What is tuition refund insurance?

Congratulations, parents, your kids are going to college! This can be an exciting and stressful time. Between tuition payments, moving your child to school and worrying about their every move and expenditure, you have lots on your plate. You have probably been inundated with mailings and emails from the institution where your child will now be studying, socializing and growing – some of these are not important, like the ones suggesting you buy those awful octopus lamps, but others should be taken more seriously.

You may receive information on “tuition refund insurance” – and before you dismiss it into your recycling bin, consider that it could be a smart investment that saves you thousands of dollars.

Tuition refund insurance is, simply stated, a way for parents and tuition-payers to insure the college-bound student’s tuition. Many plans offer as much as one hundred percent of the semester’s tuition refunded if a student requires medical withdrawal. One of the more recent hotly debated topics is with mental health withdrawals. Tuition insurance plans offer varied reimbursement for mental health so you check with your individual provider.

Nearly all colleges require tuition payments on a semester-by-semester basis, so insurance only covers tuition and room and board charges for the semester in question. While this kind of insurance may not be for all families, it may be critical for those to receive money back to pay off loans for college tuition.

Most colleges and universities offer a plan through an insurance company on an opt-in basis. Participation rates of tuition insurance vary greatly based on the specific insurance policy and payment structure of each school. NYU’s insurance runs almost $500 and only about three percent of students purchase it, while USC’s plan is only a quarter of that price and nearly a third of the university’s enrollment choose to insure each year.

While tuition insurance may not be right for your family, it can eliminate stress and cover your child in the case of an unexpected medical event.