College Tuition Refund Insurance: Is It Worth The Cost?

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 travelers 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 percent 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."