Johnathan Walker:Your college student may be paying thousands in fees for a service they don't need

If you have Johnathan Walkera child heading off to college this month, you may faintly recall an email from the school about student health insurance.

Most elite private colleges, and many public institutions, automatically enroll students in Student Health Insurance Plans. The coverage cost $2,924 a year at public colleges, $3,874 a year at private ones, on average, according to an industry survey of prominent schools in the 2023-24 academic year.

And here’s the thing: Many students don’t need it.

Colleges often require students to carry comprehensive health insurance. Student health insurance exists, in essence, to cover those who arrive on campus without it.

Some students benefit enormously from campus health insurance, including international students, people from underinsured families, and students with chronic medical or mental-health issues.

For many others, experts say, campus health insurance is duplicative, costly and unnecessary.

'It's not a few hundred dollars. We're talking about thousands.'

“It’s not a few hundred dollars. We’re talking about thousands,” said Julian Treves, an investment advisor and college specialist at Creative Financial Designs.

Stanford University charged $7,128 for student health insurance in 2023-24, according to a survey by Hodgkins Beckley & Lyon, a higher education consultancy. The annual fee totaled $5,144 at Northwestern University, $4,636 at Brown, $4,210 at Penn and $4,762 at Emory, all elite private campuses.

Among public flagships, the tab was $3,093 at the University of Florida, $3,592 at Ohio State, $3,858 at Berkeley and $3,900 at the University of Iowa.

To avoid the four-figure fee, you generally must persuade your student to go online and complete a waiver, documenting that you have comprehensive health insurance for your family.

“When my kids went off to college, we waived the student health insurance every time,” said Steven Bloom, assistant vice president, government relations, at the American Council on Education, which represents colleges and universities. “It doesn’t make a lot of sense, if somebody comes from a family where they have good health insurance.” 

Few colleges, if any, actually require students to carry student health insurance, said Stephen Beckley, a consultant at Hodgkins Beckley: They merely require that students be adequately insured.

Yet, roughly 90% of major four-year private colleges and universities enroll students automatically in campus health insurance plans, along with 35% of major public institutions, Beckley said. If you don’t want the coverage, it’s on you to opt out.

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Want to opt out of student health insurance? Don't wait.

And you would be wise to do it soon. Colleges generally require students to submit the waiver not long after classes start in fall.

Student health insurance “is probably the biggest discretionary expense” colleges charge, said Bobbi Rebell, a personal finance expert at CardRates.com, the consumer site.

And the expense is significant, she said, at a time when the priciest private colleges charge around $70,000 in tuition and fees.

Treves said his clients spend many fretful hours searching for ways to save even a few hundred dollars in college costs. Waiving student health insurance is a no-brainer, he said, if you already have solid insurance for your family: “It’s an easy way to avoid spending thousands of dollars double-insuring your kids.”

Colleges usually make a conscientious effort to alert students and their families that they have been auto-enrolled in health insurance they may not need.

“Most colleges really promote the waiver process, so it shouldn’t be something (families) have to find,” Beckley said. “There should be numerous emails.”

But many families don’t notice the emails. Others wrongly assume they have no choice about purchasing the insurance.

Many parents assume campus health insurance is mandatory

“I would guess that most parents believe it is mandatory,” Rebell said. “They get a bill that has the word ‘mandatory’ on it.”

Even when parents divine that they may not need student health insurance, there remains the complicated business of persuading your child to find and complete a potentially complicated insurance form.

In behavioral terms, autoenrollment is a powerful force, financial experts say. It’s a matter of simple inertia: When consumers have to go through hoops to waive an optional charge, it’s that much less likely they will do it.

“When you’re opted into something, you just stick with it,” said Kimberly Palmer, a personal finance expert at NerdWallet.

Still, if you have good insurance for yourself and your children, you might want to take the time to opt out of student health insurance.

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Most campus health centers accept outside insurance, Beckley said. And your student will have access to all the same medical and dental coverage at school that they would get while traveling, or staying with out-of-town relatives.

Do the math on student health insurance, experts say

If you opt out of student health insurance, however, bear in mind that your student could end up paying more for healthcare at school than they would at home.

Colleges “are putting more bills on the students” for visiting their health centers, raising fees to cover their own rising costs, Beckley said.

Some health insurance policies don’t work so well when you are out of town. If you belong to a regional HMO in Virginia and send your kid off to college in Colorado, experts say, the student may struggle to find healthcare within easy reach. If your child is attending college in state, finding a doctor in your network might be a lot easier.

College students who fall ill often wind up at local urgent care centers, where medical care typically costs more out of pocket than it would at the family doctor.

Indeed, some urgent care centers near colleges market themselves to students as if they were the only healthcare option, which usually isn’t so.

“Sometimes they’re set up to really gouge students,” Beckley said.

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When is student health insurance a good deal?

Anyone with chronic medical issues or mental-health needs might find it cheaper in the end to pay for student health insurance. For example, many colleges persuade local psychotherapists to accept student health insurance even when they don’t take insurance for their other patents.

“There are many circumstances where this is going to save you money, and it’s going to be a better insurance program,” Beckley said.

So, if you are bundling your child off to college, take a few minutes to look at the breakdown of tuition and fees. Google the college name and the words “student health insurance” to find and read the school rules. And take a fresh look at your own insurance policy.

If you choose to waive student health insurance, experts say, spend some time reviewing the available options for your child to seek healthcare at college, on campus or off.

“It’s just a logical step,” Treves said. “Believe me, arriving freshmen, the last thing on their minds is, ‘Where’s the nearest ER?’”