College Funding: Watch Out For The Unexpected Additional Expense Of Mandatory Student Health Insurance
01 August 2019
With August comes the approach of the new school year, and many families are now preparing to pay their first big college-tuition bill. At myStockOptions, our section College Funding has articles and FAQs with guidance and insights on how to best use equity compensation to pay for the ever-growing cost of college attendance and the impact that stock grant income can have on financial aid.
Big Surprise College Expense
Via the personal experience of our editor-in-chief Bruce Brumberg, a related issue involving college funding has come to our attention: the often unexpected but significant expense of mandatory student health insurance. Althought this is beyond the usual scope of this blog, what he experienced and discovered has financial-planning implications for anyone who has kids in college or will soon.
Mandatory Student Health Insurance: What Do Colleges Impose And Why?
You probably have solid health insurance for your family. However, even excellent health insurance may not meet the rigorous requirements of the college your child attends. If it does not, you will be forced to buy a separate health insurance policy that the college sells or sponsors. At some colleges, the cost of the policy is over $5,000 for the 2019–2020 academic year.
The way to avoid this charge is to get a waiver from your college by proving you have a health-insurance plan that is comparable to the one it sells. The process to do this for the academic year often occurs in July and August or the month before the tuition bills come out.
Colleges are understandably concerned that students could face debt from medical expenses that dwarfs even their student-loan debt. That is the underlying reason for colleges' mandatory health insurance and its stringent standards. However, the requirement is not completely bad news. While the cost of mandatory student health insurance is often a big surprise for many families, in some situations the college's insurance policy can actually present both savings and a better plan.
In a commentary at his Forbes.com blog, our editor-in-chief Bruce Brumberg discusses his experience and advice for parents and students on handling mandatory student health insurance at colleges: The Big College Expense You Probably Didn't Know About And Save For: Mandatory Health Insurance. The practice has become so widespread at colleges that it should be a factor in your financial planning for college funding.