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More than half of prospective college students worry they'll never graduate

  • Withdrawing unexpectedly can lead to an average loss of more than $11,000.
  • Almost eight in 10 parents said they would be worried about making student loan payments if their child left school.

Students entering college today have plenty on their minds already, such as debt and landing a job when they get out. Now, add one more fear to the list: worries about dropping out.

More than half of prospective students believe there is a chance they won't finish college, according to a new report from Allianz Global Assistance.

The most likely reasons? A family emergency, stress, and mental and physical health, the survey found. The findings are based on a poll in May of 2,004 college students, prospective college students and their parents.

Americans are going to college at higher rates than ever, said Kit Yarrow, professor emeritus at Golden Gate University, increasing stress for students who might not be ready or would prefer to take a gap year.

"It's almost like going to high school now," she said.

It appears that shift may be changing, however. Full-time enrollment immediately after high school no longer makes up the majority of college students, according to the National Student Clearinghouse Research Center.

And only a minority of students, about 35 percent, graduate within four years of enrollment, said Mark Schneider, a vice president at the American Institutes for Research. Less than three-quarters graduate within six years, he said, which can lead to a situation where a student has taken on debt but does not end up with the skills and higher wages a degree might bring.

Tuition rates are far outpacing wage growth, and families are going deeper in debt to fund a college education, a CNBC report from 2015 analyzing college costs found.

Only 52 percent of students said they were "very confident" they won't permanently withdraw from college — and many may not be prepared or aware of the financial fallout that comes along with it, the survey suggests.

Half of parents and children said they had no awareness of their school's refund policy and just 16 percent said they are very confident they know it.

That can lead to an average of more than $11,000 in losses if the child withdraws unexpectedly, the report found.

The money lost can be a major burden on children and families who withdraw, said Dan Durazo, director of communications at Allianz Global Assistance, which commissioned the survey.

"We found if they take that financial loss, they may not come back," he said. Almost eight in 10 parents said they would be worried about making student loan payments if their child withdrew from college.

SOURCE: Allianz Global Assistance

Many schools offer some kind of refund for students who withdraw, usually prorated for how long is left in the term.

Rutgers University, for instance, offers an 80 percent refund if the student withdraws before the third week, 60 percent before the fifth week and 40 percent before the sixth week. After that, no refund is offered. Northwestern University offers a refund until half the term has finished, but school officials note that "the underlying situation" can play a role in how much tuition is reimbursed.

Tuition insurance, which could help restore some of the money lost when a student withdraws, is one option to hedge fears. Another is going to a community college first, then on to a major university, said Daniel Lash, a certified financial planner at Vienna, Virginia-based VLP Financial Advisors.

Students can take certain classes, such as introductory-level ones, at a community college at a much lower cost before transferring to a four-year institution to finish their degree. That could save a family as much as $40,000, Lash said.

Parents queried for the report are more confident than their children, with 65 percent of parents of current students saying they are very confident their child will not need to drop out.