Earning a college degree has become a necessary step toward building a secure financial future. After all, studies show that college graduates earn $1 million more over their lifetime than those without a degree and have a significantly lower unemployment rate. While such statistics further strengthen the importance of attaining a higher education, it can be difficult to save for tuition in the years leading up to college.
With average tuition and fees for the 2016/17 school year ranging from $9,650 for state residents at public colleges to $24,930 for out-of-state residents attending public universities to a whopping $42,000 for private institutions, it’s no surprise more parents and students rely on loans to finance higher education. Although individuals and society reap significant economic benefits from investing in a college education, there is an element of risk that can come with borrowing money and paying such high expenses. Such risks could include early withdrawal with a limited refund or even no option for a refund on tuition and other fees already paid. This means a student who has to leave his or her studies due to a medical reason will get stuck with a big debt to repay and no degree to show for it. Considering that about 15 percent of full-time four-year college freshmen are gone by the time sophomore year rolls around and 64 percent of students (surveyed in 2012) said they were no longer attending college due to a mental health related reason, it’s clear that the potential of early withdrawal is a very real issue that could lead to negative financial consequences.
PROTECTING YOUR TUITION INVESTMENT
Tuition insurance protects students attending cost-intensive educational institutions – schools, colleges or universities – from the financial loss that may result from an involuntary or even voluntary, depending on the plan and the provider, withdrawal from his or her studies. Considering that only a handful of colleges and private secondary schools offer tuition insurance to students through a partnership with a third party, the majority of students and their families face the potential of losing a lot of money should they need to or choose to leave school in the middle of a semester.
A January 2017 national survey completed by 107 college and university bursars and student accounts representatives revealed that 45 percent of respondents reported increased withdrawal rates due to illness, while 74 percent said they do not currently offer tuition insurance.
“A significant number of students are forced to leave school because of an unexpected illness, injury or serious mental health issue sometime during their college career—creating a significant financial loss for students and their families,” said Joe Mason, Chief Marketing Officer of Allianz Global Assistance USA. “Our protection plans can reimburse lost tuition and fees, offering families a financial lifeline while improving the student experience by providing a family-friendly solution to sudden withdrawals.”
HOW DOES TUITION INSURANCE WORK?
Tuition insurance offers a remedy to the growing problem of unexpected withdrawals—ensuring students and their families have an option of recouping non-refundable tuition payments, fees, and room and board costs following a covered unexpected illness or injury. Tuition insurance must be purchased prior to the first day of the term and reimburses students or parents for any payments if the student has to withdraw from a college or university for a reason covered by their policy. Tuition insurance does not cover, however, poor academic performance, mental health issues that do not result in hospital admittance, substance abuse, or extreme sports accidents.
HOW TO SHOP FOR A POLICY
When researching tuition insurance options, it’s important to shop carefully and make sure you’re getting the protection you want. Review details such as which events are covered, which fees are eligible for a refund and if any deductibles need to be met. Allianz Global Assistance, for instance, offers Tuition Insurance with various plans to suit specific needs and provides protection benefits that can reimburse college costs when a student suffers a serious illness or injury, struggles with a psychological condition or encounters an unforeseen circumstance. One plan even provides reimbursement for almost any reason, including if a student is struggling to adjust to life away from home. With three Tuition Insurance plans to choose from: the Essential Plan, the Preferred Plan, and the Advantage Plan, families can find tuition insurance coverage that fits their needs and budget. Prices start at $29.95 per term and allow for full or partial reimbursement of total tuition costs. Allianz Tuition Insurance must be purchased prior to the first day of the term and includes Allianz Global Assistance’s proprietary Student Life Assistance, a 24/7 service that assists families in the event of an emergency. Don’t forget, policy holders must renew their plan each semester allowing for further flexibility and a change in coverage.
A college education is an investment in your or your child’s future and is one of the biggest expenses you will face in your lifetime. Figuring out how to protect this investment in just as important as you would any other big purchase like a home or a car. So do your homework and research options to protect your financial wellbeing.
*National Student Clearinghouse Research Center
Disclaimer: This post is sponsored by Allianz Global Assistance (AGA Service Company) and I have received financial compensation. However, all thoughts and opinions are my own.
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