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What is tuition insurance? Is it worth it?

Last updated: 
December 15, 2023

Tuition insurance provides financial reimbursement for private and boarding school tuition and possibly other related expenses if a student has to withdraw from school. Given the rising cost of education, tuition insurance can provide peace of mind when making this financial commitment.

What does private school tuition insurance cover?

Policies vary by provider, but tuition insurance typically covers situations such as a family moving for work, medical emergencies, death (student or parent), illness, or mental health. Benefits are based on unused school days, are retroactive to the first day of absence, and may only pay a percentage of insured fees. For example, a policy might pay 70 percent for medical absences but only 50 percent for those due to financial hardship.

It’s important to read policies carefully to understand what they include. There may be coverage limits, and some policies may exclude pre-existing conditions. Most tuition insurance policies exclude expulsion, homesickness, and students withdrawing voluntarily; policies that cover these scenarios charge a higher premium and typically only reimburse up to 50 percent. 

How much does tuition insurance cost?

The cost of tuition insurance varies by provider and policy, but it typically is in the 1 to 1.5 percent of tuition range. Keep in mind that the tuition insurance price is based on the family’s actual financial obligation to the school after financial aid and scholarships, not the tuition price listed on the school’s website.

The sample pricing below shows what tuition insurance would cost at a rate of 1.3 percent:

  • $80,000 tuition = $1,040 insurance fee
  • $70,000 tuition = $900 insurance fee
  • $60,000 tuition = $780 insurance fee
  • $50,000 tuition = $650 insurance fee
  • $40,000 tuition = $520 insurance fee
  • $30,000 tuition = $390 insurance fee
  • $20,000 tuition = $260 insurance fee
  • $10,000 tuition = $130 insurance fee
  • $5,000 tuition = $65

You typically have to purchase tuition insurance by the first day of school, but most policies also have a clause for students who start at the school at a later date.

Is tuition refund insurance worth it?

The decision to purchase tuition insurance often comes down to a family’s risk aversion and financial commitment to the school. How much would you stand to lose if you didn’t have insurance? Not all insurance policies are created equal, so weighing the cost against the potential benefits is essential.

For example, the following table provides a sample of potential benefits from a medical absence on a plan reimbursing 70 percent. The figures below are based on a tuition insurance rate of 1.3 percent and a school year beginning September 1 and ending May 31 (272 days, including weekends and holidays). 

Tuition Fee Insurance Fee Benefits Per Days of School Missed
50 Days 100 Days 150 Days 200 Days
$80,000 $1,040 $10,290 $20,580 $30,870 $41,160
$70,000 $900 $8,995 $17,990 $26,985 $35,980
$60,000 $780 $7,735 $15,470 $23,205 $30,940
$50,000 $650 $6,440 $12,880 $19,320 $25,760
$40,000 $520 $5,145 $10,290 $15,435 $20,580
$30,000 $390 $3,850 $7,700 $11,550 $15,400
$20,000 $260 $2,590 $5,180 $7,770 10,360
$10,000 $130 $1,295 $2,590 $3,885 $5,180
$5,000 $65 $630 $1,260 $1,890 $2,520

Do private schools require tuition insurance?

Ultimately, deciding to purchase tuition insurance may not be up to you. Private schools, especially boarding schools, often require families on monthly tuition payment plans to purchase tuition insurance. In these cases, there may be an opt-out option if tuition is paid in full by the start of school.

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