Tuition-insurance companies say they’ve seen increased interest in their plans from families, students, and colleges this summer because of Covid-19, yet not every company will cover the coronavirus.
Two of the three major tuition-insurance providers, GradGuard and A.W.G. Dewar, will be treating claims due to Covid-19 like those for any other illness. But the third, Liberty Mutual Insurance, does not cover any illness classified as an epidemic or outbreak by the World Health Organization or the U.S. Centers for Disease Control and Prevention. That includes Covid-19.
Tuition insurance, which typically provides reimbursement when students withdraw from college for medical reasons, is often much less expensive when purchased through a college’s partnership with an insurance company. Even so families that buy tuition insurance through Liberty Mutual’s partnerships with Sacred Heart University or Bentley University, for example, won’t get their money back if their student drops out due to a bad case of Covid-19.
The insurance is sold on a semester or academic-year basis; it usually costs 1 percent of tuition if the college teams up with an insurance company. Individual policies purchased outside of such partnerships typically cost 2 percent of tuition.
Students whose campuses are partners with Liberty Mutual must seek an individual policy through another company if they want coverage for Covid-19 — and that’s likely to increase the cost sharply.
Shannon Vasconcelos, director of college finance at Bright Horizons College Coach, which advises families on college admissions and financing, said students and their families should look very closely at what is covered by tuition insurance. Medical issues like illness and injury are usually covered, but other common reasons for withdrawal — such as social, emotional, financial, or disciplinary incidents — are not.
Additionally, Vasconcelos said, families need to understand that Covid-19 would be covered only if the student fell ill, not if the college changed its schedule or shifted courses online due to the pandemic. For Covid-19 to be covered by Dewar and GradGuard, a student would need to have the illness diagnosed and have a doctor certify that the condition required withdrawal from college.
To be effective, most tuition-insurance plans must be purchased by the first day of classes, for international students, at their home college or university.
“It’s safe to say more students will be going to school with tuition insurance than ever before,” said Natalie Tarangioli, a marketing and content specialist at GradGuard. Tarangioli said the company, which works with more than 350 colleges, has been adding five to 10 institutional partners a week since Covid-19 was declared a pandemic. Its partner colleges include Bates College, Baylor University, and Fairfield University. Tuition insurance with GradGuard starts at $39.95 for $2,500 of coverage per term.
GradGuard, which offers its plans through the insurance broker Allianz and the broker and provider Liberty Mutual, can cover students who withdraw due to Covid-19 because Allianz accommodates such claims.
The specific policy language states: “Claims due to known, foreseeable, or expected events, epidemics, cessation of operations by the school, or fear of attending school are generally not covered. However, until further notice, although not covered under most plans, Allianz is currently accommodating claims for when an insured student completely withdraws from school for the covered term due to becoming ill with Covid-19. The accommodation above is strictly applicable to Covid-19.”
According to Phillip Beattie, president of Dewar, its policy will treat claims associated with Covid-19 just like claims for “any other illness under the policy.” Beattie said that due to the constantly changing landscape of Covid-19 in the United States, Dewar, whose partner colleges include Fordham University and Santa Clara University, is not sure what volume of Covid-19-related claims it will receive.
Glenn Greenberg, director of media relations at Liberty Mutual, said the company had seen “more interest from partner schools to help educate students on the benefits of tuition insurance.”
“Parents see the value of tuition-insurance coverage, especially in an environment where an increasing number of students take classes online and have disrupted routines,” he said.
In general, Vasconcelos said, “tuition insurance is most useful for midsemester withdrawals.” If a student withdraws early in the semester, he or she can usually get most of the money back through the college’s refund policy. If a student withdraws late in a term, he or she may later get credit for it. “Right in the middle is when you’re on the hook for most of the tuition, but can’t complete the semester,” explained Vasconcelos.
It doesn’t cost colleges to team up with insurance companies, and doing so can get students’ families better deals. Still, she said, colleges should assume some responsibility for making clear to families the parameters of tuition insurance, if they are advertising their partnerships.
“If I was a college, I would want to take on that responsibility of explaining to families what is covered,” Vasconcelos said, rather than leave them to interpret the rules on their own.
