There are many preparations that must be made when sending your child off to college. From the move-in to school supplies, it can be easy for some things to slip your mind during such a hectic time. An important factor for parents to remember when launching their kids into the world is that their child is no longer a child at all.
In most cases, they are aged 18 or older, making them a legal adult. With that designation comes a heightened amount of responsibility in addition to legal complications that should be addressed by both the parent and child prior to their departure to school. We want to bring the following items to your attention so that your child’s college experience is one of excitement and joy—but with an added cushion of safety.
Students should ideally have important contact information on hand in case of an emergency, or, to make filling out the mounds of paperwork that come with enrolling in a full-time university a cinch. Therefore, we recommend helping your soon-to-be student prepare a quick list of personal information to make the process a bit smoother.
Below is a sample of what that list could look like. We also recommend ordering an insurance card from your provider for your child in case they need quick access to the university clinic.
|Emergency Contact 1||Mom||(XXX)XXX XXXXfirstname.lastname@example.org||1111 Address Rd.
City, State 12345
|Emergency Contact 2||Dad||(XXX)XXX XXXXemail@example.com||1111 Address Rd.
City, State 12345
|Primary Care Physician Office & Doctor Name
|(XXX)XXX XXXXfirstname.lastname@example.org||1111 Address Rd.
City, State 12345
|University Medical Clinic||Name||(XXX)XXX XXXXemail@example.com||1111 Address Rd.
City, State 12345
|Other Important Information|
|Medical Insurance Provider:||Name||Insurance ID||Insurance Group ID||Insurance owner|
|Medication Names & Doses:|
Many universities require full-time students to have health insurance, and, therefore, those institutions must offer some kind of health insurance option. Note that when most students first begin at a university, they are under the age of 26, which means they can still be on their parents’ plans. So, is it better to keep your child on your health insurance plan or to purchase them an individual one through their university? Each institution that offers insurance may offer a different plan, so it is important to compare it to the student’s current plan before deciding.
When comparing plans, be sure to note the premium, out of pocket costs/maximum, copay, deductible, and co-insurance. It’s also important to research the coverage of each plan, as not every plan covers the same medical needs to the same degree. Providers that are “preferred,” “in-network,” or otherwise specified by an insurance company are especially relevant for new college students.
Even if your current plan has multiple preferred providers in your area, the university could be quite far from one, so please inquire with your insurance company about the local medical provider they may have before you send your child off.
Health Insurance Portability and Accountability Act (HIPAA)
A legal document college students should consider signing is a HIPAA authorization form. This document allows parents (or those specified in the document) to have access to medical information from the medical institution treating their child. This form also allows the student to decide which parts of their health records remain private, such as their sexual health.
Should your child land in the hospital for a serious injury, this form will give you guaranteed access to their medical information and status. By not signing this document, you may risk being left in the dark if a medical emergency befalls your child while away at school.
*Important note: most university clinics fall under Family Educational Rights and Privacy Act (FERPA – explained below) not HIPAA *
Family Educational Rights and Privacy Act (FERPA)
FERPA protects the privacy of students’ academic records. Under this law, the school cannot share academic records without the student’s consent. However, your child can waive this right and award you viewership if they please.
We recommend searching the name of the university and “FERPA” to find the most relevant information about a specific university’s handling of this process.
Health Care/Medical Power of Attorney (Medical POA)
Before you let your 18-year-old college student leave the nest, it is important you have them sign some important legal documents. One such document is called a medical power of attorney (POA). A medical POA designates a trusted adult (agent) to make healthcare decisions on behalf of another adult should they no longer be able to make those decisions themselves. By signing this form, you will legally be allowed to make medical decisions on behalf of your child if such a situation arose.
Unfortunately, if you fail to have your student sign a medical POA, you may find yourself in an unfortunate situation. Even if your child is incapacitated, you will still be forced to go through probate court to ask for guardianship, which is a lengthy and expensive process. By having your new college student sign this form, you can give yourself peace of mind and protect your child, no matter how far away they are.
Durable Power of Attorney (DPOA)
While a medical power of attorney and HIPAA give parents power in health care decision making and information access, a durable power of attorney (DPOA) allows students to specify who can make financial/legal decisions on their behalf. This power can be either immediately granted to the parent or granted only if your child becomes incapacitated.
Parents named on the form can manage bank accounts, pay bills, file taxes, apply for government benefits, and break leases on behalf of their child. Note that DPOA forms vary from state to state, so it’s important to do some research before signing.
Life Insurance for Students With Private Student Loans
While federal student loans dissipate after the borrower’s death, private student loans are passed on. Therefore, co-signers on the loan or inheritors of the student’s estate may be liable for the debt in such an event. However, if the student has life insurance, it can help cover this debt and give some relief to those involved.
There are some specific forms of life insurance, such as a decreasing term policy, that can be set up to ensure that a debt can be covered and managed realistically upon a student’s passing.
Qualified 529 Expenses
If you own a 529 plan for your student, become familiar with what qualifies as a 529 expense.
Generally, a qualified 529 expense will include anything your student needs to attend a college, university, vocational or technical school. It’s also important to note that the state your plan was initiated in and the kind of plan you have dictates what can be covered. Some common qualified expenses are:
- On-campus room & board,*
- Off-campus room & board, under the university set allowance,
- Room & board while studying abroad (if the program is credited by the university),
- Required textbooks and other required school supplies for college,
- Computer, computer accessories, internet access, and school related software,
- Special needs equipment, and
- $10,000 per lifetime for student loan repayments.
*Note, pre-paid tuition 529 plans cannot be used on any room and board
Now, you may be thinking, what if you have money left over? Luckily, there are many ways to distribute this money to your advantage, such as using it to pay for that student’s graduate school costs or naming a new beneficiary from the designated beneficiary’s family (which can be yourself).
The best part is that you are still able to withdraw the funds tax-free as long as the money is used for qualified education expenses. If you decide to use the extra funds for non-qualified purposes, the account earning’s will be taxed, and you may face additional penalties.
529 savings plans are tremendous vehicles to safeguard your student’s financial road through higher education. Using them correctly is critical if they are to be beneficial to you and your family.
Ensuring that your child is well prepared before entering this new phase of their life is a great way to give yourself some assurances, while also promoting to them the benefits of planning for the future. We wish you and your fledgling student a smooth transition to college life. Please reach out to your financial advisor to get more information or clarification on any of these topics.
The fees, expenses, and features of 529 plans can vary from state to state. 529 plans involve investment risk, including the possible loss of funds. There is no guarantee that a college-funding goal will be met. In order to be federally tax-free, earnings must be used to pay for qualified higher education expenses. The earnings portion of a nonqualified withdrawal will be subject to ordinary income tax at the recipient’s marginal rate and subject to a 10-percent penalty. By investing in a plan outside your state of residence, you may lose any state tax benefits. 529 plans are subject to enrollment, maintenance, and administration/management fees and expenses.