Yale is now considering joining Brown, Penn, Harvard and Cornell universities, who cover the cost of sex change operations of its students.
If implemented, gender reassignment surgery will be part of Yale students' health care plan for its 5,322 undergraduate, 6,526 graduate and professional students.
Around 36 colleges and universities nationwide have included sex-change surgeries in their student health plans, which can cost around $25,000 or more.
The American Medical Association has regarded gender identity disorder as a serious medical condition since 2008.
This medical condition is known to cause discomfort and severe. A person might also suffer suicidal tendencies.
Yale has already offered gender reassignment coverage to employees.
"The benefit is offered to faculty and staff, and is being considered for students," Yale spokeswoman Karen Peart, told FoxNews.com. "Cost would vary depending on treatment."
Gabriel Murchison, a member of Yale's Resource Alliance for Gender Equity (RAGE), told the newspaper that student health care should be on equal level with services offered to faculty, staff and their dependents.
Generally there has been increasing interest in offering insurance coverage for this procedure.
Brown university plans to include sex-change surgery in its student health plan, beginning August.
"We identified this as an important benefit for students to have access to," Jeanne Hebert, director of the university's insurance services, told Christian News.
Apart from universities, corporate companies such as 25 percent of Fortune 100 companies, have insurance plans that cover sex change expenditure.
