First, a quick correction to our last post: We stated that one college retains 80 percent of tuition if the student leaves after the first week of classes. That college actually refunds 80 percent of tuition.
A college education used to give a job candidate an extra edge with hiring managers. The degree meant the candidate was more mature, more adept at critical thinking and problem solving. In post-Great Recession America, a bachelor’s degree is de rigueur. A candidate with a B.A. or B.S. no longer has an advantage over the rest of the hiring pool. Instead, a candidate without a degree is at a distinct disadvantage.
College is no longer a luxury the way traveling business class or subscribing to HBO is, but it costs as much as a luxury purchase. The University of Miami lists tuition for the 2012-2013 school year at $19,990.00 — an amount that causes more than minor sticker shock and that makes one wonder why the school didn’t just add “and 95 cents” and get it over with. Private schools can run double that amount.
Insurance companies have seen the business opportunity here, and more and more insurers are offering tuition insurance plans. Students who are involved in sports, for example, purchase the coverage for a little peace of mind: If an injury were to sideline them halfway through the term, their policy would reimburse them for a good portion of their tuition.
As we said in our last post, premiums are not cheap. Coverage typically runs from1 to 3 percent of the tuition amount insured. For UM students, then, the rate could be as much as $600 (to be exact, $599.70); for the typical private school, coverage could run upwards of $1,050 per year.
For students and their families, the question then becomes one of living with the risk or investing even more money in that education. Not surprisingly, experts have reservations about both choices.
The insurance director for the Consumer Federation of America is skeptical about the return on investment. He concedes, however, that the most risk-averse among us could certainly benefit. Overall, though, “Most people shouldn’t buy it” — especially if the main concern is the student’s current health. Most policies won’t cover pre-existing conditions. It’s important to note, too, that dropping out is not a covered event; there must be an injury or illness.
Sallie Mae, however, believes the insurance is worth a modest investment. The private student loan agency purchases a $5,000 tuition policy for each student loan applicant. It’s not much, but it’s something.
Ultimately, the decision lies with the person who is paying the tuition.
Source: InsuranceNewsNet.com, “Tuition Insurance Business Expands,” Tim Grant (Pittsburgh Post-Gazette), July 29, 2012Share