When Buying Tuition Insurance Makes Sense

FOOTING THE BILL at some colleges — and even some private elementary and high schools — can be just as expensive as buying a luxury car every September.

But while it's long been second nature for people to insure their Porsches and BMWs, it's only recently that parents started seriously considering insuring their child's education. With tuition rates skyrocketing and a weakening economy, obtaining tuition insurance is becoming a much more accepted way for parents to protect their investment.

Tuition insurance allows parents to recoup some or all of their money should their child have to leave school midway through a semester, say, due to an illness or, in the case of K-12 schools, if a parent loses a job or has to move away. Offered through schools by third-party insurers, these policies cost anywhere from 1% to 3% of tuition per semester. With the average tuition at a private college clocking in at $24,000, according to the College Board, that comes out to between $100 and $200 a semester.

Here are some tips to help you decide whether a tuition insurance policy is right for your family:

At colleges and universities, on the other hand, obtaining tuition insurance is voluntary. "At the K-12 level, the school is interested in protecting its tuition revenue," says David Galvin, an insurance agent who works with schools. "The colleges are just making it available."

In most families' situations, however, obtaining a policy covering college tuition isn't necessary. After all, most colleges will reimburse all or part of the tuition paid if a child withdraws by a certain deadline, usually within the first several weeks of the semester, Galvin says.