Should You Buy Tuition Insurance?
Plans can change, particularly when it comes to college students. It's no surprise, then, that parents have asked us about the pros and cons of tuition insurance, an optional purchase when sending a child to college. Is tuition insurance a good idea? There's a lot to consider.
How does tuition insurance work? Generally, you take out a policy to cover a certain amount of tuition, pay your premium, and if your child has to withdraw early, you will be reimbursed the cost. As with all insurance policies, however, you are not necessarily covered for everything, and policies vary. Some policies will cover medical absences up to 100%, some will not. If your child has a medical condition that may make it more likely that he or she must leave school early, find out if the policy you are considering covers students with pre-existing conditions. It's also important to note that many policies may not cover non-medical reasons for leaves or withdrawals from school.
Another important consideration is that colleges generally have their own refund policies. The refund policy can most often be found in information from the student accounts or financial aid office and will clearly define under what circumstances a family may receive a refund and the amount of money to be refunded. If you have a unique circumstance, speak with the college directly, as they may deal with exceptions to their policies on a case-by-case basis. Keep in mind that if your child has to leave school between semesters, you are not charged for any semester that he or she hasn't attended, and you can cancel any impending loan payments for an upcoming semester as well.
When looking at any insurance policies, read the information carefully and make sure you are an informed consumer. Many parents ultimately purchase tuition insurance for the simple reason that it makes them feel better. But make sure to do your due diligence and learn the college refund policy, and know that you are not on the hook for anything that hasn't been paid yet. Each family has a different story. Our role at MEFA is not to tell you what or what not to do, but to give you the tools and information to help you make the best decision for your family.