College Planning Checklist

Many families are busy preparing to send their first child off to college in a few weeks.  They may currently be researching and buying items for their child’s dorm room and making plans for these costs and potentially the first tuition invoice too.  It’s an enjoyable, but typically hectic period of time!

Consistent with ACM’s prior year commentaries on this subject, the financial planner in me has been thinking about other critical actions to complete before you drop off your child or grandchild for their freshman year:

1. Legal Documents – Once your child turns 18, they are considered adults for healthcare purposes, which makes all of their healthcare information private. So, if your 18-year old freshman gets hurt playing intramural flag football and ends up at the emergency room, the doctors and nurses will not be able to share any information with you unless your child grants them permission (which they may not be able to do if they are seriously injured). One way to avoid this potential problem is to have your child sign three important documents – a durable power of attorney, medical power of attorney and HIPAA Release. You can have these documents prepared by an estate planning attorney or use an online service (ask your ACM Wealth Advisor). Please note that if you already have these documents in place for your child in your home state and they attend an out of state school, you may need to have additional/new documents drafted that are specific for that state (you can check with the College/University too as some understand this issue and will assist).
   This is a topic that we’ve written about every summer for years.  We’ve seen really bad outcomes where college kids did not have these documents in place so we recommend doing some homework here.  To learn more about this, then you can click HERE and follow the additional links in our commentary from past summers for more information.

2. Dorm/Renter’s Insurance – Your child’s laptop, TV, clothes and other personal property that they bring with them to college may be covered for loss under your primary home insurance policy but you will need to confirm with your home insurance carrier. However, you may be subject to a 1% deductible, and depending on the value of your house, your deductible could be over $5,000. A cheaper option would be to purchase dorm insurance through your child’s school or a separate renter’s insurance policy if your child is living off-campus. Typically, these policies cost around $25 per month.

3. Auto Insurance – If you live in a populated metro area and your son or daughter will be attending school in a smaller town, you should contact your auto insurance provider and let them know your child’s school address. Letting your insurance company that your child is off at college could potentially help lower your auto insurance bill.

4. Freeze credit – Actually, we encourage everyone to freeze their credit as a way to help prevent identity theft. You will need to create an online profile with each of the three credit bureau reporting agencies (Experian, Equifax and TransUnion) where you can “freeze” your credit. When your credit report is frozen, it is impossible for any new credit accounts to be opened in your name. If you need to take out a loan, you can easily login to your three credit profiles and temporarily “thaw” your credit to get approved for your new loan. By having your college student freeze their credit, it will help reduce the chances of them carelessly opening a new credit card in order to get a free t-shirt. Please be sure to unfreeze their credit if they are taking out any student loans in their name.

5. Credit cards – Speaking of credit cards, it is important to start helping your child establish a solid credit history. One easy way to do this is to add them as an “authorized user” on one of your credit cards. As the primary card holder, you are still responsible for all charges made by you and any authorized users but if you use your credit card responsibly, this will help to start build your child’s credit history and improve their chances in the future of being approved for loans in their own name. If you want your child to get their own credit card, Capital One, Chase and Discover all offer cards specifically for college-aged students. If you think your student may study abroad or take a spring break trip to Mexico sometime during college, you will want them to have a card that does not charge foreign transaction fees (FTF). Capital One and Discover cards do not charge FTF, which gives them a slight advantage over Chase, however, Discover is not as widely accepted outside of the U.S. so that is something to keep in mind when helping your student choose a card.

The above is not a comprehensive list of all of the factors that go into planning for and getting settled into college, but we hope that brings up a couple of important personal financial considerations that may be lost in the shuffle of tuition payments and trips to the store to purchase dorm room or apartment furnishing and related items.  As always, if you have any questions, please reach out to your ACM Wealth Advisor.

Advisors Capital Management, LLC is an investment advisor registered with the United States Securities and Exchange Commission. Registration does not imply any degree of skill or training. All investing carries risk, including the potential for the loss of principal and past performance is no guarantee of future results. This content is for informational purposes only, can change at any time without notice, and is not investment advice or a recommendation to trade any security. Indices are not available for direct investment. We only provide services in jurisdictions where we are registered. Our disclosure brochure (ADV Part 2A) and customer relationship summary (ADV Part 3) are available at https://adviserinfo.sec.gov and upon request.