Are you spending thousands of dollars to send your child to college? You could take out tuition insurance to get your money back if your child doesn't finish the term.
Carmen Lawton just spent thousands to send her son to an out-of-state college. So she bought tuition insurance that will reimburse her if, for some reason, he's unable to complete the term.
"He called me just a week ago and said this is really, he was having some anxiety because it's such a huge school, and my first thought was, 'If this doesn't work out, at least the tuition expense is reimbursable,'" said Lawton.
She bought her policy from the company where she works, Henrico-based Allianz Global Assistance, which recently started offering tuition insurance to residents of Virginia and 10 other states. Residents of those states can be covered while attending any accredited college or university in the country.
Explained Joe Mason with Allianz Global Assistance, "There are a lot of students who go into their first year of college, or even their fourth year of college, and situations happen that force them to withdraw. Either they get sick, they get injured, or college just isn't for them."
Most schools offer pro-rated refunds during the first several weeks of school, but after that, tuition can be lost if the student withdraws.
A few other companies offer tuition insurance too, A.W.G. Dewar, GradGuard, and College Parents of America. Prices usually range from 1% to 6% of tuition.
While tuition costs are already high and rising, is paying more money for insurance worth it? The Wall Street Journal reported fewer than 1% to 2% of students with tuition insurance end up using it. But the cost of insurance can be relatively low, so weigh your options.
Lawton felt it was worth it for some peace of mind. "It's a fraction of the cost of what you pay for tuition, room and board."
Be sure to check what your school's refund policy is and find out what circumstances your insurance policy will or will not cover.
You must purchase tuition insurance at the beginning of the term. But Allianz says it's offering Virginians a grace period right now for eligible schools.