A member of a “faculty family,” Martha Thompson had always assumed her kids would graduate from college in four years. Until her first was ready to begin courses, she never had given a moment’s thought to how she would handle it financially, if they didn’t.

 “All three of our kids are very bright. There was no question about their going to college to expand their minds, learn critical thinking and become full adults ready to enter the world,” she says.

Julie Leavitt, whose daughter has struggled with mental illness, wasn’t as certain she would finish in four years, but she was certain about the value of a college education.

“To be able to learn, to find out more about who she is, and what she wants to be able to give the world, to contribute, is important to me and important to her,” Leavitt says. “

Parents may spend as long as 18 years saving for their children’s college education, and for most families, it can be a struggle to come up with four years of tuition payments, especially when they have more than one child. When also considering room and board, books and other expenses, parents are aware most young adults enter the real world with student debt, but most give little thought to how much debt might increase if their son or daughter doesn’t complete school in four years.

According to the 2017 Allianz Tuition Insurance College Confidence Index, parents know relatively little about what happens if their child has to withdraw during a semester. The survey showed 43 percent of current college students have considered withdrawing and 53 percent are less than “very confident” they will graduate in four years. Yet half of students and parents have no awareness of their school’s refund policy, and just 16 percent are “very confident” they know it.

Parents seldom give much thought to the possibility their student will not finish—which means they don’t think about tuition insurance until it’s too late, says James Garrant, director of student accounts at Lasell College in Newton, Massachusetts, whose school has partnered with GradGuard to offer this product.

“Their thought process isn’t, ‘What if my student falls and gets hurt, gets hit with an illness, or doesn’t get along with their roommate?’ ” Garrant says. “Tuition insurance isn’t something most parents are going to have on their radar. We make the information readily available for them to make an informed decision.”

Because of her daughter’s health challenges, Leavitt was among those who investigated not only refund policies but also the tuition insurance products available for families that reimburse them for tuition and related fees that they otherwise would not recoup if their child were to unexpectedly leave school in the middle of a semester. “I hoped that she would finish in four years if it was right for her, but I was just taking it a year at a time,” she says.

Leavitt learned about Allianz Tuition Insurance through her own research—it was not an official partner of Keene State College, where her daughter has attended one semester to date—and decided to take out a policy. That decision paid off when her daughter took a leave of absence in the middle of her second semester last spring (she plans to return to school next spring).

“At first, I was hesitant about spending the money on the policy," Leavitt says. “But I felt really grateful that it was able to help us when the time came, and she wasn’t able to complete the second semester. This will help her to have money to continue without loan debt.”

Lacking a specific reason to suspect any of her children would not finish a semester, Thompson did not have reimbursement policies or tuition insurance on her radar screen when her children were about to start college, and she has no memory of attending a parent orientation where either topic came up. She did happen to notice a mention of insurance on her oldest child’s college’s website.

“Parents really have to make a point to educate themselves about the refund policy, which might otherwise be overlooked when sorting through reams of new information about a college or university.”  Thompson says. With refunds unavailable at most schools beyond a certain point in the semester, she says, “a certain percentage of students will get sick or have to leave school for one reason or another after the refund period is over. We all think it won’t happen to our children but it is a realistic possibility that families should prepare for.”

As she learned more, Thompson came to believe that college tuition protection is an ideal insurance product. “Insurance is to protect your assets against a random, catastrophic loss,” she says. “You don’t expect your kid to leave school, but it’s going to happen to somebody. A semester of college these days is like buying a car. You’ve paid $30,000 for a semester and gotten nothing from it [if your child leaves]. If you save money for 18 years and then, boom, an eighth of it’s gone because they had to come home, that’s a big loss.”

Thompson’s feelings have only grown stronger over the past several years as two of her three children have had to leave campus for periods of time. The Allianz Tuition Insurance policy covered tuition, room and board, and related fees, although such policies typically do not cover books and transportation costs, and parents still have to take into account the fact that tuition is slightly higher when students return to campus.

“You get most of your investment back,” she says. “When they’re ready, they go back, and then at least you have the money to pay for it. It covers not just tuition but fees, room and board.”

Thompson notes tuition insurance is available on the individual market. Some colleges and universities also partner with companies, like Allianz, that offer tuition insurance. “No matter your situation, it’s worth exploring as an option.”

Another important wrinkle that parents and students should understand is that aid to students, whether it’s a private scholarship or a federal loan, might be withdrawn if a student leaves campus for the semester—but the family may still be on the hook for tuition and fees, Thompson says.

Additionally, with tuition insurance, even families that take out loans can protect themselves. In fact, according to a 2016 survey of financial advisors, 78 percent recommend students who will need to take on loans consider tuition insurance as a smart option to protect their investment.  

“One question parents need to ask is what’s going to happen to scholarships and loans if a student gets sick and has to withdraw,” she says. “We thought we were not going to have to pay tuition with a scholarship. That’s not how this sometimes works in reality.”

Ultimately, Thompson says, the bottom line is that tuition insurance provides parents and students peace of mind. “I’m always interested in being able to sleep at night,” she says. “College is a valuable yet substantial investment. You are literally buying a nice car every semester your kid is in college. It’s your money, and a lot of it. I tell everybody to investigate this. Most people don’t have any idea it exists and can be helpful.”