As nearly 3 million new college students and their families prepare to start college in the fall, now is an excellent time for parents and students to examine the financial risks of paying for college.
There has never been a year where the need for families to consider the risks to their students is more important then now. The Coronavirus crisis has brought new attention to the risks of college life, and specifically, the refund policies of colleges and universities nationwide.
Recent data shows that one out of four students who enrolled in a 4 year non-profit college in 2017 did not return to any school for their 2nd year. There are many reasons why students don’t persist and many of them are easy to prepare for and easy to protect your family from a preventable financial loss.
Attending college is a big financial decision for students and their families. In many cases it’s also the second largest investment families make. Before you go, there are financial risks that are important to be aware of so you’ll know how to navigate them.
Student Medical Withdrawals Are On The Rise
Several ordinary medical conditions, not just COVID-19, create financial losses each year for students and schools.
According to 2019 data from the American College Health Association (ACHA), conditions including concussions, mono, pneumonia, and the flu greatly impact college completion.
The ACHA assessment confirms the scale and impact of health conditions on college completion. The calculations are based on a total of 8.16 million full-time undergraduate students attending four-year non-profit institutions.
The ACHA research also reports a dramatic increase in anxiety, depression, and mental health conditions that are leading to student medical withdrawals.
Know Your College Refund Policy
While the Coronavirus pandemic has shed light on college refunds, it has also created confusion over what’s covered and what’s not.
A 2019 survey by HigherEdStudy of 179 colleges and universities found that only 6% of schools reported providing a 100% refund of tuition—down from 23% in 2015.
None of the public colleges surveyed provide full refunds and nearly half of the schools don’t provide any refund for student fees and academic fees.
In another survey, data from the Ipsos – College Confidence Index indicates 73% of parents are unaware of the refund policy of their college or university; 23% of parents surveyed indicate that they could not pay for an additional semester of classes and 51% indicate that it would be difficult.
If your student has to withdraw from college due to a serious illness, injury or accident, it’s unlikely that you’ll receive a full refund.
Tuition insurance can provide a refund, however, when schools do not.
If you cannot afford the cost of an extra college semester, then it is essential to purchase tuition insurance coverage prior to the start of classes.
Recent articles in Forbes, Money Magazine and Inside Higher Ed demonstrate the growth and value of tuition insurance. The most economical way to purchase tuition insurance is when colleges, themselves, offer the option for families to obtain this type of additional protection.
Confirm Health Insurance Coverage
Many colleges offer health insurance plans to students and require them to purchase or opt-out by showing proof of alternative insurance.
According to the American College Health Association, about 10 percent of students get their health insurance through their school. A college health insurance plan may make sense for some students. But if you have family health insurance, your college student can remain on a parents’ plan until the age of 26.
Be sure to confirm the requirements to use your student campus health clinic and be sure not to pay twice for coverage.
If you choose to opt out of health insurance offered by your student’s college, make the college aware of your choice since many schools automatically include this fee on college bills.
Protect Yourself from the Risks Of Living On Campus
For many of the nearly 3 million students who live in student housing, this is the first time they are living independently. Chances are, they’re not aware that their college or university is unlikely to replace stolen or damaged student property.
- 98% of colleges and universities do not replace stolen or damaged student property (HigherEdStudy)
- 1,999 fires are reported in campus-based student housing (Clery Act Reports from 2009-2019)
- 69,500 property crimes were reported on campuses nationwide (FBI Crime Report)
Families are also smart to consider purchasing renters insurance, particularly given that a recent review of the top 20 home insurance companies found that less than half of them automatically provide coverage for students living on-campus.
In addition, home-insurance policies are often impractical to protect students as they are subject to high deductibles or may increase the cost of your insurance if you file a small claim.
As an example, for about 50-cents a day, GradGuard’s college renters insurance contains an exclusive student endorsement that provides worldwide property coverage, a low-deductible and no credit check, making renters insurance a must-have consideration for college families.
Evaluate Your Insurance Needs and Options
It’s exciting to send your student off to college, but don’t overlook the need to think through the different ways you and your family may still need to be protected.
Different types of insurance can help mitigate financial losses that come unexpectedly. In the end, the decision is based on your financial situation, any medical conditions your student may have, the refund policy of your student’s college and how well your current insurance policies may or may not cover these circumstances.
This article is sponsored by GradGuard.