Financial and Legal Preparation for College Students

It has been a year of milestones in my home. My son graduated high school, turned 18, and started college last week. In spite of the fact that I still see him as my baby, he is now a legal adult. I think an adult would remember to replace the garbage can liner after taking out the garbage, but the law says he is an adult.  

His first act as an adult was registering to vote. But other steps were taken before he left the nest. We will walk through some important though not all-encompassing topics below.  

We don’t want to think about anything happening to our children. However, emergencies can happen. Prepare your child for any inevitable emergency by having them sign a Durable Power of Attorney document naming you their attorney-in-fact¹. This will allow you to make financial decisions for them if they were to become incapacitated. Consult a lawyer for further details and if your document must be notarized within your state.  

Though doctor’s appointments and all medical decisions were on our plates as parents, as an adult, that information is now private. The next document your child should sign is a HIPAA Authorization allowing their parent access to medical care and billing information. A Health Care Directive includes documents written with instructions for medical preferences or treatment. These are also called Advanced Directives. Examples of these documents include Living Wills and Health Care Power of Attorney². These allow a parent to make health care decisions in the event your child is incapacitated.  

A Durable Power of Attorney, HIPAA release, and Health Care Directive are available from your family attorney or found online. Some language can vary by state. Include a set of documents for your home state and the state your child will attend college.  

Before your child leaves for college, discuss plans for medical and dental checkups when home during breaks. Also discuss a plan and create a list of in-network medical doctors, urgent care facilities and emergency rooms near campus. Additionally, review costs for urgent care and emergency care in the new city/town for out of network pricing. 

Next on the risk management preparation list for your child will be a call to your property and casualty insurance agent. Ask your agent if your child needs renters’ insurance or if they are covered under your existing insurance plan. Make sure the insurance agent has your child’s name and address on file to protect their belongings from theft and damage. Also, let your agent know if your student will be taking a family car to college or if they will not be driving while away at school. If they are not driving at college, this may save you on auto insurance. 

This is a great time to work with your teen on financial literacy. Budgeting, saving, spending and cash management are life skills that take time to learn.   

As for spending and cash management, discuss ATM fees, insufficient funds fees, and managing a bank account. Using a debit card has advantages and disadvantages.  It’s the student's money so there are no interest charges, but an overdraft account can generate fees (big fees). If the card is stolen or lost, they must report it RIGHT AWAY to their bank. You will only lose $50 if you follow the bank’s procedures and report within two days. It increases to $500 for the next 58 days and NO protection after 60 days³.  

Many students are already accustomed to using their parent’s credit card.  Caution is important here as well.  Educate your student that they are borrowing the credit card company’s money, not spending their own cash.  They will have to pay those funds back with interest if not paid in full by the due date.   

Remind your teen to never hand their unlocked phone to anyone if they have any cash apps on their phone.  It is a best practice to never hand someone your phone. 

Having these discussions and your student signing these documents is another way to love and support them. As a parent, your guidance is still needed though maybe not as appreciated as we would like.  

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Disclosures: 

Apella Capital, LLC (“Apella”), DBA Apella Wealth is an investment advisory firm registered with the Securities and Exchange Commission. The firm only transacts business in states where it is properly registered or excluded or exempt from registration requirements. Registration with the SEC or any state securities authority does not imply a certain level of skill or training. Different types of investments involve varying degrees of risk, and there can be no assurance that the future performance of any specific investment, investment strategy, product or any non-investment-related content made reference to directly or indirectly in this material will be profitable, equal any corresponding indicated historical performance level(s), be suitable for your portfolio or individual situation, or prove successful. Due to various factors, including changing market conditions and/or applicable laws, the content may not be reflective of current opinions or positions. Please note the material is provided for educational and background use only. Diversification seeks to improve performance by spreading your investment dollars into various asset classes to add balance to your portfolio. Using this methodology, however, does not guarantee a profit or protection from loss in a declining market. Past performance does not guarantee future results. All data is from sources believed to be reliable but cannot be guaranteed or warranted.   

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