Tuition Insurance Business Expands
By Tim Grant, Pittsburgh Post-Gazette | |
McClatchy-Tribune Information Services |
For more than seven decades, CMU students have had access to an optional college insurance program known as the Tuition Refund Plan, which promises to reimburse students and their families for up to 100 percent of their semester fees if they need to withdraw because of a physical illness or accident.
The
While many students can and do overcome these unexpected medical events, the financial loss can be devastating if they can't complete a semester.
Most colleges and universities will only give a partial refund if a student needs to withdraw after a semester gets under way. Typically up to 80 percent is refunded if a student leaves in the first week. The chances of getting any refund after the fourth or fifth week of classes are usually slim to none.
Paying for college is one of the biggest investments most families will make, but only a small percentage take steps to protect that investment the way they would seek insurance for their home or automobiles -- often because they don't know it is possible.
For many decades, the polices were offered by only one company --
Today, new players in the tuition insurance business -- TuitionGuardian and GradGuard -- have expanded the market to allow students at all colleges, including state institutions like the
"We provide service to all schools, not just the elite schools," said
The cost of the policies offered through third-party insurers runs anywhere from 1 percent to 3 percent of the cost of attending the institution. With the average cost of attending private college at
Generally speaking, applications for tuition insurance must be postmarked by the opening day of classes.
Representatives from Dewar, based in
According to their marketing materials, it appears all of the tuition insurance companies maintain a similar policy: Tuition insurance is not drop-out insurance.
If a student simply skipped classes, got sidetracked by drugs or injured himself, he is out of luck. The policies will only reimburse students and their families for medical withdrawals.
Mental health issues may not be insured unless the student is hospitalized for at least two days. The Dewar Tuition Protection Plan offered at CMU will refund 60 percent of the insurance policy if a student withdraws from class because of a medically diagnosed psychological illness.
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GradGuard reimburses students and families 100 percent for mental health problems. The GradGuard policy also reimburses policyholders if a student withdraws because of the death of a family member. It will also pay if the guardian or person responsible for paying the student's tuition dies.
"Although I wouldn't buy it, I would never say everyone shouldn't,"
"You need to make sure a child's current [medical] condition isn't excluded as a pre-existing condition," he said. "Like any other insurance, you have to make sure it covers what you are really worried about."
Students and families also can buy additional tuition insurance directly through the
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