Is Tuition Insurance Worth It?

Tuition insurance can be worthwhile if your college doesn’t have a generous refund or medical withdrawal policy.
Cecilia Clark
By Cecilia Clark 
Updated
Edited by Des Toups

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Learn more about how much college could cost — and, how to afford it:

Tuition insurance, which pays out if you need to leave school, can be worth the cost if your college does not have a sufficient refund or medical withdrawal policy.

As of the 2022-2023 academic year, the total cost of attendance ranged from $27,940 for four-year public schools to $57,560 for private non-profit universities, so withdrawing from school could cause substantial losses.

Schools typically have guidelines around who is eligible for a refund and under which circumstances, but those rules can be hard to find and are often ambiguous.

Some colleges allow students to withdraw for medical reasons and finish their coursework after they recover for no additional charge. Others are much less flexible. Before buying tuition insurance, verify your school’s refund and medical withdrawal policies.

Ask your school’s registrar’s office about its policies. If it doesn't have the information you’re looking for, ask a representative to direct you to the right office. If you’re uncomfortable with what you find, tuition insurance can provide peace of mind and a refund if you have to leave school.

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Tuition insurance costs can vary depending on school costs, but plans are often available for under $200 per semester. Some companies charge a flat fee, such as $140 per semester, or they may charge a percentage of the total cost of attendance; the typical cost is 1% to 2% of the semester's cost.

Read the details of any tuition insurance policy to make sure its coverage is adequate for you. Not all policies offer the same coverage levels.

Tuition insurance coverage

Tuition insurance reimburses you for lost college costs if you leave school for a qualified reason. It typically covers nonrefunded money for tuition, fees, room and board.

You can qualify for reimbursement even if you used financial aid, including federal or private student loans, if you are still responsible for the loans' repayment. However, tuition insurance normally only reimburses you for your out-of-pocket expenses, so you cannot get reimbursed for grants or scholarships paid directly to the school.

Qualified reasons are normally health-related and can include unexpected injury and illness, ongoing or chronic illness, and mental health conditions. Previously, COVID-19 was not a covered condition, but companies like GradGuard have expanded their policies to include COVID.

You typically must buy tuition insurance prior to the first day of class. Some colleges also allow you to buy insurance as part of the tuition payment process, which makes it easy to use your student loans and other aid to cover the costs. Your school might even include tuition insurance as part of its cost of attendance.

Key terms in this story

Cost of attendance (COA) is your estimated annual school cost, including tuition and fees, books and supplies, room and board, transportation and personal expenses. Colleges subtract your expected family contribution, or EFC, from their cost of attendance to calculate the maximum amount of need-based aid you can receive. Expected family contribution is the amount the federal government estimates your family can pay for college.
A student loan is money you borrow from the federal government or a private lender to help pay for college costs, like tuition, supplies, books and living expenses. Federal student loans typically have lower interest rates and more flexible repayment options than private loans. Borrowers should exhaust student loans from the federal government before applying with private lenders.
Tuition insurance is a means of providing protection from lost tuition, fees and room and board if you leave school for a qualified medical reason. You should consider buying tuition insurance only if your college does not have an adequate or flexible refund or medical withdrawal policy.
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