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An academic question: Is tuition insurance worth the investment?

College students and their families have substantial amounts of money invested in their college education. Unfortunately, sometimes a student has to drop classes and withdraw from school during a semester because of unforeseen injury or illness. In most circumstances, colleges and universities will not refund the tuition -- or will only refund a portion of it -- for the classes not completed.

A few insurance companies offer plans that may give college kids and their families a little more peace of mind. The coverage can reimburse up to 100 percent of the tuition paid when the student has to withdraw mid-term.

A 2011 survey conducted by the American College Health Association found that 16 percent of college students had an illness, cold, or flu that affected their ability to perform well academically. A significant 11.9 percent had experienced depression, and around 2 percent of those responding contracted mononucleosis. Ultimately, most students recover from these assorted medical problems, but the failure to complete even one semester of classes can cause a loss of many thousands of tuition dollars, a loss which many families cannot afford in today's troubled economy.

Some schools do issue partial refunds if a student has to withdraw because of illness or other circumstances beyond their control. But even then, the amount refunded rapidly declines after the semester has gone on for a while; one school, for example, retains 20 percent of tuition even when the student is forced to leave in the first week of classes. In most instances, even schools providing for some possibility of refunds will return nothing if a student has attended four or five weeks of classes.

Tuition isn't cheap, and neither is tuition insurance. We'll get into that and some financial experts' opinions in our next post.

Source: InsuranceNewsNet.com, "Tuition Insurance Business Expands," Tim Grant (Pittsburgh Post-Gazette), July 29, 2012

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