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Four Things Parents and Students Should Consider This Spring to Promote Their Financial Wellness

January is Financial Wellness Month, and for millions of college students and families in the U.S., it also marks the beginning of a new semester.

On average, four-year college students graduate with $28,950 in federal and private loans, which totals $1.75 trillion in student loan debt nationwide.

With 55% of students from public four-year institutions and 57% of students from private nonprofit four-year institutions taking on education debt after graduation, it is critical that students and families better educate themselves on the potential risks of their investment in a college degree.

In fact, the 2022 College Confidence Index by GradGuard and College Pulse revealed that most college students and their parents are uninformed about how withdrawing might impact them financially, specifically when it comes to their school's tuition refund policy. Most college students (74 percent) and parents of college students (66 percent) report they are not at all or not too familiar with the tuition refund policy at their school.

Here are four steps families and students can take to better protect themselves and their investment.

  1. Look into the terms and conditions of any student loans. Some loans start accruing interest before you graduate, while others don’t. Understanding where debt might be compounding is critical to ensuring proper financial planning for college and beyond. Students will eventually need to repay all federal and private loans, so exploring payment plan options may help students stay on track and avoid defaulting.

  2. Understand unique risks. If your student has a chronic physical or mental health condition, make sure you are taking steps to ensure that financial protections for them can be used later. Some schools require students to be medically cleared before attending classes for refunds to be issued in the event of a reoccurrence; however, most students report being unable to afford an additional semester if they are forced to take a leave of absence for a medical reason.  

  3. Investigate your school’s tuition refund policy. Depending on the circumstances, some schools will offer partial refunds to students who withdraw based on how far into the semester or academic year they leave school. For students who intend to re-enroll in school the following semester, the difference between the amount refunded and the money needed to resume academic programming may pose significant financial hurdles that result in a permanent departure from higher education. Be aware of withdrawal deadlines and refund policies before the start of the semester.

  4. Consider tuition insurance to protect your higher ed investment. Outside of purchasing a home, paying for college is a family's most expensive investment. Just as you would consider buying travel insurance for a costly trip, tuition insurance can provide students and parents with a financial safety net should a student need to withdraw unexpectedly due to a covered injury, illness, or mental health condition. Students should not have to choose between prioritizing physical and mental health or financial stability.

John Fees, CEO of GradGuard, said, “It is incredibly important to understand the terms and conditions of financing a college education, whether through loans or cash investment. Many students and families investing in a degree take on debt with an eye on when repayment will start. However, they can start to feel the impact much sooner if their student withdraws for a mental health reason, chronic illness, injury, or even an epidemic.”

Families and students interested in protecting their educational investment can visit GradGuard to find a plan that fits their needs.

Terms, conditions, and exclusions (including for pre-existing conditions) apply. Plans only available to U.S. residents and may not be available in all jurisdictions. Recommended and provided by GradGuard, a service of Next Generation Insurance Group, LLC (NGI), the licensed agent for all insurance programs. Insurance plans include insurance benefits and assistance services. Pricing may vary by state. Insurance benefits are underwritten by Jefferson Insurance Company (NY, Administrative Office 9950 Mayland Drive, Richmond, VA 23233) rated “A+” (Superior) by A.M. Best Co., A+ (Superior) is the 2nd highest standard of A.M. Best’s 13 Financial Strenght Ratings. Non-insurance benefits/services are provided by AGA Service Company. Claims are administered by Allianz Global Assistance (AGA). AGA Service Company dba Allianz Global Assistance (AGA) compensates their suppliers or agencies for allowing AGA to market or offer products to customers of the supplier or agency. Allianz Global Assistance and Grad Guard Tuition Insurance are marks of AGA Service Company or its affiliates. AGA Service Company and NGI are affiliates of Jefferson Insurance Company. Plans include insurance benefits and assistance services. Except as expressly provided for under the plan, consumer is responsible for charges incurred from outside vendors. Contact AGA Service Company at 888-427-5045 or 9950 Mayland Dr., Richmond, VA 23233 or