Financial Advisor in Raleigh NC: College Bound Child
Before sending your child to college, there are several important things you should do. First, teach them good habits and important life skills. Next, make a plan for college funding. Lastly, address any legal matters.
We made a list of eight important things parents should do before their child starts college for the first time. It will help them prepare for this new phase.
HIPPA, Medical Forms, POA
It is advisable to consult with an attorney regarding several critical documents that should be prepared.
First, obtaining a HIPAA Release Form and Healthcare Proxy (also known as Healthcare Power of Attorney) is important. When students turn 18 in college, parents can't access their medical records or make medical decisions without proper documents.
Additionally, two types of power of attorney (POA) documents should be considered. The first is a strong POA, which gives someone the power to make medical choices for you if you can't. The second is a financial POA, which authorizes a trusted agent to act on the principal's behalf in financial matters.
Moreover, implementing an advanced directive, commonly known as a "living will," is worth considering. This document allows an individual to express their decisions regarding end-of-life care in advance, particularly in emergency medical situations.
Given that each situation is unique, consulting with an attorney will help determine the specific documents required. It is important to remember that even though you may be the parent and responsible for college expenses, the law does not automatically grant you access to your child's records. You may need to provide evidence to establish your entitlement to access such records.
Insurance Needs for You and Your Child
When your child heads off to college, it is crucial to address specific insurance considerations. Firstly, it is advisable to review your homeowner's insurance policy to determine if your child's belongings are covered while they are away at college. If not, parents may want to explore renter's insurance if their child will be living off-campus.
Additionally, it is important to assess your car insurance needs. Will you still require coverage if your child won't be driving and won't have a car on campus? Will the child utilize the car when they return from college, necessitating continued coverage? These are significant questions to address and plan for accordingly.
Lastly, discussing health insurance coverage is vital. Parents should verify that their child remains covered even when they are away at college, particularly if they are attending an out-of-state institution. Often, colleges offer students health insurance plans with lower costs and improved benefits. However, it is advisable to review all available options before making a final decision on the plan.
Taking the time to review and address these insurance considerations will help ensure adequate coverage for your child's college experience.
Schedule Medical and Dental Appointments
Amidst the hectic preparations for college, it is understandable that scheduling medical appointments may be overlooked. However, it is highly recommended to arrange these appointments at least one month before your child departs for college, or during their breaks when they return home. This proactive approach reduces health surprises in the future, especially for children with chronic medical conditions. Additionally, parents should ensure they obtain a copy of their child's medical records to provide to the school.
It's important to get prescriptions ahead of time and have extra copies that can be filled at school if necessary. Parents should check if their child's vaccinations are current, as colleges often have strict vaccination rules for campus entry. Information regarding required vaccines can typically be found on the college's website.
Parents should focus on medical preparations for their child's health before they start college.
Create a Budget for Spending at College
This is an opportune time for parents to have a conversation with their children and discuss finances. Simply handing a credit card to a teenager without proper guidance may result in them seeing many things as necessary and quickly maxing out the card. To prevent this, parents should talk to their child and make a budget together. This will help them know how much money they have before they spend it.
Parents should open a student checking and savings account with a credit union or school-affiliated bank to make budgeting easier. This step can save significant amounts of money in ATM fees when withdrawing cash on campus. If there is no credit union or bank affiliated with the college, it is recommended to locate the nearest bank to the school for convenience in case withdrawals or account adjustments are necessary.
Review if you Qualify for FAFSA
It is highly important to review the FAFSA form well in advance, as colleges have limited funding available for scholarships. Completing the form as early as possible increases the likelihood of qualifying for a higher award.
It is essential to apply, as this financial aid represents free money that every student should utilize. Some colleges require all students to complete the FAFSA form, even if they are not seeking financial aid. This includes federal aid, state aid, grants, loans, work-study, and aid provided by the college.
Parents should be aware of this requirement. Taking advantage of this opportunity is crucial for maximizing available financial support.
Building Credit and Establishing Good Credit Habits
Parents should think about getting a credit card for their child. This can help the child start building credit and have benefits in the future. Having a credit history can help the child after college, as some employers or landlords may check their credit.
Having a good credit history can make things easier later on when the child plans to make big purchases. These purchases may include buying a car or renting an apartment.
Opening a credit card can also serve as an opportunity to teach responsible money management habits. Parents can talk to their child about credit limits and smart credit habits, teaching them how their spending affects their budget.
Another important idea is handling debt wisely. Lastly, it is crucial to always pay bills on time. By establishing these fundamentals at an early stage, parents can contribute to their child's long-term success beyond graduation.
Add your Child as an Authorized User
Parents should add their child as an authorized user on their credit card for emergencies. This allows the child to have access to extra money when needed. This can also help the child build their credit history, especially if they don't have their own credit card yet.
Once added to the account (or upon turning 18, depending on the card issuer's policies), the account's complete history will be included in their credit reports. By using the account responsibly, keeping low balances, and paying on time, this can help the child build good credit.
Review College Funding Programs and Loans
Besides completing the FAFSA, it's important to look into other college funding options your child might be eligible for. Federal student loans help undergraduates with financial needs to pay for higher education expenses. Pursuing scholarships is another valuable avenue to mitigate the impact of escalating tuition expenses. Additionally, students can consider private loans that they can secure themselves, with the parent serving as a cosigner if necessary.
Parents have various loan options to consider as well in order to support college costs. These options encompass utilizing a home equity loan, obtaining a secured loan using collateral other than the home, taking a loan from an employer-sponsored retirement plan, utilizing a margin loan from a brokerage account, leveraging the cash value from a life insurance policy, and exploring the federal PLUS loan program. Furthermore, parents may be eligible for penalty-free withdrawals from a traditional IRA specifically designated for college tuition.
By thoroughly exploring and understanding these various funding options, parents and students can make informed decisions regarding their college financing strategy.
Bottom Line
These eight items are important for parents to consider when their child is going to college for the first time. Dealing with these tasks in advance may seem overwhelming, but it will ultimately reduce stress. By sorting everything out ahead of time, you can ensure that everything is taken care of well before it's needed.
Sources:
https://www.horsesmouth.com/8-things-every-parent-should-do-before-sending-a-child-off-to-college
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