College costs top $27,000 a year as families weigh insurance options

College costs top $27,000 a year at state schools and more than $55,000 at private universities, pushing families to insure their investment in a degree.

Consumer Reports recommends dorm or renter's insurance as a more affordable option than relying on a homeowner's policy to cover a student's belongings, the nonprofit said.

Tuition insurance can refund the portion of a semester a student did not receive if they drop out midway because of a major health issue, on top of any refund the school already provides. Dorm insurance is typically inexpensive and covers everything a student brings to campus, reimbursing loss or damage. Parents can also scale back car insurance when a student does not bring a car to school.

With annual costs above $27,000, insurance and tax breaks for parents of dependent students can meaningfully reduce out-of-pocket risk. Families should also sign medical authorization forms once a child turns 18 to keep access to healthcare decisions.

Coverage terms and documentation vary by policy

Tuition insurance reimburses families for the portion of education a student did not receive if a major health issue forces a mid-semester withdrawal. Coverage terms vary by policy, so families should check what is covered and what documentation is needed for reimbursement — which may include medical records or a doctor's note. The refund comes in addition to whatever the school itself returns.

Dorm insurance covers everything a student brings to college, reimbursing loss or damage at a typically low premium. While a homeowner's policy may partially cover a child's belongings, Consumer Reports says dorm or renter's insurance is often cheaper. Parents can also cut car insurance premiums when a student does not bring a vehicle to campus, a move that can save hundreds of dollars a year depending on the policy.

For families, the combination of tuition, dorm and car insurance plus dependent tax credits can lower the total cost of a four-year degree by thousands of dollars. Tax breaks for parents of dependent students change with each filing year, so families should verify eligibility against the latest IRS guidance. Before enrollment, families should review policy terms and sign medical authorization forms so parents can stay involved in a student's healthcare once they turn 18.

This article is for informational purposes only and does not constitute professional advice.