O’Connor: Tuition insurance — check the fine print

Brian J. O'Connor
Detroit News Finance Editor

It’s nearly back-to-college time, Funny Money fans, and time for a pop quiz on college and university mottos. This should be a breeze for those of you who went to medical or law school, since you already are well acquainted with Latin phrases, such as habeas corpus, rigor mortis and quae meum tempus tincidunt (“When’s my tee time?”).

Try to match the school with the translation of its motto:

1. Harvard University — Veritas

2. Evergreen State College — Omnia Extares

3. Iona College — Certa Bonum Certamen

4. University of the South — Ecce quam bonum, et quam iucundum habitare fratres in unum

A. Fight the Good Fight

B. Truth

C. Behold, how good and joyful a thing it is, for brethren to dwell together in unity

D. Let It All Hang Out

The answers (1-B; 2-D; 3-A; and 4-C) are revealing. Harvard gets right down to brass tacks, while the guy who wrote the University of the South motto clearly got paid by the word. As for Evergreen State, the writer is somewhere in the great beyond having a huge laugh, since no one on the hiring committee obviously understood Latin.

It was all Greek to them

There’s an additional implied university motto that students and parents also need to translate, and that’s Caveat Emptor (“Read the fine print.”) And if you want to know which school it applies to, it’s all of them.

Take a student who needs to withdraw from school because of a serious illness. Most colleges aren’t going to refund a dime unless the kid manages to break both legs or contract mononucleosis in the first few weeks of classes. And no, Junior and Missy, that’s not a challenge.

With a year of in-state public university tuition, room and board averaging $19,548 this year, and private school costs averaging $43,921, forfeiting an entire semester or year of expenses would be a big financial hit to any family. One way to avoid that is with tuition insurance.

“Many parents don’t know about this,” says Joe Mason, chief marketing officer of Allianz, a specialty insurer that’s more widely known for travel insurance. “You see a lot of parents who either wish they knew about tuition insurance when their older son or daughter went to school, or feel like they should have been informed by the school.”

Tuition insurance coverage can vary, from reimbursement for illness, injury or a psychological conditions to policies that will cover any unrefunded tuition, fees and room and board for nearly any reason. That can include cases where the student becomes terribly homesick, decides to get a job or just hates the school. Some policies also cover the death of a parent or someone else paying the student’s tuition.

However, policies typically won’t pay if the student leaves school for discipline reasons or flunks out. That means no check if Junior comes down with a bad case of Jägermeister flu.

He’d be sadder Budweiser

Costs for tuition insurance range from flat fees to a percentage of the expenses. The basic policies from Allianz charge $29.95 for every $2,500 of coverage per semester, or $135 for every $10,000 per semester. For 6 percent of the costs, a policy will cover any unforeseen reason for withdrawal, Mason says.

Besides Allianz, tuition insurance providers include and Education Insurance Plans’ Tuition Guardian (provided through schools). Another provider is A.W.G. Dewar, which limits its coverage to about 1,300 mostly private schools. Some schools also offer policies.

Before buying a policy, consider that medical withdrawals are rare among healthy students, and many experts don’t recommend tuition policies as a general rule. But it can make sense for a student with an ongoing medical condition or one who might suffer a relapse of a previous illness.

Figure out what would prompt a student to withdraw, then check the policies carefully, because there are conditions and exclusions. Some give only partial coverage for mental health issues, and most won’t cover an accident or illness that occurred right before the policy was purchased. Others may exclude conditions diagnosed in the previous six or 12 months. And most policies require you to buy the coverage before the first day of classes.

If a student should withdraw, families face not only the loss of a semester’s worth of payments but also the cost of an additional semester when the student returns. If they’ve borrowed to finance college that could extend the loan payments well beyond the decade or more students take to pay off college debt. And that, as they say in Latin, could drag on ad infinitum.

Brian O’Connor is author of “The $1,000 Challenge: How One Family Slashed Its Budget Without Moving Under a Bridge or Living on Government Cheese.”