. Also, tuition insurance is provided by hundreds of schools, mainly through third-party sellers such as A.W.G. Dewar and GradGuard.
Before you decide on whether or not to buy tuition insurance, consider the main reasons for withdrawal from college.
Serious Illness
Every year, many students face the difficult decision of continuing to go to school while being seriously sick, or withdraw and lose tuition payment? If they withdraw they lose their tuition and working hard during illness could lead to serious short term or potential long term harm. It is best to leave and take care of your health. This is where tuition insurance can help.
Difficult Transition
Studies show that 80% of students feel overwhelmed and more than 50% face anxiety so severe it affects their academic performance. Many students drop college or get depressed. According to data, 1 in 3 students leave college for at least one semester. In such cases, tuition insurance can help pay or offset your tuition fees and other payments.
It isn’t free. On top of each college application fee, you’ll need to add $25.00 for the initial filing (which includes sending the PROFILE to one college), then $16.00 to send it to each additional college.
How it Works
In general, plans can cost as much as 6 percent of the tuition tab and are purchased a semester at a time to cover in-state and out-of-state nonrefundable tuition as well as housing and other fees. As with other types of insurance, the more extensive the coverage, the more expensive the policy. At Allianz, for example, if a student’s annual tuition, fees and room and board were $30,000, the midlevel “preferred” tuition insurance plan would cost about $200 per semester.
How to Decide?
You Might Already Have Coverage
Before you rush to buy tuition insurance, keep in mind that most schools have a refund policy and don’t limit reimbursement to medical issues if your child withdraws during the school year.
For example, at Boston University, a student who withdraws in the first five weeks of school can get 20 percent to 100 percent of tuition back, depending on when she leaves school. There is a deadline for this, so you have to check.
Even if a student withdraws later in the semester and doesn’t have tuition insurance, she hasn’t necessarily wasted her money, says Jane Klemmer, an independent college consultant. “You can take an incomplete and make up the work when you come back to school.”
History is important
What is your child’s history: medical, behavioral, etc? How does she handle stress? If she is sickly and/or cannot handle stress well, be prepared that she may leave college for at least a semester. Don’t rush and get insurance though. First, check if the college offers reimbursement, partial or full, and if she can mark the semester courses as incomplete and make up the work later. Second, after you have found the information, if there is a shortfall and you cannot afford it, buy some insurance.
Sources:
1. https://www.consumerreports.org/tuition-insurance/should-you-buy-college-tuition-insurance/
2. https://www.allianztuitioninsurance.com/
3. https://gradguard.com/tuition-refund-insurance
4. https://www.usnews.com/education/best-colleges/paying-for-college/articles/2017-05-17/tuition-insurance-is-it-right-for-your-family
5. https://www.tuitionrefundplan.com/
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