Guest Post: Understanding Tuition Refund Insurance | SimpleTuition ...

By: Erika Stewart

In the last few years, tuition for college has grown faster than inflation. As we struggle to be able to afford payments, we often overlook the possibility that the tuition paid to schools could be wasted if the student is forced to withdraw for medical reasons.

Tuition refund insurance exists to provide peace of mind in case this circumstance arises and can put tuition money back in the pocket of students and parents. This type of plan can be an alternative or supplement to student health insurance if the student if facing severe health problems.

Many colleges have their own refund policies and it is important to understand them before taking out tuition refund insurance. Some universities will limit the ability to get a tuition refund after a certain time has passed into the school year, such as 30 days. Others base their refund policy on if a student is receiving various kinds of financial aid.

Federal law governs the federal financial aid that students receive in the case that he or she withdraws from school. The R2T4 policy decrees that students must return any unearned federal financial aid back to the government. The percentage of earned financial aid is prorated based on how much of the school term the student has completed. A 60 percent term completion counts as 100 percent as far as federal student aid is concerned.

Tuition refund insurance is only recommended for students who have serious pre-existing health conditions or illnesses that would cause a student to withdraw during their studies. Common kinds of coverage include withdrawal from school due to illness or injury as well as death of the student or parent/guardian. Other coverage types include job loss, withdrawals due to mental health conditions, and expulsion or suspension on academic or disciplinary grounds.

Tuition Refund Insurance Vs. Student Health Insurance
Keep in mind that tuition refund insurance is not equivalent to taking out health insurance plans. Most schools will still require you to buy health insurance for students or prove that the students are covered under a plan owned by a parent or guardian. These two plans are different and should not be confused with each other.

Student health insurance can ensure that health and medical costs that are incurred while at school are not prohibitive. Health insurance for students is a good bet for nearly every child who is in college or university. On the other hand, tuition refund insurance should only be purchased in the case that the probability of withdrawal is very high.

Tuition refund insurance will usually cost parents and students 1 to 5 percent of the coverage value, usually the cost of tuition. Premiums can be a good investment if the threat of withdrawal due to health reasons is serious and the family can recoup a significant portion of the school?s tuition cost.

Source: http://blog.simpletuition.com/2012/01/guest-post-understanding-tuition-refund-insurance/

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