By CultureBanx Team
- Tuition insurance can cost up to $1,500 a month or an average of 1% of your total tuition costs
- For 4-year HBCUs the graduation rate is just 35%
College tends to be one of the biggest financial commitments people make and now companies are offering ways to lessen the burden through tuition insurance. On average, tuition insurance costs roughly 1% of your total tuition costs, according to the National Association of Insurance Commissioners. Given the low graduation rates at historically black colleges and universities (HBCU), is this a smart move to protect your money?
Why This Matters: For four-year HBCUs, the six-year graduation rate is just 35% compared to other institutions that have a 59% graduation rate, according to the United Negro College Fund. If for some reason a student is unable to finish, tuition insurance will reimburse the payments they made for tuition, fees and on-campus housing. This type of insurance can cost up to $1,500 a month.
Even though HBCUs generally have lower endowments than other private institutions, they’ve been able to keep tuition costs lower. Spelman College is the most expensive private HBCU at $28,181 a year, followed by Morehouse College at $27,278 and Howard University at $25,697, according to Student Loan Hero. While these are high tuition and fee prices, it’s still several thousand dollars less than the national average of $32,410 for private four-year colleges. Schools typically offer some type of tuition reimbursement around halfway through the semester.
Data from the National Student Clearinghouse (NSC), researchers found that completion rates for private HBCUs, “are higher than the federal graduation rate suggests, and closer to a 67% completion rate. About 70,000 policies were written across the U.S. last year, up from 20,000 five years ago, said John Fees, co-founder of GradGuard to the Wall Street Journal.
As with any insurance product, you must read the fine print. A lot of plans cover withdrawal only for a serious health issue. The Wall Street Journal reported Allianz Insurance, which began selling the policies in 2015, said about 20% of claims were for mental health and 70% were for physical health. If a student drops out for academic reasons, disciplinary action, or just is unhappy at school, in most instances the insurance won’t apply.
Situational Awareness: Colleges often dedicate their time to helping students obtain money through scholarships, grants, financial aid, and work-study. Perhaps these institutions need to help students learn how to manage the money they have, so they can better protect their college investment and cross the finish line to a degree.
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