What You Need to Know About Tuition Insurance

Paying for College

What You Need to Know About Tuition Insurance

Is it worth it to pay extra to get your money back if your child withdraws from college?

When you fork over big bucks to pay your student's college bills, should you pay a few hundred more for insurance that gets you a refund if your student withdraws? Some colleges require that you buy refund insurance, tacking the amount onto their fees. You can also pick up coverage on your own, through GradGuard (up to $50,000 in coverage for $600) or by joining the Expense Management Association, which gives you access to TuitionGuardian (up to $25,000 per semester for $300).

But most colleges rebate full tuition if a student withdraws within the first week or two of classes and provide a partial refund until about five weeks into the semester. If your student makes it through most of the term, he or she may be able to take "incompletes," salvaging the credits.

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Even with tuition insurance, you won't be fully protected. For instance, some policies, including GradGuard, reimburse only if the student dies or withdraws because of illness or injury; many policies reduce the benefit if the student leaves because of mental illness. Bottom line: Unless your risk tolerance is razor-thin, you can skip this coverage.