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College tuition insurance: How to protect your student in the COVID era

With COVID hitting the college-age cohort, insuring your tuition investment is worth a look.

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Has there ever been a more stressful time to go off to college? As the delta variant continues to sweep across the US, more than 14,000 vaccinated people with breakthrough COVID cases have been hospitalized or died, according to the US Centers for Disease Control and Prevention. With college students returning to in-person learning on campuses across the country, the specter of illness is casting a shadow over the coming semester -- even for the vaccinated. In fact, CDC data shows the college-age cohort has one of the highest numbers of cases in the US.

Though it remains to be seen how effective vaccinations and other protections will be at keeping campuses and students safe, there's a way for families to protect themselves financially from COVID-19 and other illnesses: tuition insurance. These insurance policies refund tuition fees for students who experience an accident, illness, injury or mental health issue that prevents them from finishing the semester. 

Though this type of insurance has been around for decades, the new realities of the COVID era, and increased attention on mental health issues in university settings, are raising its profile. Read on to learn more about college tuition insurance, how it works and whether it's worth the price.

Who sells college tuition insurance? 

Many universities partner with tuition insurance carriers, including A.W.G Dewar and GradGuard. If your school doesn't partner with these carriers, you can go to them individually and purchase a policy.

A.G.W. Dewar has been offering college tuition insurance since 1930. In addition to college tuition, it also offers reimbursement policies for private school students from pre-K through 12th grade. 

GradGuard, which partners with Allianz Global, is another prominent carrier. It offers tuition insurance (and renters insurance) to college students.

How much does tuition insurance cost?

Typically, these plans cost roughly 1% of your tuition fees, and they can offer coverage of up to 100% reimbursement if you can't finish a semester because of a covered reason. You can purchase plans either for a single semester or the entire year. To check if your university offers these plans, head to your school's student finance office or check the office's website online. 

What kinds of expenses are covered?

College tuition insurance reimburses the tuition and fees paid at the beginning of the semester. It also reimburses tuition if the covered student dies. Both GradGuard and Dewar include additional coverage for room and board if you choose to purchase it, but Dewar covers it only if the student is living in a dorm on campus. 

You can choose how much coverage you want and how much you want your maximum benefit amount to be, which in turn will affect how much you can get reimbursed for other school expenses, such as books, after the plan pays out for tuition. For example, under GradGuard's policy, if your maximum benefit amount pays for all your tuition and fees and there's still money left over, GradGuard will reimburse you for other school expenses up to the maximum benefit amount.

What illnesses are covered? 

There are three main categories that most policies cover: serious injuries or illnesses, chronic illnesses, and mental health conditions.

Coverage for chronic illnesses may include autoimmune disorder and diabetes, while mental health conditions may include stress, depression or anxiety. Serious injuries or illnesses may include things like meningitis, lupus or head injuries, and carriers like Dewar and GradGuard are now including COVID-19 as part of that list. 

Outside of these three main buckets, tuition insurance won't reimburse you for other disruptions to your academic semester. This includes poor academic performance such that the student needs to drop out, disciplinary issues, or if the student takes a leave of absence for other reasons, including running out of money to finish the semester.

Is there any fine print?

Preexisting conditions are typically included. But GradGuard stipulates it'll cover withdrawals for preexisting conditions only if the student didn't have symptoms and was able to attend school at the time the policy was purchased.

Is tuition insurance worth it?

The average cost of tuition and fees is $10,560 per year at an in-state public university, $27,020 a year at an out-of-state university, and $37,650 per year at a private nonprofit university, according to research from College Board.  This is a pricey undertaking, and those numbers don't even cover other expenses associated with higher education, including books, transportation and housing.

In light of those numbers, if your policy charges 1% of your tuition amount, then you're looking at a minimum of about $105 for the year. The stresses of college can take a large toll on your mental health, so tuition insurance may be worthwhile for this reason alone. But especially if you're a student with an autoimmune disorder or if you have medical factors that put you at an increased risk of severe illness from COVID-19, tuition insurance might be a good idea, even if you're already vaccinated.