Sending a child off to college is a major milestone for any family, whether you’re a parent, grandparent, or close friend. It’s an exciting time, filled with anticipation and perhaps a bit of trepidation. There’s so much to do, and time seems to fly by. This fall is special for me as I am sending my youngest (of 3) to college. Empty nest here we come!
As the big day approaches, you might find yourself helping to check off items on their list (extra-long sheets, shower caddy, microwave mac & cheese, etc.). However, based on our experience working with clients during this busy time, we’ve come up with several things that may not be on your radar but may be worth considering. Keep in mind that this article is not a replacement for real-life advice. Your legal professional can help explain what documents might work best for your family.
Here are three topics to discuss as you pack the car:
1. Establish Power of Attorney and other legal authorizations.
When freshmen go to college, they may have already turned 18, making them legal adults. Having that birthday has healthcare, financial, and even academic implications. You may be surprised to learn that after a child turns 18, a parent can no longer speak with their doctor or access their school grades without express permission.
- Healthcare
One way that may allow you the legal ability to step in should your child need you in a health emergency is to establish a power of attorney (POA) for healthcare before they head off to school.1
Having a healthcare power of attorney, also known as a healthcare proxy, allows you to make healthcare decisions on behalf of an adult child who may be physically or mentally unable to decide independently.1
This type of legal document may seem extreme, but the unforeseen can happen, and it is better to be prepared.
If you don’t want to go so far as a healthcare POA, a universal Health Insurance Portability and Accountability Act (HIPAA) release form can help you get medical information about your child. It can even specify which information the holder doesn’t want to be shared.2 - Finances
On the financial side, once a child turns 18, a parent’s oversight of their personal finances is more limited. That’s where a financial POA can help.
Like a healthcare proxy, a financial POA allows you to make financial decisions for your child and access their financial records and accounts. With this document, you can help your child manage their money, pay student loan bills, and cover car payments. By having this authority, you may be able to step in if your child needs guidance with financial decisions.1
There are different kinds of financial powers of attorney, and laws vary by state, so you should consult your attorney about what works best for your situation. There are also varying opinions about how much authority a young adult should give to a parent. Some durable powers of attorney take effect only in cases in which the child is considered disabled due to such reasons as mental illness, physical incapacity, or chronic drug use. Others take effect immediately upon signing.2 - Academics
When it comes to academics, parents no longer have direct access to their children’s educational records after they turn 18, even though they may be paying the bill!
The Family Educational Rights and Privacy Act (FERPA) requires that students over 18 give written consent before their school releases any educational records, including GPA, credits, scholarship status, disciplinary action, tuition information, and records maintained by the campus health clinic. A FERPA authorization will allow you access to these records.2
Be sure to confirm with your child’s school whether there are any additional authorization forms you need to complete to allow you access to your child’s records on campus.
2. Discuss budgeting and financial wellness.
Some parents have taught their children about money before leaving for college but still want to be there to continue helping them manage possible missteps. For many children, going away to college is the first time they will be responsible for their own finances. Now might be a good time for a refresher conversation about budgeting and handling money. You don’t want to wait until there is an issue. And just because your child may have always been responsible with money in the past, their financial world can look very different from a dorm room.
You may want to show your child how you manage your household budget. You may also want to set them up with an online tool that allows users to track their spending and categorize where their money goes each month.1
If your child does not use Venmo or other money transfer apps, this may be a good time to start. In our increasingly cashless society, apps such as Venmo are how finances are often handled today. Venmo makes it easy for your child to divide the bill at a restaurant or to split a rideshare with friends. Venmo is one of the most popular apps for fast, peer-to-peer payments. You can also link a Venmo account to some rideshare and delivery apps, including Lyft and Uber, making it an attractive choice for college students.
PayPal is Venmo’s parent company. Any companies mentioned herein are for illustrative purposes only. It should not be considered a solicitation for the purchase or sale of securities. Any investment should be consistent with your objectives, timeframe, and risk tolerance.
3. Consider your insurance choices.
When children move out of the house for the first time and possibly live in a different state, this may be an opportunity to reevaluate their insurance.
- Health Insurance3
Many colleges and universities require students to have health insurance. (Dependents under age 26 can remain on your health insurance plan.) A school health insurance program may make sense if your health plan has a provider network where the student goes to school, but if your child goes to school outside your health plan’s provider network, check the coverage that your plan provides since not all insurance plans include out-of-state healthcare providers and pharmacies.
According to the American College Health Association, the out-of-pocket costs of student health insurance plans tend to be lower than comparable workplace plans that parents might have, so it may make sense to compare the premiums and scope of coverage with any health plan you already have to determine the best choice.
Also, be aware that some schools automatically enroll students in their health plans unless they or their parents opt out by signing a waiver showing existing coverage. Remind your child to be on the lookout for any emails or notifications regarding student health insurance and to forward them to you so you can confirm that the necessary forms are in order. - Car Insurance3
If your child is taking a car to school, let your car insurance company know. Your rate might change depending on where the vehicle will be.
If they are not taking a car with them, you might be eligible for a “student away at school” car insurance rate if your child is 100 miles or more away from home. - Renters Insurance3
A homeowners’ insurance policy typically covers your child’s possessions if they live in campus housing, such as a dorm, but that may not be the case if they live off-campus. If your child rents an apartment or house, you may want to consider renters’ insurance.
Renters’ insurance typically covers possessions from theft, fire, vandalism, and other types of damage. Renters’ policies often provide liability coverage as well to cover legal bills if your child is responsible for accidental injuries to someone or damage to someone else’s property.
Some schools may require insurance for on-campus housing, so if you are already covered, fill out the waiver so you aren’t charged for something you don’t need.
Congratulations to the new college students!
Taking care of financial and healthcare topics may help parents be more confident as they send their children to college and empower them to have a happy and healthy freshman year experience.
As financial professionals, we support our clients at every stage of life. We are also happy to work with attorneys on the documents you may need. If you or someone you know would be interested in discussing these topics further, please don’t hesitate to contact us.
1 HoranAssoc.com, August 17, 2022
2 WSJ.com, August 14, 2023
3 Forbes.com, October 19, 2023