Ever heard of tuition insurance? As the coronavirus pandemic continues into the fall, parents and students have flocked to buy tuition insurance as colleges and universities re-opened in-person class for the fall 2021 semester.
Companies such as GradGuard offer tuition insurance protection for parents and students, who are uncertain whether they’ll be able to attend in-person classes during the pandemic. Co-founder and CEO of GradGuard John Fees, told Inside Higher Ed, “We’ve seen almost four times growth in the business in two years.” He added, “We are seeing record numbers of purchase rates, and we’re paying a lot of claims. More students and more universities are adopting the program.”
GradGuard estimated that one-percent of students will not complete their semester due to a covered reason, such as illness. It said that students and families lose over $1 billion per year due to medical withdrawals from classes.
Other covered reasons for withdrawal are death of a parent, injury, or mental health, but it depends on the company that offers tuition insurance.
GradGuard and its competitors do partner with many universities, with GradGuard partnering with over 425 institutions. Students can purchase tuition insurance for non-partner schools, but it will be more costly, the company said.
For the most part, the majority of colleges and universities are not offering refunds to students for paid tuition if they withdraw from classes during the pandemic. Typically, this is known as the withdrawal deadline when no refunds will be issued.
Tuition insurance kicks in and reimburses the cost when a student does not complete a semester due to an unforeseen but covered event. Although illnesses can be considered justifiable reasons for tuition reimbursement, higher education institutions do not view switching from in-person to virtual or online classes in the same vein.
The strict rules about tuition reimbursement have plagued students and parents for years, and tuition insurance is one way to try to get around these rules. If small businesses and large corporations offer refunds or credit, why don’t colleges or universities do the same?
The onerous and bloated higher education bureaucracies prevent reasonable, common-sense approaches to tuition refunds, which has led to the emergence of a small insurance market to help students and parents feel more secure about their tuition payments.
