tuition refund insurance?

Parents Forum
1

<p>We did not buy tuition refund insurance for freshman year, but I am wondering if it make sense. </p>

<p>I am a little concerned because of the following:</p>

<p>
[quote]
Special information for grant/scholarship aid recipients: grant and scholarship aid funds are applied to tuition charges first. Students who enroll in the plan and who withdraw for covered medical reasons will have their grant/scholarship aid reduced up to the amount of their original tuition charge. This can result in a partial to full reinstatement of the student’s tuition charges.

[/quote]
</p>

<p>Am I reading this wrong, or does this say that students on financial aid become full pay (for tuition) if they have a medical withdrawal?</p>

<p>Also with respect to federal funds:</p>

<p>
[quote]
Students who are receiving federal Title IV financial aid (e.g., federal Stafford, PLUS, or Perkins loans; federal ACG, Pell, FSEOG, or SMART funds) are required to return the portion of unearned federal aid if they withdraw, do not register, or otherwise fail to complete the period of enrollment for which the Title IV aid was provided. The return of funds does not apply to any student whose date of withdrawal is beyond the 60 percent enrollment period for which the student has been charged.

[/quote]
</p>

<p>So... if my child had a medical withdrawal, he could lose all of his grant aid toward tuition, and have to immediately repay a portion of his loans....</p>

<p>If a student leaves very early in the semester, he is entitled to a prorated tuition refund, but after about 2 months, he's on the hook for the whole things. </p>

<p>In general I don't like to take insurance for relatively small and unlikely potential losses, but if we could lose not only what we'd paid but also have to pay back loans and grant aid, that could be moving into territory where the coverage might make sense. </p>

<p>Does it look like I'm reading this properly?</p>

2

<p>hmm, I’m sure there used to be some replies to this thread.</p>

<p>Anyhow, we decided to buy the insurance. The school sent out information on a policy from Dewar ([College</a> Tuition Refund - Home Page](<a href=“http://www.collegerefund.com%5DCollege”>http://www.collegerefund.com)). It looks fine (haven’t read all the fine print yet, but I will). Is this something to shop around for, or is the Dewar policy pretty standard? It costs a little over $100 per semester to cover a little over $20K in tuition per semester</p>

3

<p>Tuition refund insurance was recommended by our kid’s U. It is fairly inexpensive and can be a good thing to have if kiddo needs to withdraw from all courses for a covered reason.</p>

4

<p>HImom, what company does your kid’s U recommend?</p>

5

<p>Our kids U, USoCal has Dewars tuition refund insurance automatically included & you have to opt OUT if you don’t want it. When our kids were in a private HS, Dewars was the insurer–we opted out then & when they were in college. In HS, you had top opt in & purchase; for USC, it’s the default & you have to specifically ask that it be removed.</p>

<p><a href=“Tuition Protection | Dewar Tuition Refund Plan”>Tuition Protection | Dewar Tuition Refund Plan;

<p>The cost for USC is about .03% of tuition & fees. I believe the % was higher for their HS, but am not positive at this point. It probably has to do with claims history, etc.</p>

6

<p>We did not get tuition insurance for our kids … we have 3 kids so we were looking at 24 semesters of insurance. Adding up the cost of 24 semesters of insurance was pretty substantial … and the odds of actually needing it are pretty low … so we decided to self assure.</p>

7

<p>There have been at least two other CC threads on Tuition Insurance. If I recall correctly they boiled down to:
(a) it depends on your child’s unique situation; and
(b) read the fine print … then read it again.</p>

8

<p>My kid’s a healthy kid, but we did get a bit of a scare last year. Everything turned out fine, but it made it easy to see how a perfectly healthy kid might suddenly need to take a medical leave for a semester. I think if we were just risking the money we’d paid, we’d self insure, but risking having to pay back all financial aid for the semester as well… it becomes something where insurance starts to make sense. And believe me, we are big on self-insuring in many cases (trip cancellation, extended warranties, etc.)</p>

