Home Education News Pandemic leads to spike in demand for tuition insurance

Pandemic leads to spike in demand for tuition insurance

With the COVID-19 pandemic and the Delta variant continuing to sow uncertainty about the future, companies offering tuition insurance have seen a spike in business, as many students and their families are looking to safeguard their investment in higher education.

“We’ve seen almost four times growth in the business in two years,” said John Fees, co-founder and CEO of GradGuard, a company that offers tuition insurance. “We are seeing record numbers of purchase rates, and we’re paying a lot of claims. More students and more universities are adopting the program.”

Most colleges and universities don’t offer students refunds on their tuition if they have to withdraw from the semester after a certain number of weeks have passed. That’s where tuition insurance comes in — it provides reimbursement for the cost when a student can’t complete an academic term due to an unforeseen, covered circumstance. Illnesses are usually considered justified reasons for reimbursement, but circumstances such as a college choosing to switch from in-person to virtual classes are not.

GradGuard estimates that about 1 percent — tens of thousands — of students won’t complete their term due to a covered reason. Students and their families lose more than $1 billion a year due to unexpected medical withdrawals, according to its estimates.

Many institutions partner with GradGuard and A. W. G. Dewar, a company that has offered tuition insurance for decades, to make the option available for their students. Dewar partners with nearly 60 colleges and universities, most of which are private, including Columbia University, Duke University, the University of Michigan and Stanford University. GradGuard partners with more than 425 institutions — including Auburn University, Oklahoma State University and Purdue University — but Fees expects that number to climb to over 500 by next year.

Tuition insurance is available for purchase from GradGuard even if it doesn’t partner with a student’s college, but it’s more expensive, said Fees.

The college or university usually indicates in an email to their students about tuition payments that they offer tuition insurance through either GradGuard or Dewar. It guides students and their families to the application, and for GradGuard specifically, the billing process is integrated into the institution’s billing. It doesn’t cost anything for institutions to participate, and they don’t receive any money from GradGuard through the partnership.

Ragan Lower, president of Dewar, said his company has also seen a significant increase in participation in the tuition insurance program since the pandemic.

“I think people were trying to protect themselves from the unknown,” Lower said. “Parents were concerned about what would happen if their child became ill and had to withdraw from college.”

Both companies cover withdrawals that occur as a result of injury, illness and mental health complications, and GradGuard covers instances like the death of a parent. GradGuard has specifically stated that it also covers students who withdraw due to sickness from COVID-19, as some colleges are telling their students that COVID-related absences may require them to withdraw. The uncertainty surrounding the coronavirus and its emerging variants was what motivated Daniel Cotter, a Chicago resident and parent of a senior at Beloit College in Beloit, Wis., to purchase tuition insurance for the first time since his son has been in college.

“COVID and the topsy-turvy world we live in was the sole reason,” Cotter said. “He’s fully vaccinated and healthy, but I thought, ‘Why not put some belts and suspenders onto the tuition?’ There’s too much invested, and he’s going to be a senior.”

Cotter said he thought the costs were affordable, especially for the amount of tuition that he’s paying. For example, $20,000 in coverage for the spring 2022 semester at Beloit College would cost $212, according to GradGuard’s website.

Related Stories

Fees said he thinks there are several trends driving both personal and institutional interest in tuition insurance programs: a greater focus on students’ health due to the pandemic and a growing mental health crisis, the ease with which it’s integrated into the institution’s billing process, and the availability of it at more public institutions.

“What COVID has done is brought attention to the fact that paying for college is like paying for any other purchase,” Fees said. “If you can protect something as trivial as travel, you should be able to protect an investment in something that is a vital path in a young person’s life.”

Lower noted that the pandemic highlighted institutions’ limited refund policies, making students and families more aware of them and prompting them to find a way to protect themselves. Cotter agreed that he feels more protected after purchasing the insurance for his son’s tuition.

“Hopefully he never has to use it, but it gives a little more comfort that — God forbid something happens — we have a safety net behind us,” Cotter said.

Most Popular

What Are The Opportunities For Virtual Or eLearning Solutions?

Which Virtual Learning Solution Is Right For Your Team? Today, there are numerous digital learning options and online platforms that make it easy to conduct...

CoderZ Launches New Code Farm Coding And Robotics Course

Derry, N.H., Dec. 2, 2022 — When young students learn coding, they hone skills—such as computational thinking and collaboration—that enhance their success in school...

6 Business New Year’s Resolutions For Happier Employees

How To Make Your Employees Happier In 2023 One more year is coming to an end, and if you're managing any type of company, you're...

Why Cybersecurity Is So Important For Business

How To Scale Your Business Growth Having a strong cybersecurity presence is important for business growth, but not all companies are aware of how to...