Preparing for college is a long journey, but the summer before your child starts school is often when the reality of it truly sets in. In addition to talking to them about healthy habits like getting adequate sleep and managing their stress, this is the ideal opportunity to introduce them to money basics that will help them build a strong financial future.
Review your family’s plan to pay for college
By now, you’ve likely received your child’s financial aid package, so you have a sense of how big the college bill will be. If you haven’t already done so, this is a good time to sit down with your child and discuss your family’s plan to pay for college.
- After the expected family contribution, scholarships, loans and grants, what will your child be responsible for?
- Will you help them pay the balance or are you expecting your child to pitch in with their own savings or income?
- If your child is taking out student loans, it’s also a good time to explain how student loans work, including the difference between public and private loans, and subsidized and unsubsidized loans.
Once you have gone over the big picture of their college career, this college prep checklist can help guide you both through five financial tasks to tackle ahead of move-in day.
1. Go over a budget
Even if their room, board and dining hall meals are covered, your child will still need to account for some extracurricular spending. You might need to teach your child some money basics: Estimate how much they might spend on things like living expenses, school supplies and social activities. Determine how much money (if any) you plan to give them. Will they have to get a part-time job to help cover those expenses or does their school have a work-study program they could apply for? Perhaps you could help them make a plan to save up earnings from a summer job to fund any extras.
2. Set up bank accounts
Does your child have a bank account set up yet from which they can pay bills or access cash? See if your preferred bank has a branch near campus, or if you can open a student account at a nearby location, so that they avoid incurring fees every time they take out $20 from the campus ATM. If you decide to get them a credit card, establish boundaries around what the card should be used for, or if your child wants to open one in their name, be sure to talk to them about the importance of good credit card habits for their financial future.
3. Get all legal paperwork in order
When your child turns 18, they’re an adult in the eyes of the law. That means that without the proper paperwork, you could be cut out of some very important decisions. Consider pulling together:
- A medical power of attorney. You’ll need this if your child is ever in an accident. Without one, a doctor might be prevented from giving you a medical update or you may not be able to make medical decisions on their behalf if they’re unable to.
- A durable power of attorney, which allows you to act on your child’s behalf for financial and legal matters. For both these documents, check with your attorney to make sure you are following rules applicable to your home state and the state where your child will be living, if they differ.
A Family Educational Rights and Privacy Act (FERPA) waiver: While this isn’t essential, if your child doesn’t sign a FERPA disclosure, you won’t have any access to their grades or other educational records, even if you’re covering all or part of their tuition.
4. Update your health insurance
Many schools offer student health plans, which offer basic, on-campus coverage at an attractive price. If you elect to keep your child on your health insurance plan, contact your carrier to ask about out-of-state coverage, if applicable. It’s also a good idea to find a provider and pharmacy near your child’s school so they are prepared before that first bout of flu kicks in.
5. Check your car insurance
If your student is bringing a car to campus, make sure they have their car insurance information and understand their coverage level; you might be able to get a break on rates if the campus is located in a more rural area. If your child won’t be driving on a regular basis while in college, ask your insurer about discounts, too. Student discounts often apply to college students, particularly if they’ve moved 100 miles or more away, and you may be able to change your child from a primary driver to an occasional driver.
Empowering your child toward financial independence
Parents offer differing levels of financial support during the college years, but no matter how involved you can or want to be, having your child assume increasing responsibility will help them become financially independent that much sooner. You want to transition the money-related decisions into their hands so they are ready to take charge of their own finances when they are out on their own.
Empowering your child toward financial independence
Parents offer differing levels of financial support during the college years, but no matter how involved you can or want to be, having your child assume increasing responsibility will help them become financially independent that much sooner. You want to transition the money-related decisions into their hands so they are ready to take charge of their own finances when they are out on their own.
For more information about financial planning for college and throughout life, contact Christina Singh at Northwestern Mutual at [email protected] or 646-616-7908.
For more information about well-rounded, holistic college prep services, contact GAMECHANGER Tutoring Connection.
Reprinted with the permission of Christina Singh, copyright 2023.
