Kids go to College
Sending a kid to college can be overwhelming. Just wading through the potential scholarship and loan options can be exhausting. But once all of that is done, you may still be left with the lingering thought: “What do I still need to think about?”
Make a Plan!
I am an accountant who works with small businesses … but … sooner or later we usually get to talking about the personal finances.
Today, let’s talk about some of these money and related issues as it relates to you, the parent, when having a kid in college.
Freeze their credit reports
One of the best articles I read on this topic is by Clark Howard who wrote Credit Freeze Guide: The best way to protect yourself against identity theft.
Clark lists basic steps for you to take in order to freeze your credit reports with the (3) major credit agencies: TransUnion, Equifax, and Experian.
If you start early and your child is under 16, you can move forward to freezing your child’s credit reports. Here is the hassle: If your child is over 16, you will probably need to work with them to do this.
Also, just know that the steps may become a little more involved when freezing the credit for a 17 or 18 year old, so be prepared to spend some time. But, the protection may be well worth it. Why do it?
- Help protect them from identity theft. One of Clark’s shocking quotes: “Child identity theft is one of the worst forms of fraud because it often goes unchecked and unnoticed for years. “
- Help protect them by preventing them from opening a credit card or borrowing money without your permission.
Insist they track their spending
I know . . . some of you may be saying “I don’t even consistently track my spending”. For now, keep that to yourself and Insist they do this.
Start with a basic budget outside of tuition, dorm costs, and books such as:
- Car insurance, gas
- Cell phone
I think the freshman year can be tough. There are a lot of changes for these kids–especially if they move to a dorm. They go from a controlled environment to “Hey I can do more of what I want without checking in” environment. As great as that seems to them, they also have more responsibilities. So, you need a plan of how much they will contribute to the above costs. They then have the responsibility of determining how much to work and spend on other items.
Opinions are all over the place on how much they should contribute, but, for sure, I believe they need to have ownership and contribute something.
Sit down and make a formal plan of what they will contribute. They’ll need to track the information because if they then break the deal, they’ll need to explain to you what happened. This is ownership.
College and money: a few more tips
FAFSA and loans
- If you filled out the FAFSA when your child was in high school and they received a loan, make sure they accept the loan on the college website. (Yes, I have seen this situation where the child just forgot to click accept.)
- Also, put it on your calendar: Fill out an updated FAFSA next year.
- If they are taking a car to college, talk to your agent to make sure everything looks good. If your child got “good” grades, tell your agent. They may have a “good student discount”.
- If they continue to get good grades, follow up with your agent when it comes time for renewal. If you don’t, the discount may be taken off. (Yes, I’ve also seen this. The insurance invoice comes with an increase because of no “good student discount”. )
- They’ll know about this quickly from friends and instructors. But, if necessary, remind them: rent books if at all possible. It will save money!
Be careful with passwords – especially for the bank, but really, for everything
- Check out my blog on a password app.
One non-money Tip: Talk to a Lawyer
As parents, we want to make sure our child is healthy and OK. So, dart over to your lawyer and ask about the forms listed below. (They may have different names in different states.)
Many times we may think of certain forms when we are creating our will, but no, it’s time to think about these forms now.
In an article by Consumer Reports, a story was told about a mother who was scared her child was hurt when the child’s roommate called and said the child was taken to the hospital. The mother quickly called the hospital, but the nurse said she could not give out the information since the child was 18. Check the state you live in for the exact age.
Yes, you may not be able to get critical medical information even if your child is on your insurance plan and you pay the bills!
Get the forms so you have authorization.
Ask a lawyer about:
- This form allows healthcare providers to disclose health information to anyone your child specifies.
Medical power of attorney (another name: Healthcare power of attorney)
- Your child can appoint you as an “agent” to make medical decisions on his behalf in case they are incapacitated and can’t make the decisions.
Durable power of attorney
- This covers other things if the child becomes incapacitated. Examples: signing tax returns, paying bills, accessing bank accounts.
Once you have the forms completed and signed by everyone, put them on your phone so you always have them with you.