Parents: Plan for Your Child's College Costs
It’s impossible to predict whether your child will experience unexpected costs or an emergency during their time in college.
But by researching,
planning and budgeting for the known and unknown, you’ll be less likely to experience a big financial hit.
Set Financial Responsibilities for College Costs Beforehand
Before school starts:
- Sit down with your child and outline all expected college costs — from living expenses to entertainment extras.
- Then, establish what you plan to pay for and what your son or daughter must cover.
- After establishing the responsibilities, it’s a good idea to set aside all your education funding into a separate account with a little padding in it for emergencies.
Check Insurance Coverage
Anything can happen, so it’s important to make sure your child and their property have the appropriate
insurance coverage while away at school. This includes:
- Technology insurance for cell phones and computers
If you keep your child on your insurance policies because it offers better coverage or rates, decide if you will cover the entire payment or if your child will be responsible for their share.
If you decide to help your child get their own plan, read the fine print carefully and make sure your teen understands what is and isn’t covered.
The Affordable Care Act makes it possible to keep your child on your own health insurance plan until he or she is 26 years old, rather than putting them on a college-sponsored plan.
If you opt for your child to have their own insurance plan, check with the school to inquire what it offers students.
- Does the college plan provide cheaper rates and doctor visits at its campus clinic?
- Does it cover dentist visits, physicals and wellness exams?
Make sure to compare the premiums and coverage on the college plan to what your child receives on your insurance. Part- and full-time jobs also might offer health insurance for your student.
If your child brings a car to college, he or she will need insurance. People younger than 25 years of age typically face higher insurance rates, so it may be cheaper for your child to remain on your auto policy.
If you decide to keep your child on your policy, remember that your rates could go up if your teen is in an accident or is ticketed for speeding. However, insurance companies also offer perks such as “good student discounts,” which may qualify your student for a lower rate.
Beware the Credit Hook
Certain situations can leave you on the financial hook for your child, including co-signing your son or daughter’s credit card. If you co-sign, you are jointly liable and your own credit might suffer if your child doesn’t pay the bill on time. This is the time to set clear expectations.
On a Tight Lease
Off-campus housing is another college cost to consider. You’ll acquire a financial stake in your child's apartment if the landlord requires you to co-sign the
lease. Be aware of your responsibility if a roommate fails to pay rent, leaves or damages the property.
[Any reference to a specific company, commercial product, process or service does not constitute or imply an endorsement or recommendation by the National Endowment for Financial Education.]