<p>Will definitely read the fine print and see if there aren’t other companies that offer a better (covers more situations) product.</p>

<p>thanks all!</p>

9

<p>I just read the following reports:</p>

<p>[If</a> Your Kid Drops Out… - Businessweek](<a href=“Bloomberg - Are you a robot?”>Bloomberg - Are you a robot?)</p>

<p>[Tuition</a> insurance, sometimes limiting, raises questions for college students - News - Daily Nebraskan - University of Nebraska - Lincoln : News, Husker Sports, Opinion, and Video](<a href=“http://www.dailynebraskan.com/news/tuition-insurance-sometimes-limiting-raises-questions-for-college-students-1.2658591#.UBFY7KN5mK0]Tuition”>http://www.dailynebraskan.com/news/tuition-insurance-sometimes-limiting-raises-questions-for-college-students-1.2658591#.UBFY7KN5mK0)</p>

10

<p>Among other limitations listed in the Daily Nebraskan article, this one struck me:

So even serious depression or other mental health problems won’t cut it without a hospitalization.</p>

11

<p>Based on this, I don’t think the Dewar “plan” is actually a one-size-fits-all plan. For example, the article says Dewar only covers 60% for mental health, but the plan we received clearly says 100% for mental health.</p>

12

<p>Out of curiosity, I just called the Bursars Office at Cornell and asked what percentage of students take this insurance. At first, the person I spoke with said she did not know then in the background I heard someone answer my question. They told me to hold on and when the person came back to the phone she said they did not have this information. This prompted me to go on the Internet and do a search. Based on what I read, we will not be paying for this insurance.</p>

13

<p>Manjooman, would you mind pm’ing me with the information you found out if you don’t want to post it here?</p>

14

<p>As Penn State is finding out, having insurance and collecting on insurance are two different things.</p>

<p>Quick question for you math-heads out there: If the premium is 0.03% of tuition and half of premiums are paid out in claims, what percent of students who have the insurance actually receive payouts? Uh-huh, thought so.</p>

15

<p>There have been prior threads on the issue about some folks who DID collect on their insurance for this, like when kid dropped out due to accident/injury, etc. Try searching.</p>

16

<p>They’re clearly operating a for-profit business. If more students were making successful claims, they’d be charging more. That’s how actuarial science works.</p>

<p>Other than routine healthcare, which is a kind of perverse case, you don’t take insurance for <em>likely</em> perils, you take insurance for unlikely but financially disasterous perils. What percentage of people do you think receive payouts on their home’s fire insurance per year?</p>

17

<p>The challenge is evaluating how great the risk is–I wouldn’t have taken out insurance against Skylab falling on me, even if it was only a dime. This particular risk is real, but still pretty remote for most kids. I wonder if you can get it–and if they will pay–if your kid has a preexisting condition that increases the risk of illness?</p>

