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Sallie Mae, one of the largest private lenders in the country, just launched open online enrollment for a host of insurance plans for consumers. This isn’t the lender’s first foray into the insurance world. It launched a tuition refund insurance plan back in May for college students.
With the latest additions to its suite of insurance offerings, including plans for for auto, renter’s, health and travellers insurance, Sallie’s clearly looking to diversify its business outside the realm of college campuses.
There’s nothing all that special about the new policies, but the whole idea of tuition refund insurance gave us pause.
Insurance policies for college tuition function as a way to protect students if they have to suddenly drop out due to underlying medical issues. For $249 per year, Sallie Mae’s plan will cover 100 per cent of lost tuition but only up to $5,000 per semester.
“With the average private college tuition in excess of $38,000, that leaves a sizable shortfall,” says Joseph Orsolini of College Aid Planners, Inc. “That being said, I once had a client whose student gotten bitten by a spider in her dorm room and when into a comma for three days. She had to dropout for obvious reasons. This type of plan would have come in handy.”
But what about the rest of students out there?
“Tuition refund insurance provides the family with peace of mind, but is probably not necessary for most students,” he says.
There’s one case in which it might be a good idea: If you have a long-standing medical illness you fear might take a turn for the worse or require a lot of in-patient treatment. But as Orsolini points out, you might already be covered under your parent’s health plan so you’ll want to doublecheck beforehand.
Thanks to a bit of public backlash last year, the tuition refund plan also covers tuition costs for students forced to dropout for mental health reasons. Originally, it only covered up to 75%.
If it makes a difference, the tuition plan also includes up to $1,000 in coverage for physical or virus damage to your personal computer for all states except New York.
When it comes to the rest of the lender’s insurance offerings, a few might be worth looking into.
Renter’s insurance is always a good idea, especially if you’re living off campus and want protection for your expensive belongings like furniture and electronics. The plan covers up to $95,000 in losses from fire, water damage and theft. You can also share the policy with your roommates.
Auto, health, and travel are worth a glance, but you can get those plans from just about anywhere. Do your homework in advance and shop around to compare prices to Sallie Mae’s.
Here’s one you can skip: Life insurance.
Unless you have children to care for, there’s not much need for college students to have one, Kantrowitz says. If you’re on the fence about getting a plan, check out this helpful infographic.