Managing Finances

Is College Tuition Insurance Worth It?

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3 Questions to Ask Before Purchasing College Tuition Insurance

First, check with the school’s Bursar Office, Registrar, or Accounting Office to find out the tuition refund policy at your student’s school (For a detailed glossary of college terms like Bursar, click here). Besides learning their tuition refund policy, make sure to check the dates for withdrawal without a financial penalty – and make sure to clearly communicate these dates to your student. Surprisingly, most schools do not offer a tuition refund for issues such as a serious illness or injury, or if the student struggles with a psychological condition or experiences other unforeseen circumstances. According to Fastweb, “Even when the college has a generous refund policy, the family will still incur some costs,” and these costs may be significant.

Second, contact your student’s lender to find out their policy about withdrawal (if applicable) and how the loan will be handled. If your student has a student loan and they withdraw from school prematurely, they may still be responsible for repaying the loan (and college tuition) in full. This is a scary possibility for families, especially when nearly 1 in 3 students will withdraw during their freshman year. For more information on why so many freshmen withdraw, click here to read, 7 Reasons Freshmen Drop Out of College. When the student withdraws, colleges will use the Federal Return of Title IV formula, state grant refund calculation and institutional policy, to determine how your student aid will be adjusted, if at all.

Third, consider your student’s past performance. If your student struggled with their college decision and has had difficulty with school in the past, college may present unforeseen challenges. What if they want to transfer schools, or take time off? In many cases, this will mean withdrawing mid-semester, but they will still be responsible for the full semester’s tuition, fees, and living expenses. Many families find themselves starting the college search over again after their son or daughter struggles to adjust at their first school of choice.

Because of the lack of protection most schools provide, and the many variables students face, consider purchasing College Tuition Insurance, which provides families with investment protection for non-refundable tuition payments, fees, and room and board costs. According to a recent survey, nearly 8 in 10 financial advisors say they would recommend tuition insurance for students taking out loans [see infographic below].

Allianz College Tuition Insurance provides reimbursement for non-refundable tuition expenses in the event a covered student needs to leave college, university, or post-secondary school before the end of the term for a covered reason. Allianz offers three insurance plans to provide parents and families flexibility when choosing the plan that best suits their needs. The plans cover a range of reasons for withdrawal including serious illness or injury, mental health challenges, homesickness or a family emergency among other things.

Allianz offers three types of plans to suit parents and families’ needs: the Essential Plan, the Preferred Plan, and the Advantage Plan. Click here to learn more about what is covered in each plan. Prices start at $29.95 per term and allow for full or partial reimbursement of total tuition costs. The plan must be purchased prior to the start of the semester.

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Note: Although this post is sponsored, all opinions are my own.

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