Everything You Need to Know About Tuition Refund Insurance

 Author: Paul Smith

Tuition Refund Insurance is a niche insurance product offered by FCA Insurance to private schools across Canada. While the product is purchased by the private school it in fact benefits both the private school and its parent group.

Like any business, private schools have fixed costs that need to be paid. Tuition prices are set in a manner that provides a school with financial stability which ensures an excellent learning atmosphere for its students. However, this financial stability is dependent upon the full receipt of tuition payments from parents. So what happens when a student withdraws or is dismissed from the school? This loss of tuition, especially if this occurs multiple times throughout a year, can have a significant impact on a school’s finances.

An easy example would be to consider a family of five with three students attending ABC Private School. ABC Private School is a boutique private school promising small class sizes and only offers fifty enrollment spaces per year. Well the family of five has received some news. The father is receiving another promotion but this requires the family to move to a new city. As such the children will be withdrawing from school immediately and the family is asking for a pro-rated refund. The tuition for each child is $25,000 and school only started a month go so the family wants a refund of $67,500. The school understands this request but at this stage it would be hard to replace these students mid-year and so this is a direct loss to the school.

This is where Tuition Refund Insurance comes into play. Tuition Refund Insurance eases the financial burden on both the school and the parent by making a prorated refund of tuition and insured fees. The refund is made to your school for credit to the student’s account, assisting in full receipt of tuition by the school while easing the family’s annual tuition commitment. This ensure that there is no detrimental financial impact to neither the school nor the family.

This insurance product is generally offered to all students registering for a private school each year. The cost of this insurance is usually passed onto to the parents as an additional insurance surcharge.

Frequently Asked Questions

How long has this product been available?

FCA has been offering Tuition Refund Insurance since 1930. Currently over 1300 leading independent schools and colleges are protected by the plan.

If a student withdraws during the school year, what does a school do about any tuition balance?

If a school does not offer the Tuition Refund Plan, there are only two alternatives.  It can cancel the tuition obligation, or it can force the parent to pay under the terms of the enrollment contract.

What happens when a school cancels a tuition obligation?

The parent is appeased but at the school’s expense.  While the individual loss may not seem serious, it is not immaterial, and several such cases during the year can represent a sizable sum. Further, the school sets a costly precedent for canceling annual tuition obligations.

What types of withdrawals are covered by the Plan*?

  1. Withdrawal due to illness or accident, including mental health conditions.
  2. The death of a student or  parent.
  3. Non-medical withdrawal for personal reasons, scholastic failure, transfer of family, change of objective, loss of job, etc.
  4. Dismissal for scholastic or disciplinary reasons.

*Exclusions and limitations may apply according to the limitations of the policy

How are claims filed?

Claim forms are supplied by the school.  They are completed by the school and parents and returned to FCA Insurance by the school.

How quickly are claims paid?

Usually within a week after the claim is received by FCA.  Checks are generally made payable to the school for credit to the student’s account.

Why are refunds made through the school?

To give the option of either refunding the entire amount to the parent or crediting the student account first if there is an outstanding balance due.

Can the plan be purchased by a parent on an individual basis?

No.  It can only be purchased through a participating school, as it is group insurance.




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