When Compassion Becomes a Requirement: What Mental Health Withdrawal Laws Could Mean for Your Campus
New Jersey is advancing a bill that would require public colleges to refund students who withdraw for mental health reasons. It follows a Maryland law believed to be the first of its kind. Here’s a look at both, what they could signal for other states, and how schools can plan ahead without straining the budget.
New Jersey lawmakers are moving forward with a bill that would require every public college and university in the state to refund students who withdraw for health reasons, including mental health. If it passes, New Jersey would join Maryland as one of the first states with this kind of requirement. Even campuses outside those two states should take a close look.
Where it started: Maryland
In 2019, Cameron Carden withdrew from Salisbury University in the middle of a semester during a mental health crisis. Mental health wasn’t part of the university’s withdrawal policy at the time, so he couldn’t get a refund for the rest of the term. Carden later told Maryland lawmakers his situation was “no different than if I had suffered a debilitating physical injury.” The bill’s lead sponsor, Delegate Shaneka Henson, told WMAR-2 News she was struck that the refund could have gone toward his treatment and care.
The Cameron Carden Act of 2024 took effect in July 2024, and Inside Higher Ed reported it may be the first law of its kind in the nation. It requires Maryland’s 14 public universities to adopt formal withdrawal policies that name mental health as a valid reason to stop out. It also requires them to refund students who withdraw mid-semester for mental or physical health reasons for the remainder of the term. Most campuses already had something in place. Nearly all allowed withdrawals for illness or hospitalization, but not every policy specifically mentioned mental health.
Where New Jersey stands
New Jersey’s bill, A1319, would require public institutions to refund tuition and fees for the semester in which a student withdraws because of illness, injury, hospitalization, or mental health and wellness. Students would also receive the unused portion of room and board. The Assembly Higher Education Committee approved the bill on September 17, and the Senate Higher Education Committee approved its version, S4072, on October 5. Both versions are now with their chamber’s appropriations committee.
If enacted, the requirement would begin with the first full academic year after the law takes effect. Like Maryland’s law, the bill was carried over from a previous session, and it doesn’t include state funding to cover the refunds.
What this could mean for other states
Both bills have had broad support. Maryland’s passed 46-0 in the Senate and 130-7 in the House, and New Jersey’s has cleared both higher education committees without a single no vote. That track record could make them a model for other states.
They also take a different approach than most state mental health legislation. John Lane of the State Higher Education Executive Officers Association noted that these laws have typically worked through funding and resources. These bills set requirements for institutions instead, which means the cost falls on campus. And although both apply only to public institutions, families may start to expect similar protections at other schools.
These bills are part of a larger conversation about how students step away from school and how they return, whether that means coming back after a medical leave or understanding how a withdrawal affects a transfer. Experts say complicated processes can keep students from stepping away when they need to, because they’re afraid of losing tuition or not being able to come back.
The Hidden Cost of Student Withdrawals, a 2026 survey of 151 higher education finance executives by Higher Ed Dive’s Studio ID and GradGuard, found that every institution disclosed its refund policy annually. Yet just 2% said students are well-informed about refund implications when they withdraw. Schools are making the effort, but the message isn’t reaching students when it matters.
The budget question and planning ahead
Most campus leaders support the intent behind these bills, and many already make exceptions informally.. A formal guarantee turns those exceptions into a predictable cost. In the same survey, the typical refund per withdrawal was between $2,500 to $7,499, and mental health-related withdrawals rose 46% year over year. Case-by-case appeals also add to staff workload, with seven in 10 finance leaders saying appeals take more effort than they did three years ago.
Schools don’t need to wait for a mandate to act. They can start by naming mental health in the withdrawal policy, putting refund information where students will actually see it (such as the billing portal), and estimating what a refund requirement would cost.
To help fund refunds, some institutions use tuition insurance, which can reimburse families when a covered illness, injury, or mental health condition leads to a withdrawal. Sixty-two percent of surveyed institutions offer it in some form.
Tuition insurance can also ease one of the biggest worries that keep students from stepping away: losing the money already spent. It can help them return, too. According to GradGuard data, more than 75% of students who received a paid GradGuard Tuition Insurance claim re-enrolled or planned to re-enroll.
The families behind these bills want the same things campus leaders do: for students to focus on getting well and come back when they’re ready. Planning ahead helps schools support that, whether or not a mandate arrives.
Learn more about how GradGuard partner schools protect families when an unexpected event leads to a withdrawal.
