Tuition refund policies are worth a look
COVID-19 has prompted many parents to consider purchasing a college tuition refund insurance policy in the event of disruptions this fall caused by the pandemic.
But read the fine print — many policies don’t cover epidemics and pandemics.
In most cases, students must actually have been infected with COVID-19. Withdrawing from school or taking a leave of absence because you are worried about getting sick is typically not covered.
“Generally, tuition refund insurance does not cover discretionary choices,” said Mark Kantrowitz, vice president of research and publisher at Saving forCollege.com.
Tuition insurance policies have been available for years, and GradGuard is the leader in this field. It sells its policies through brokers such as Allianz and Liberty Mutual, often through marketing arrangements with colleges.
Typically, the insurance kicks in after a school’s own refund policies are applied. For example, students withdrawing from school early in a semester may be eligible for a refund on all or most of their tuition payment. But a student leaving mid-term or later may not receive any tuition reimbursement from the school.
Tuition insurance helps close that financial gap, Kantrowitz said. Some policies also can cover room and board fees.
There are good reasons for purchasing the insurance. While coverage varies, the policies generally cover unexpected events that could cause a student to withdraw from classes. Those events range from injuries from accidents to substance abuse, mental health illnesses and other health problems.
At many schools that offer GradGuard policies, students can opt in to tuition insurance as they pay their bill for the semester this summer. A student can buy about $10,000 worth of insurance per semester for about $106, according to Inside Higher Education. Policies are typically for a single academic term, not a full year, and premiums vary by school.
Allianz recently announced accommodations for some students affected by COVID-19.
“Fear of attending school because of the pandemic is not covered, but Allianz is currently accommodating claims for when an insured student completely withdraws from school for the covered term due to becoming ill with COVID-19,” Allianz said in a statement to Inside Higher Education.
Kantrowitz said in some coverage cases, an insured student might need to have been hospitalized because of COVID-19. “Even if the policy does not require you to have been hospitalized, a doctor’s diagnosis is required. Getting a positive test result is not enough.”
Some policies have pre-existing condition exclusions, which typically run 60 days. That means you can’t qualify for a tuition refund policy after you’ve been infected.
If the college switched to onlineonly education and the student is unhappy with this, it probably is not sufficient for coverage, especially if the student is not withdrawing for medical reasons.
Most colleges have not issued tuition refunds, but a few did this spring when classes were canceled and not just moved online. If a college issues a tuition refund, the coverage under a tuition refund insurance policy will be reduced by the amount of the refund, Kantrowitz said.
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