Saving Money & Protecting Yourself – 5 Financial Risks of College Life

5 Hidden Financial Risks Every College Student Should Know

With student debt reaching an all-time high, having a game plan for how to face the financial risks of college life is more important than ever. When students think about paying for college, they’re usually focused on costs like tuition, books, and living expenses. However, several less obvious financial risks can catch students and their families off guard.

Understanding the risks and being well-prepared for the unexpected can ensure a smoother college experience. It can also help keep your student debt in check. Let’s explore five key areas where you may be financially vulnerable during your college years, including:

• Health risks
• Tuition refunds
• Extra semesters
• Property theft
• Gaps in health insurance

Being aware of these five potential financial risks is important. By doing so you can feel more prepared and confident when it comes to paying for college.

Student Health Risks

Colds and viral infections are common on college campuses. Getting sick every now and then happens to all of us. Even so, there are other serious health risks students often face and should be aware of. Many students recover from mono, a concussion, or a broken bone at some point during their college career. Depending on the severity, some situations may prompt students to leave school early and pause their studies. This can delay progress toward their degree.

Moreover, mental health conditions are also on the rise among college students. According to the American College Health Association, 1 in 4 students reported being affected by depression. Even more prevalent was anxiety, affecting every 1 in 3 students.

Taking care of yourself, both physically and mentally, is crucial for staying on track and getting the most out of your studies. Know the signs to look for–among yourself and your friends. If you do find yourself needing support, seek help from a professional. You can go to an on-campus guidance counselor, online therapy service, or medical professional as needed. 

The Truth About College Refunds

You may be planning to take on a certain amount of student debt. However, it’s hard to plan for an unexpected break from your studies. This is one of the hidden financial risks of college life. Many students assume that they will receive a full refund if they need to withdraw from school due to illness, family emergency, or other reasons. However, the reality is often quite different. Efforts are being made to push institutions towards transparency and accountability when it comes to college costs. However, you’ll still want to do your own research into your school’s specific policies regarding tuition reimbursement.

It may surprise you to learn that most colleges have strict refund policies. In many cases, these policies actually decrease the refundable amount as the semester progresses. After a certain point–usually just a few weeks into the term–you may receive no refund at all for tuition, let alone for housing and other fees.

Make sure you understand your school’s refund policy, and ask if they offer tuition insurance. You’ll want to ensure it’s offered through a trusted company, such as GradGuard, which works with hundreds of colleges and universities to offer preferred pricing to students and families. Tuition insurance can provide up to 100% refund for tuition, housing, and fees when a student withdraws for a covered reason. So, if you find yourself faced with a serious illness, injury, or mental health condition, you won’t have to worry about an additional financial loss on top of that.

The Reality of the Cost of an Extra Semester

As you likely already know, life doesn’t always go according to plan. For one, changes in your major or making up for a failed class can extend your time in school. However, those are usually within your control and can be accounted for without a significant increase to your student debt.

When it comes to coming down with a serious case of mono right before midterms or severe depression weeks away from the end of the semester, it may be a different story. Unexpected situations like these could cause you to leave college completely, requiring you to pause and subsequently extend your studies.

In fact, more than 1 in 3 currently enrolled students have considered stopping out of their degree or credential program within the last six months, according to the 2024 Gallup/Lumina Foundation State of Higher Education Report. Among those considering stopping out, 64% say emotional stress or mental health concerns are significant reasons.

The financial impact of an extra semester can be significant, especially if it wasn’t part of the original plan. Once you understand your school’s refund policy, evaluate if your family can afford the cost of an extra semester. Most families cannot; 52% reported it would be difficult to do so in the 2022 College Confidence Index.

Lack of Coverage for Personal Property

While you’d hope paying for college wouldn’t include covering loss or theft, sometimes it’s unavoidable. Many students are surprised that their college or university doesn’t cover stolen, damaged, or lost personal property. Even though it’s a worse case scenario, that pricey laptop you received for high school graduation or the nice bike you saved up all summer for are worth protecting. 

Unfortunately, college campuses aren’t immune to crime, another one of the financial risks of college life. According to Clery Act Reports, more than 24,000 crime and safety incidents, including robberies, fires, and burglaries, are reported annually on college campuses. Your laptop, smartphone, bike, and other valuables are vulnerable in shared living spaces and busy campus environments. Replacing these items out of pocket, potentially even racking up credit card debt to do so, can be a significant financial setback.

Even if you’re careful to protect your personal property, who is to say a burst pipe in your residence hall won’t cause water damage in your dorm room? It happens! Instead of hoping it never happens to you, college renters insurance can help protect your stuff from the unexpected.

Moreover, it’s smart to get your own policy from a company with student-focused protection, such as liability protection and worldwide property coverage. Especially since relying on a parent’s homeowners insurance policy isn’t always the best option to protect yourself from these kinds of financial risks of college life. 

Health Insurance Gaps

While many college students remain on their parent’s health insurance plans, coverage gaps can still occur. Out-of-network providers, high deductibles, and limited coverage for mental health services are common issues. If you do have adequate coverage under a parent’s plan, be sure you’re not being billed twice by also paying for coverage through your school.

Student debt is never a fun topic, and for many students, paying for college is the first time they’ve had to take their finances into serious consideration. Remember, it’s your responsibility to be an active participant in your future. Do your research, stay on the lookout for financial tips, and don’t be afraid to look for additional support. 

Protecting Yourself and Your Investment

Beyond applying for scholarships or creating a budget, understanding financial risks of college life is a crucial step toward protecting your financial well-being during college. Paying for college often requires a multifaceted approach, so don’t be afraid to explore options outside of your financial aid package.

To avoid unnecessary student debt, consider options like tuition insurance, renters insurance, and supplemental health coverage to fill potential gaps. By planning ahead, you can focus on your studies and college experience without the stress of unexpected financial burdens.

Remember, paying for college is an investment in your future. Make sure you’re protecting that investment from all angles to help reduce the financial risks of college life! Check out tuition and renters insurance plans with GradGuard.

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