5 action items before sending your child to college

When a child starts college, it’s often a time of transition and mixed emotions for parents, from excitement about new experiences to thoughts about challenges they may face. While there are endless checklists online for what a child may need for the dorm and classes, there are key items that often don’t make it on those lists. And these can be critical to helping ensure a positive college experience for child and parents alike.

1. Power of Attorney Documents

Most students entering college are 18 years old, which means they are now an adult in the eyes of the law with numerous new legal and privacy rights. Without the proper paperwork, parents have no special rights or access to information. Therefore, there are three critical areas for which legal documentation is important: health care, financial and academic.

Health Care Power of Attorney with HIPAA waiver

This document allows you to act as a “medical agent” for your child, making decisions on their behalf, should they become medically incapacitated. You will also need a HIPAA (Health Insurance Portability and Accountability Act) waiver to access your child’s medical records and possibly even to receive medical status information from caregivers (such as a doctor or hospitals). In addition, most insurers require this waiver to discuss your child’s billing information. You may also want to consider establishing a living will that outlines directives for medical care should your child become medically incapacitated.

Financial Power of Attorney

This document, like a health care power of attorney, allows you to make financial decisions on your child’s behalf, should they become incapacitated. It also gives you the right to act on your child’s behalf when they are away from home, with things such as signing legal documents (e.g., leases or tax returns). We recommend consulting your family attorney to draft the powers of attorney documents.

FERPA Release Form

The rights related to a child’s education records also transfer from parents to the child when they turn 18. If you would like access to this information—such as grades, class registrations and transcripts—your child needs to sign a FERPA release form.

2. Review/Update Your Insurance

When your child is entering college, it is important to consider what insurance they will need and whether changes will need to be made to your existing policies. Below are a few of the key areas you will want to review.

Check with the school regarding health care insurance. For some schools, student health care insurance is extra, but at others it is part of the tuition cost. If you have your own health care insurance, it may cover your child (typically until they are 26 years old). In this case, check with the school to see if they offer a health care insurance exemption.

Call your automobile insurance provider if your child will not be driving at school as they may be able to place your child on an “away policy,” which often results in considerable savings.

Protect your child’s personal items of value by reviewing your homeowner’s insurance policy to determine if it will provide coverage for personal property and/or personal liability for your child at college. If it doesn’t, consider purchasing a basic insurance policy for your child. You may also want to revisit your umbrella policy when contacting your insurance company. In addition, before your child leaves for school, call the local campus police and register valuable items such as laptops or bicycles. If these items are lost or stolen, it can speed up the return to your child if found.

3. Get a Credit Card in Your Child’s Name

Make sure your child has a credit card in their name for emergencies. There doesn’t seem to be as much need for ATM cards or cash these days. Many young adults use apps such as Venmo or Zelle® to pay each other. However, we suggest that as a parent, you set up an account to easily send money to your child and track those expenditures for your own tax returns. 

4. Help Your Child Create a Budget

Many college-bound children have not yet managed a budget. It also may be unclear which expenses you will pay for and which ones you expect your child to pay. Therefore, discussing expenses and showing your child how to create and manage a budget can be an important step before they head to college. There are several free apps that can help your child set up and manage a budget, such as Goodbudget or Mint. 

5. Continue Saving for College

Parents often stop making contributions to education savings accounts such as 529 plans once their child starts college. But if you are able, continuing to make contributions into a 529 plan may be a prudent decision, depending on the investment choices of the plan and the state tax deduction potential, particularly if there is a high likelihood the student or their siblings may attend graduate school of some kind.

On a related note, if you are paying for your child’s education (e.g., through a 529 or Education IRA), you will want to make sure you periodically review the current market value to determine if additional monies need to be invested in light of any significant decline in the value of those investments and/or changes in expected college costs.

Sending your child off to college is a significant milestone for your family. Through careful planning, you can help ensure that their college experience is a rewarding and positive one. At CI Private Wealth, we have a long history of working with families on planning and investing for higher education. We would welcome the opportunity to speak to you to see how we might help your family be successful.

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