By Owen Daugherty, NASFAA Staff Reporter
With few higher education institutions offering discounts for a semester that will largely take place online, some students and their families are seeking to obtain tuition insurance in an effort to safeguard their payments with the ongoing pandemic disrupting campus plans.
And while institutions are providing information to students about what the fall will look like, including detailed policies on refunds for both tuition and room and board, the likelihood of students getting their money back from a college or university should they contract the novel coronavirus is slim.
The uncertainties surrounding the upcoming academic year are leading colleges and families alike to look closely at tuition insurance, though the devil is in the details, and virtually no tuition insurance plans cover shifts to online-only learning mid-semester that may cause a student to withdraw, as was the case in the spring when the pandemic began and students were unexpectedly forced to return home.
John Fees, co-founder and managing director of the tuition insurance company GradGuard, said he’s seen a spike in requests from colleges looking to adopt tuition insurance policies to offer to their students.
"This will be a record year for families using tuition insurance to protect themselves," he said, adding that while the company does offer policies directly to students, it is much cheaper if their institution offers one, at no cost to the school. The cost of tuition insurance plans range anywhere from $100 to $200 for every $10,000 of tuition, but can vary greatly depending on the institution and insurance company.
Through its partners Allianz Global Assistance and Liberty Mutual, GradGuard is now covering students who withdraw due to contracting COVID-19, Fees explained, acknowledging the added risk associated with covering the virus and noting that it could be reconsidered in the future.
Generally speaking, tuition insurance covers unexpected events that force a student to withdraw mid-semester, such as mental health illnesses or physical illnesses, and injuries like concussions or accidents.
However, the plans do not typically cover other expenses such as room and board, technology expenses, or costs that arise if the school changes plans in the middle of the semester and students have to leave campus. As Fees put it, the tuition insurance provides coverage for the financial loss that occurs as a result of a complete withdrawal, but does not provide a refund due to a change in how classes are delivered.
That’s why Shannon Vasconcelos, director of college finance at Bright Horizons College Coach, said it's important to read the fine print, and cautioned that tuition insurance won’t be a saving grace for families looking to offset the uncertainties the upcoming semester will bring.
“It is not your school shutting down, it is not your school going to online learning and you don't take to that and that's why you withdraw,” she said. “It is not having to go home and take care of an ill relative. It's only if the students themselves have to withdraw because they become ill with COVID-19.”
Tuition insurance is in part drawing more attention because following the disrupted spring semester, students filed dozens of class action lawsuits against their respective institutions calling for tuition refunds. Now, some institutions are attempting to protect themselves by requiring students to sign a housing contract acknowledging that they may not get a refund if the school forces them to leave their residence halls or campus altogether in the fall due to the pandemic.
Washington State University (WSU) initially issued a contract stipulating that students were not entitled to a room and board refund if they were forced to leave campus, but later reversed course after receiving pushback. Still, the school said it wouldn’t be refunding students for meal plans or housing if they choose to leave or if WSU makes changes mid-semester, and would only issue refunds “if a public health order requires the University to vacate residence halls due to” the virus.”
And while tuition insurance wouldn’t resolve such an issue, Fees said schools are exploring the option now more than ever to provide their students with all the options up front.
"We provide a refund if the student completes a withdrawal from school," Fees said. "If campuses change their methods or make students move out, there’s no insurance that provides coverage for that.”
At many of the colleges GradGuard works with, students are able to opt in to tuition insurance as they pay their bill for the semester. Institutions are also letting students know up front about their refund policies and the tuition insurance plans they offer, with the University of Purdue-Fort Wayne notifying students when they access their online portals to view their financial aid award summary or to pay their tuition bills.
Doug Hess, the director of financial aid at the University of Purdue-Fort Wayne, said he has not fielded a lot of questions from students or their families about tuition insurance plans, attributing it to the fact the coronavirus reached its peak in the spring and some students may view the notification in the online portal as simply another pop-up window.
“I don't think they really give it the true consideration. Now do we really push it either? Probably not as hard as maybe we could or should,” Hess said. “But it is out there and available. And I think most students probably are looking at it. They read it. And if they don't understand it, they just click no and move on.”
Other schools are taking a different approach, automatically enrolling students in a tuition insurance plan for a fee, and requiring them to fill out a waiver to opt out. At Rhodes College in Memphis, the policy premium appeared on the tuition bill and students had until August 1 to opt out. The plan, offered by A.W.G. Dewar, covers 80% of tuition and fees and applies to both injury and sickness withdrawals, as well as mental health withdrawals. Included in the FAQ informing students of the policy is a note that makes clear the plan does not issue tuition refunds due to a “change to online instruction or alternative learning platform.”
At Santa Clara University in California, where a tuition insurance plan is offered through Dewar and students are automatically enrolled unless they opt out, the school makes clear that “students who are quarantined and have withdrawn because there is concern that they may have the virus, but have not been diagnosed with the virus, are not covered.”
“It is important to note that the Tuition Refund Plan does not provide coverage for fear of contagion,” the policy posted on the school’s website states.
Still, with plenty of plans still to be finalized even as some schools look to begin classes in a matter of weeks, Vasconcelos estimated that looking into tuition insurance is probably not high on many students’ priority list.
“There is just so much uncertainty that they haven't even gotten to that point yet,” she said. “First, the schools are having to decide what they're doing, and once those announcements are made, then families are having to decide how they're going to respond to what the school is doing. And then they may start thinking about covering the bill and insuring the bill.”
Publication Date: 8/3/2020