The Hidden Cost of Student Withdrawals, and Why We Studied It
By: Heather Richmond
Every higher ed leader I talk to knows student withdrawals are expensive. What surprises them is how expensive and how predictable the leaks have become.
That's why we partnered with Higher Ed Dive's Studio ID to survey 151 financial aid, bursar, and student finance executives about what's really happening inside their refund and appeals operations. We wanted to move past anecdotes and put real numbers on a problem that's quietly reshaping institutional budgets, staff workloads, and student outcomes.
The result is our new report, The Hidden Cost of Student Withdrawals: Trends, Risks, and Smarter Approaches to Protecting Enrollment Revenue.
What the data revealed
Withdrawals are bigger and more costly than most leaders publicly admit. 85% of surveyed institutions report annual withdrawal rates between 5% and 20% — and the per-student cost can climb into five figures.
The first year is the fault line, and the pressures driving students out are accelerating sharply, particularly around finances and mental health.
Disclosure isn't the same as understanding. Every institution we surveyed discloses its refund policy annually, yet only 2% of finance leaders believe students actually understand the implications when they initiate a withdrawal.
Appeals processes are buckling under volume, growing subjectivity, and a quiet equity problem. And outstanding balances are compounding the loss in ways that are getting harder to collect on.
Why we did this research
At GradGuard, we work with more than 700 institutions to embed tuition and renters insurance into the enrollment experience. Across those partnerships, we kept hearing the same thing from bursars and financial aid leaders: the appeals queue is growing, the conversations are getting harder, and the financial exposure is climbing. But it's difficult to make the case for change without industry-wide data.
We commissioned this study to give higher ed leaders that data to take an honest look at where the systems meant to protect students and institutions are showing their seams, and what some campuses are already doing differently.
The institutions getting ahead of this problem, like Purdue University and St. Edward's University (both featured in the report), share three traits: they communicate refund policies where students actually encounter them, they've reduced their reliance on subjective appeals, and they've built financial protection into the student experience rather than leaving it to chance. The results are tangible. St. Edward's now retains more than $1 million annually that previously went out the door in refunds. Purdue has seen higher re-enrollment rates among insured students. And GradGuard's own claims data shows more than 75% of students who received a paid tuition claim re-enrolled or planned to.
Who this report is for
Bursars, financial aid directors, CFOs, enrollment leaders, provosts, and presidents — anyone trying to turn withdrawals into pauses rather than permanent exits, or build institutional resilience as families' capacity to pay continues to tighten.
The honest truth is that withdrawals aren't going away. But the leaks are predictable, which means they're addressable.
