College is the second largest investment most families will ever make, after a home. It makes sense, then, more parents are deciding to protect that investment with tuition insurance.
“Driving the increased demand are higher college costs and, to a lesser extent, rising mental-health disorders among college students that have raised concerns among parents that their children may struggle away from home,” The Wall Street Journal reports. Here are the three reasons families should consider tuition insurance.
1. Most colleges and universities have strict tuition refund policies.
In the pre-semester whirlwind of dorm-room shopping and course signups, many parents and students overlook an important detail: the college’s withdrawal and cancellation policy. This policy outlines what happens if a student withdraws from school, and how much of a refund, if any, they can expect.
The WSJ article cites the example of mother Mindy DiCostra, whose daughter suffered an allergic reaction to anxiety medication and had to withdraw in the middle of her junior year at Marymount Manhattan College.
Marymount Manhattan’s withdrawal policy states that students may receive a full tuition refund only if they withdraw on or before the start of the term. If they withdraw in the first week, they can receive a 75 percent refund; if they withdraw during or after the fourth week, they get $0. And don’t forget about housing! Even if a student withdraws before the semester begins, he or she gets a 75 percent refund for housing costs, not including the $500 deposit or any remaining dining dollars. Marymount Manhattan’s policy is by no means unusual; most schools have a similar, prorated reimbursement schedule.
Fortunately for DiCostra, she had purchased tuition insurance for her daughter, which fully reimbursed the $16,000 she had paid. That’s what tuition insurance does: reimburse tuition, housing and other fees in the event a student needs to withdraw from college for a covered serious illness, injury, mental health disorder or other covered reason.
Learn more: Tuition Insurance 101
2. College has become enormously expensive.
In 1988, the average cost of tuition and fees at a private college was $15,160 (in 2017 dollars). Today, it’s $34,740. The average student who graduated in 2016 carries $37,172 in college loan debt — and collectively, Americans are burdened with more than $1.5 trillion in student debt.
“I think a lot of families don’t fully grasp that if they have to withdraw midterm it can have a significant financial impact,” Paige Lee, Director of Tuition Insurance at Allianz, told the WSJ. Most families can’t afford to simply lose a semester’s worth of tuition, should a student have to withdraw.
Allianz Tuition Insurance surveyed financial advisors about parents’ college-costs anxiety. Nearly 6 in 10 advisors said their clients were concerned about not earning enough money to cover the cost of paying for a college degree. Seventy-eight percent said parents should purchase tuition insurance if they or their child will be taking on student loans.
3. More college students are struggling with mental health disorders.
“As many as one in four students at some elite U.S. colleges are now classified as disabled, largely because of mental-health issues such as depression or anxiety,” The Wall Street Journal article reports.
But it’s not just students at top-tier schools who are struggling. A wide-ranging American College Health Association survey of undergraduate students in fall 2017 found that more than 40 percent had felt so depressed in the prior year that it was difficult for them to function, and 61 percent of students said they had “felt overwhelming anxiety.”
Colleges and universities are trying hard to meet the increased need for mental health care by offering screenings to incoming students, opening more counseling centers and increasing funding for programs. But sometimes, a student must withdraw from school and return home before they can get better. That’s why Allianz Tuition Insurance offers reimbursement for tuition and other college expenses when a student must withdraw for a covered psychological or mental disorder. (The insured student must be admitted to the hospital.) The amount of reimbursement varies by plan. Compare tuition insurance plans to find the best option for your college student.
- CNBC.com: https://www.cnbc.com/2017/11/29/how-much-college-tuition-has-increased-from-1988-to-2018.html ↑
- Forbes.com: https://www.forbes.com/sites/zackfriedman/2018/06/13/student-loan-debt-statistics-2018/#4987d9e07310 ↑
- WSJ.com: https://www.wsj.com/articles/tuition-insurance-catches-on-as-costs-rise-students-struggle-to-adjust-1534590000 ↑
- Time.com: http://time.com/5190291/anxiety-depression-college-university-students/ ↑