18

<p>This is one of the articles I read:</p>

<p>Education is often referred to as an investment, and for some students, there is insurance to back it up.
Tuition insurance is offered not by universities, but by private companies such as A.W.G. Dewar, GradGuard, FinAid and more. A.W.G. Dewar is often regarded as one of the most prominent tuition reimbursement companies. It claims on its website, “We are the originators of the Tuition Refund Plan.”
Dewar’s first insurance policies for students were created in 1930 and now serve students from 1,300 colleges across the United States. The University of Nebraska-Lincoln is not one of them.
The plans are available for students who have to withdraw from classes for a few very specific reasons. In a majority of cases, the insurance is only applicable to policyholders who cannot complete their classes for medical reasons.
The private companies may have different definitions of what constitutes a medical emergency, which lessens the coverage available for many students. For example, the Dewar plan doesn’t cover mental health emergencies without a minimum of a two-day hospitalization and doesn’t cover withdrawals because of self-inflicted harm or drug abuse. According to a Wall Street Journal article, even if hospitalization for mental health-related issues occurs, most tuition insurance programs only refund 60 to 75 percent of tuition and room and board costs, compared to the 100 percent that is refunded for serious physical illness.
The same article says that these insurance policies are basically only effective for students who are injured or become seriously ill during the middle weeks of the semester. This is because, in the second half of the semester, most students who cannot complete their classes simply accept “incompletes” on their transcripts.
J. Robert Hunter, director of insurance for the Consumer Federation of America, doesn’t think the insurance policies are a worthwhile investment for college students. “These are very narrow policies,” he said. “I just think these are not intelligent insurance purchases.”
GradGuard specifically notes on its website that enrollment status changes because of war, early graduation or any natural disasters resulting in the closure of the institution the student attends are excluded from policy coverage, and tuition will not be refunded under these circumstances.
Alex Gardner, a freshman accounting major, said she thinks there might be some value in buying tuition insurance.
“That’s a lot of money to get back if you had to drop out of class,” she said. “Just to know that (I’d) get money back would make me feel better.”
Dominick VanLaningham, a sophomore chemistry major, agrees with Hunter that the insurance is a wasteful investment. He said, with all the fees the university already charges students, this would most likely just turn out to be another service that many students would pay for but never use.
Hunter believes that the insurance policies could be made more beneficial for students if they were broadened. According to him, tuition insurance would be more effective if sold directly to universities, who would then include the insurance for all students as part of the cost of tuition students already pay.
“If (colleges) insured everybody under certain standards, then the price would be reasonable,” Hunter said. “For individuals, it just doesn’t make sense.”</p>

19

<p>Market Watch also published this article:</p>

<p>BOSTON (MarketWatch) – With college students only weeks away from the start of classes, many parents are buzzing about, trying to take care of last-minute details.</p>

<p>That’s precisely why my wife Susan – the most patient and understanding woman in America – stopped by my office the other day. Looking to finish chores before our oldest daughter heads off to college, Susan had been approached by friends who wondered whether we were taking advantage of the “tuition insurance” they had been offered.</p>

<p>Since we have been saving for college tuition for years, Susan – like her friends – assumed that some protection for our investment in education would be a good idea.</p>

<p>Looking into tuition insurance, however, was an education of its own, and showed that for most people, this kind of coverage would be the Stupid Investment of the Week, as well as the entire academic year.</p>

<p>Stupid Investment of the Week highlights the conditions and characteristics that make an investment less than ideal for the average consumer, and is written in the hope that spotlighting trouble in one case will make easier to sidestep trouble elsewhere. While obviously not a purchase recommendation, neither is the column intended as an automatic sell signal; someone who has purchased tuition insurance may get some peace of mind from the coverage, even if it’s not particularly sensible or cost-effective.</p>

<p>Unnecessary coverage
From a regulatory standpoint, insurance is not considered an investment, but it qualifies for this column because the buyer of the policy expects a return – protection – in exchange for their outlay of capital.</p>

<p>The premise of tuition insurance is to refund the cost of tuition, fees, room, board and other legitimate education expenses when a full-time college student withdraws from school unexpectedly.</p>

<p>It’s an appealing concept precisely because many families work so hard to save up for college, and because the cost of a semester or a year’s worth of tuition is akin to other big-ticket items that most people protect. Skyrocketing tuition bills and a weak economy – coupled with the many colleges and universities that now partner with insurers to put the idea in front of parents – has made the concept much more widespread and acceptable.</p>

<p>So if college costs as much or more than, say, a new car, and you insure your car, then logically tuition would seem like a good thing to insure too.</p>

<p>The cost, typically, is a few percentage points of the tuition bill for the semesters or years the plan is in place.</p>

<p>At private high schools and prep schools – where many schools require insurance if tuition is not paid all at once – tuition insurance can often make sense because schools have policies of not allowing refunds.</p>

20

<p>Manjooman, am I missing something? Is tuition insurance a Stupid Investment or not? Is there more to the posted article that I’m missing? I don’t feel like it got to the punchline.</p>