I am trying to understand the risks of paying for college. Does anyone have specific knowledge of what schools, if anything, are required to refund when I am borrowing for a PLUS loan? Should I consider purchasing tuition insurance?
I don’t think they are required to refund anything if the student has attended a certain number of classes, past the add-drop date. They may be willing to allow a medical temporary withdrawal for provable reasons. How high are the known risk, such as does your student have anxiety or emotional issues?
Yes - my 3rd college student has some health issues that I am worried about. That’s the source of my anxiety.
Why not purchase tuition insurance?
I think Carachel2 is right. Just starting the process. I have purchased it in the past for my D at NYU and couldn’t for my S at ASU. Seems reasonable for $135 for $10,000 of coverage. Just trying to get some insight.
The loan is the loan, and you have to pay it back whether your child completes college (or the semester) or not. If you buy a house and take out a loan, you have to pay the loan whether you live in house, or if you move out before the loan is paid, or if you didn’t enjoy the house, or if half your family moves. You borrowed money, not a house. For college, you borrow money, not tuition or R&B that you didn’t benefit from or use. You have to repay the money.
The tuition insurance may cover you if your child leaves within a certain period of the semester. The loans may also have to be repaid immediately if the student doesn’t finish the semester, so it is a wash for whatever the insurance covers. I think in many cases it is more financially beneficial if you can take medical incompletes and finish the class. Then you don’t lose money
You need to read the fine print on both your enrollment contract with the college and the insurance contract with the company.
Every college gets to determine its own refund schedule, and the circumstances under which you would be entitled to a partial refund. Similarly, your tuition refund insurer is going to determine the situations under which you are covered and those where you are not.
Assume nothing. I know several families who assumed that tuition insurance functions like homeowners insurance- you file a claim, you get a check. Not every withdrawal is going to get covered- read your contract. Similarly, colleges are pretty transparent about what you need to do when you withdraw, and every year lots of families assume their kid did what they were supposed to do… only to discover a few months later that telling your RA “I’m leaving” is NOT The same as an official withdrawal letter submitted to the registrar on such and such a date.
Your kid needs to understand how much money is involved. And yes- it may mean actually composing and printing out a letter and dropping it off at the bursar’s office in addition to emailing a PDF. And handing in the key to your dorm, returning all library books, etc.
I have a neighbor whose kid assumed that telling a professor “by the way I won’t be in class any more, I’m leaving for the semester” is the same as officially withdrawing from the university. Guess what- no refund. No documentation whatsoever. Kid continued to live in the dorm, eat food from the dining hall, use the wifi.
This is not withdrawing. This is called “can’t be bothered to go to class”.
blossom - thank you - you said what I was thinking. So appreciate it.
When a student withdraws, the school has to perform a calculation called Return of Title IV Funds, based on the date of withdrawal. Federal funds are required to be returned to the government in a specified order (PLUS loans are last in the order). When loan funds are required to be returned, that portion of the loan is “repaid” … but the student may then owe the school for the funds that are returned. My suggestion is to purchase tuition insurance in your situation.
As you seem to have several threads on this issue, what school is in commuting distance for you guys instate?
@Sybylla - we are in northwest Phoenix. So Arizona schools are on the map - but I had one at NYU as well. Few more to go…I keep learning that each school has their own process just like each of our kids have their own issues. 