MATTER OF POLICY
College tuition insurance is getting new attention amid new COVID surge.
With the new college year about to begin amid a resurgent pandemic, college tuition insurance is getting new attention.
Tuition insurance is just what it sounds like: Students or their families buy a policy that will reimburse them for all or part of their tuition and other costs of attending college if the student must withdraw from school for a documented medical or mental health reason.
But while the coverage sounds appealing, it’s important to know the details of how a policy works and what situations are covered, insurance experts say.
“Certainly anyone thinking about getting it must read the policy first to see if the thing you’re concerned about is really covered and what exclusions and conditions apply,” said Robert Hunter, an insurance expert with the Consumer Federation of America.
Kristina Dooley, a college consultant in Hudson, Ohio, and president of the Independent Educational Consultants Association, said she didn’t typically advise families to buy tuition insurance but that the pandemic seemed to have spurred interest in it.
“I’ve had more families ask about it in the past year and a half than ever before,” she said.
Colleges and universities typically offer full tuition refunds for just a short period after the start of classes and then offer partial refunds for four or five weeks; many may offer little or nothing if a student must withdraw even later. Some schools offer tuition insurance as a way to cover that gap.
Despite formal cutoff dates for refunds, institutions would probably work with a student in a medical or mental health crisis to arrange a partial or full refund or offer a deferral so the student can withdraw but return to classes the next semester, said Justin Draeger, president and CEO of the National Association of Student Financial Aid Administrators.
Policies offered by GradGuard, which markets them in partnership with about 400 colleges, specifically exclude student withdrawals resulting from an epidemic. But the company’s insurance partner, Allianz, has chosen to cover medical withdrawals resulting from the coronavirus, said John Fees, a cofounder and the managing director of GradGuard.
GradGuard policies will continue to cover withdrawals by students who fall sick with COVID in the coming academic year, Fees said. He declined to say how many such claims the company’s policies have paid. And he noted that the policies did not cover withdrawals simply because a school switched from in-person classes to remote learning. (Some families sued colleges and universities that had switched, saying remote learning was substandard or not what they were promised. The lawsuits have had mixed results.)
The insurance would probably cover a student who withdrew because of a mental health diagnosis related to the coronavirus, Fees said. The policies require that a licensed mental health professional examine the student and counsel withdrawal. (In the past, withdrawals for mental health reasons required a documented hospital stay, but that is no longer the case, Fees said.)
Despite the uncertainty around COVID and increased concern about mental health, some colleges say there hasn’t been a rush among families to buy tuition insurance. Reed College in Portland, Ore., which offers coverage through GradGuard’s main competitor, A.W.G. Dewar, said the number of families that bought coverage fluctuated between 5 and 10 percent each year.
“The college has not experienced any significant changes in participation or claim activity as a result of the pandemic,” Mandy Heaton, a Reed spokesperson, said in an email.
Dewar offers policies at dozens of institutions of higher education, as well as private elementary and high schools. Buying the insurance is optional, but some schools automatically enroll students unless they opt out.
The details vary by campus, but typically the Dewar policies reimburse 70 to 80 percent of the cost of tuition, fees, and room and board, according to online policy offerings. Some schools allow students to customize their coverage, for tuition only or to add room and board. Rice University, for instance, offers coverage for the coming fall and spring terms for $745, or $582 for tuition only, according to its offering through Dewar. Or families can buy a specific amount of coverage, depending on their need.
Stanford has offered tuition insurance for 30 years, said Ernest Miranda, a university spokesperson, but “only a very small percentage of students apply for it,” including during the pandemic. In part, he said, that’s because about a third of undergraduates pay no tuition out of pocket, thanks to needbased aid and scholarships, and many more have at least a portion of tuition covered.
The pandemic has caused insurers to modify some offerings. In 2019, GradGuard offered a policy that covered withdrawal for just about any reason, including a change of heart by the student. The offering has been discontinued, at least for now, because it was too difficult to price policies in the pandemic,
Fees said.
Here are some questions and answers about tuition insurance:
Q: When do I have to buy the insurance?
A: Typically, policies must be purchased before the first day of classes.
Q: What about preexisting conditions?
A: GradGuard’s sample policy says it covers withdrawals for preexisting conditions, provided that on the policy purchase date, the student didn’t have symptoms of the condition and was “medically able” to attend school for the term.
Dewar’s online information doesn’t address preexisting conditions.
Q: How can I find my college’s refund policy?
A: Most schools outline their refund policies on their financial services or school treasurer websites. Colleges offering coverage through Dewar typically include their refund schedule on the insurance website. If you can’t find it online, Fees recommends calling the school to ask.