The transition to college represents a major milestone, not just academically and emotionally, but financially as well. For families preparing to send a student to college this fall, taking time to organize financial matters in advance can help reduce uncertainty and support long-term financial wellness.

Outlined below are eight key areas parents and students may want to address prior to the start of the academic year. These suggestions reflect sound financial planning principles and can be discussed in coordination with a qualified financial professional.

1. Set Up a Bank Account
Before the academic year begins, it may be helpful for students to establish a checking account, ideally with a debit card and online access. This can enable students to manage expenses, receive direct deposits from part-time jobs, and begin building financial independence. Parents may consider linking the account for oversight during the first few months.


2. Review Insurance Coverage
Parents should evaluate current insurance policies. If the student is bringing a vehicle to school, especially across state lines, it is advisable to contact the insurance provider to verify coverage. Health insurance coverage should also be reviewed to ensure the student remains covered under a family plan or has access to an appropriate student health plan.

3. Obtain Legal Authorization Documents
Once a student turns 18, parents may no longer have legal authority to make certain decisions on their behalf. It may be prudent to have the student sign a health care proxy or medical power of attorney, as well as a HIPAA release form. These documents can authorize a parent or guardian to access medical information and make health care decisions if needed.



4. Introduce Budgeting Principles
Discussing budgeting basics can help students make informed choices about spending. Creating a simple monthly budget, identifying needs versus wants, and tracking expenses can promote financial discipline. Consider introducing budgeting apps or tools that make it easier to manage spending in real time.



5. Provide Credit Education
For students using or considering a credit card, it is important to understand the responsibilities involved. Parents may want to explain how interest accrues, the consequences of missed payments, and how credit history can impact future borrowing ability, such as renting an apartment or applying for a loan.

6. Encourage Long-Term Savings Habits
For students with earned income, parents may consider introducing the concept of retirement savings. Contributing to a Roth IRA, even in small amounts, can be a valuable financial habit. In some cases, parents may choose to match contributions to encourage consistent saving. Keep in mind that Roth IRA contributions are limited to the lesser of earned income or the annual IRS contribution limit ($7,000 for individuals under age 50 in 2025).



7. Reassess 529 Plan Investments
If a 529 plan is being used to fund college expenses, now may be a good time to review the investment allocation. As the student approaches or enters college, more conservative allocations are typically recommended to help protect funds needed in the near term. This adjustment should reflect the timing of planned withdrawals.



8. Understand 529 Distribution Rules
Qualified withdrawals from 529 plans are generally tax-free when used for eligible education expenses, including tuition, fees, room, board, and supplies. Parents should maintain detailed records and coordinate distributions with actual expenses to avoid incurring taxes or penalties. IRS Publication 970 provides detailed guidance on qualified education expenses and tax benefits for education-related savings.

Final Considerations
As with many financial transitions, early planning can provide clarity and reduce the likelihood of future complications. Families are encouraged to work with a financial advisor to align college-related decisions with their broader financial strategy.

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Sources:

· Internal Revenue Service. “Publication 970: Tax Benefits for Education.” irs.gov

· Federal Trade Commission. “Understanding Credit.” consumer.ftc.gov

· U.S. Department of Education. “College Preparation Checklist.” studentaid.gov