"When tuition insurance was brought to my attention, I immediately thought of the multitude of unintended consequences the federal student financial assistance programs have had. The government makes low-interest loans available on terms no private lender would consider, enhancing the demand for colleges, which respond by vigorously raising their tuition fees. College financing becomes a much bigger issue in the lives of Americans, and that, in turn, spawns secondary impacts, such as the rise of tuition insurance."
Bill Suneson and I founded GradGuard and led many innovations surrounding the development of tuition insurance for just these reasons. Indeed, the need for GradGuard's tuition insurance wasn't that great thirty years ago when I attended Arizona State University. Back then, I could earn enough through my campus jobs and scholarships to pay for the complete cost of college so the risk of losing the investment of a semester was relatively small. In fact, before GradGuard, only students attending the most elite and expensive schools in the nation were able to purchase tuition insurance. Today, thanks to GradGuard's students in all 50 states are able to protect their investment in college.
From our perspective, there are at least five factors driving the growth in tuition insurance.
Growth Factor 1: The Cost of College Creates Real Risks for Institutions & Families: The average published in‐state tuition and fee, and room and board charges for 2018-19 are $21,370 and $37,430 for out of state students. The average published total charges at private nonprofit four-year institutions are $48,510 according to the College Board’s 2018-19 Trends in College Pricing. According to the Allianz College Confidence Index, 85% of students and parents agree that the financial repercussions of withdrawing could be severe.
Growth Factor 2: Students Are Vulnerable to Unique Health Issues That Can Disrupt School: A survey of student health and financial service administrators reported that 45% of schools reported an increase in student medical withdrawals. Coupled with data from American College Health Association that reveals a doubling of mental health issues from 2010 - 2015, it is clear that students despite their youth, students face risks to their health that are disrupting their academic progress.
Growth Factor 3: A Modern Form of Tuition Insurance Now Available in All 50 states: Before GradGuard launched the first national tuition insurance in 2011, tuition insurance was only available through commercial policies sold through elite colleges. GradGuard believes that all students and families deserve the opportunity to protect their investment in college and is thankful to innovative insurance companies who have worked to create a modern form of tuition insurance that is now available to students in all 50 states. This policy includes the coverage families expect and that students need to provide protection for not just the loss of tuition but also for other direct academic costs and fees.
Growth Factor 4: Schools Are Serious About Increasing College Completion Rates: According to the National Student Clearing House Research Center, most recent data, the overall national six-year college completion rate was 57%. The total completion rate for students who started at a four-year public institution increased 65%, while the four-year private nonprofit rate is 76%. Helping students return to complete their studies after a medical withdrawal is one step among many that are supporting greater student success. As evidence more schools than ever recognize the importance and value of GradGuard's tuition insurance to schools and the college families they serve.
Growth Factor 5: Schools Are Serious About Operating With Greater Transparency: A 2017 survey from College Parents of America revealed that two-thirds of college parents have no idea how their college or university would handle a student medical withdrawal. As a result, schools are taking steps recommended by NACUBO to use Financial Responsibility Agreements and to disclose the refund policy of their institution. In addition, 85% of schools surveyed report that they believe purchasing tuition insurance should be as convenient as buying travel insurance.
Continued Rapid Growth Expected:
In the most recent survey of student financial services offices, 84% of colleges and universities do not provide a refund to students who complete a medical withdrawal.
Dr. Vedder is wise to suggest a concern regarding college enrollment trends. Though college enrollment has recently declined due to birth rates from 18 years ago and a strong economy, the risk of paying for college has grown due to increased costs and an increase in student medical withdrawals. The point of both is that it takes multiple steps to grow confidence in the value of higher education.
Ultimately, GradGuard believes that each student deserves the opportunity to succeed and protect their investment in college. If your college or university does not provide 100% refund, then it is essential to disclose your refund policy to each student and smart to provide the opportunity to protect their college investment through GradGuard's Tuition Insurance from Allianz.