College Tuition Insurance Gains Attention in Pandemic

By Ann Carrns
Aug. 6, 2021
Politics has been around for decades. But before buying, experts say, parents need to decide what to cover and what not.

With the start of the new college year amid a resurgent pandemic, tuition insurance is getting new attention.

Tuition insurance is exactly what it sounds like: students or their families take out a policy that reimburses them in whole or in part for tuition or other college fees if the student has to drop out of school for a proven medical or psychological reason.

The average published cost of tuition, fees, and room and board at private four-year colleges was about $ 51,000 last year, according to the College Board. Not all students pay full price due to college discounts and scholarships. Nevertheless, it can be expensive for students and their families to miss a semester and make up for it.

But while coverage sounds attractive, knowing the details of how a policy works and what situations are covered is important, say insurance experts.

“Of course anyone thinking of getting it has to read the policy first to see if the thing you are worried about is really covered and what the exclusions and conditions are,” said Robert Hunter, insurance expert at the Consumer Federation of America.

Kristina Dooley, a college counselor in Hudson, Ohio and president of the Independent Educational Consultants Association, said she usually didn’t advise families to get tuition insurance, but the pandemic seemed to have piqued interest.

“In the past year and a half, more families have asked me about it than ever before,” she said.

Colleges and universities typically only offer full tuition reimbursements for a short time after the start of classes and then a partial reimbursement for four or five weeks; many may offer little or nothing if a student has to step down later in the semester. Some schools offer tuition insurance to fill this gap.

Despite formal deadlines for refunds, institutions would likely work with a student in a medical or mental crisis to arrange a partial or full refund or offer a postponement so the student can retire but return to class in the next semester, Justin said Draeger. President and Chief Executive Officer of the National Association of Student Financial Aid Administrators.

Tuition insurance, sometimes called tuition refund insurance, has been around for decades.

The guidelines offered by GradGuard, which they market in partnership with around 400 universities, in particular exclude student cancellations due to an epidemic. But the company’s insurance partner, Allianz, has chosen to cover medical withdrawal symptoms due to the coronavirus, said John Fees, GradGuard co-founder and chief executive officer.

An update attached to the insurance information on GradGuard’s website dated February 12, states that “for the time being, although most plans are not covered, we are currently considering claims in the event that an insured student leaves the school leaves completely for the insured period due to termination, sick with Covid-19. “

GradGuard’s guidelines will continue to cover withdrawals from students developing Covid in the upcoming academic year, Mr Fees said. He didn’t want to say how many such claims the company’s policies paid for. And he found that the guidelines didn’t cover withdrawals just because a school switched from face-to-face to distance learning. (Some families sued colleges and universities that had switched, claiming that distance learning was either inferior or not what they were promised. The lawsuits had mixed results.)

Insurance would likely cover a student who withdrew due to a psychological diagnosis related to the coronavirus, Mr Fees said. The guidelines require that a licensed psychiatrist examine the student and advise the withdrawal. (In the past, withdrawal symptoms required documented hospitalization for psychological reasons, but that’s no longer the case, Mr Fees said.)

Eden Schiano, a 19-year-old from Virginia Beach, said her family was relieved that she got college insurance with GradGuard when she enrolled at Virginia Commonwealth University last fall. Ms. Schiano had been treated for an eating disorder, she said, and her family were concerned about college requirements and the possible loss of funds if she were to retire.

Ms. Schiano was determined to leave, however, and her doctor recommended study insurance. According to GradGuard, the family paid $ 180 for $ 10,000 of coverage. (Typically, the cost of coverage is 1.06 percent or 1.8 percent per $ 10,000, depending on your college.)

On campus, Ms. Schiano struggled to juggle distance learning and eat regular meals and began to lose weight, she said. Her doctor advised her to withdraw, which she did in October. The policy payout allowed her to regroup, she said, and she is now preparing to enroll in community college this fall.

Despite the uncertainty surrounding Covid and increasing mental health concerns, some colleges say there has been no rush among families to get study insurance. Reed College in Portland, Oregon, which offers coverage through GradGuard’s main competitor, AWG Dewar, said the number of families purchasing coverage fluctuated between 5 and 10 percent each year.

“The college has not seen any significant changes in attendance or eligibility activities as a result of the pandemic,” Reed spokeswoman Mandy Heaton said in an email.

Dewar has offered tuition insurance since 1930 and offers policies at dozens of colleges, including well-known names like Columbia and Stanford universities, as well as private elementary and high schools. Getting insurance is optional, but some schools will automatically enroll students unless they cancel.

Details vary by campus, but typically Dewar policies reimburse 70 to 80 percent of tuition, fees, and room and board as per the online policy offerings. Some schools allow students to customize their coverage, just for class or to add room and board. For example, Rice University offers coverage for the upcoming fall and spring semesters for $ 745 or just $ 582 for tuition, depending on what they’re offered through Dewar. Or families can purchase a certain amount of coverage, depending on their needs.

Stanford has offered tuition insurance for 30 years, said Ernest Miranda, a university spokesman, but “only a very small percentage of students get it,” even during the pandemic. This is partly due to the fact that around a third of students do not pay any tuition fees out of their own pocket thanks to needs-based help and scholarships, and many more pay at least part of the tuition fees.

Ragan D. Lower, president of Dewar, said in an email that there has been a “boom” in plan participation over the past year, but the company is not disclosing any data about claims.

Dewar’s tuition refund plan doesn’t exclude student de-registrations due to epidemics or pandemics, so withdrawals due to Covid-19 disease “would generally be covered,” he said.

The pandemic has caused insurers to change some offers. In 2019 GradGuard offered a policy called Advantage, which covered resignation for almost any reason, including a change of heart on the part of the student. The offer has been suspended, at least for the time being, because it was too difficult to price politics in the pandemic, Mr Fees said.

Another company that offered student insurance, Liberty Mutual, has stopped selling. A company representative did not respond to a request for information, but his website states that tuition fees are “currently unavailable”.

Here are some questions and answers about tuition insurance:

As a rule, policies must be purchased before the first day of the course.

GradGuard’s model policy states that it will cover withdrawals for pre-existing medical conditions, provided the student had no symptoms of the medical condition at the time the policy was purchased and was “medically able” to attend school during the semester.

Dewar’s online information does not address pre-existing conditions.

Most schools describe their refund policies on their financial services or school treasurer websites. Colleges that offer Dewar coverage usually post their reimbursement schedule on the insurance website. If you can’t find it online, Mr. Fees recommends calling the school and inquiring.

Colleges, Ms. Dooley said, want to keep students. “The last thing they want is to have student leave,” she said. “It doesn’t hurt to ask.”

If you’re still unsure, you can get a single semester insurance to see how it goes. You are not required to continue purchasing insurance for every four years of college.
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