Students insure against expense of dropping out

More than 500 students had paid for insurance against the cost of dropping out of their degree course just two weeks after A-level results were announced and university places were confirmed.

Saxon Direct UK Limited runs the first scheme to cover outstanding tuition fees, accommodation charges and loans for students who quit their course. It is still receiving 30 to 90 calls a day. By today, it expects to have more than 2,000 applications.

Local authorities that pay fees for poor students will cover the full annual cost if the student stays on the course until at least December 1 in an academic year.

Universities must choose whether to refund fees to others who drop out. Most have yet to decide. Roger Clark, registrar of Reading University, said: "Life would be easier if there were guidance, but this seems to be an area that falls to us." He said Reading was likely to offer refunds for full terms a student fails to complete.

Saxon Direct's Uni-Shield scheme, which covers students who drop out for any reason other than a change of mind, covers unlimited outstanding liabilities at the time the insured person de-registers. It has two parts. Fee Shield, which costs Pounds 166, covers outstanding fees for the balance of the academic year in which the student leaves and liability for accommodation charges and maintenance grants. Loan Shield, which costs Pounds 208, also covers liability for outstanding debts to the Student Loans Company.

The three-year cover may be extended for an extra charge.

Brian Wright, managing director of Saxon Direct, said: "The days of the good old university that turns a blind eye to outstanding debts is a thing of the past."