Many families create a checklist when it’s time for the children to go to college. This fall, that task may be more important than ever as the ongoing pandemic is affecting how colleges re-open.
Some 4,300 colleges and universities are making plans to open this fall, but college life may be quite different depending on the school. Some schools are closing dormitories altogether or opening only for certain class levels in the near term, such as freshmen. Some colleges have decided to offer only online learning while others are offering a hybrid option, combining in-person and online classes.
COVID-19 testing may be required for students living on campus. Social distancing rules will be introduced as well. Some colleges are considering limiting the duration of the on-campus fall semester.
Nearly 20 million students are expected to attend college this year. Once campus details are clarified, families can adjust their plans. Of course, given the situation, plans will be subject to change depending on the trajectory of the pandemic as well as evolving state-specific guidelines.
College checklist before heading off to school
1. Budget and document expenses
- Families using a 529 college savings plan need to budget for items that are not covered by the 529. Determine eligible “qualified” expenses that can be paid with a 529. Examples of non-qualified expenses include transportation, health-care costs not covered by insurance, extracurricular activities, and meals outside of college dining. Non-qualified transportation costs may involve taxi or Uber rides and the cost to travel home on breaks. Transportation costs for the first semester this year may increase as many students who normally live on-campus are considering commuting options instead.
2. Health-care documents
- Make sure that parents and/or key family members can access the student’s health information with HIPAA authorization.
- Complete a health-care proxy once a student reaches age 18. Use the form for the state of primary residence and where the student is attending college. Students may have to complete forms for multiple states if the provisions aren’t uniform.
- Standard version of health-care proxies are available online or an attorney can draft one (see everplans.com for links to 50 states)
- Compare the benefits of health insurance obtained through the college or remaining on the parents’ health insurance plan (until age 26).
- Families may be reimbursed for the costs of tuition, room and board, and fees if a student withdraws from school due to a qualifying medical event and they cannot earn credits for the semester. Mental health conditions, such as depression, may also be considered in this definition. Pandemics are typically excluded from coverage. If a college determines during the year that it needs to send students home due to the pandemic, this event would not be covered. The policy may, however, provide reimbursement if the student contracts COVID-19, but not all policies cover this.
4. Additional insurance
- Determine if there are any gaps in insurance coverage that need attention. For example, does the homeowner insurance cover the students’ valuables while they are at college? Does the student need to purchase renter’s insurance if they are living in an off-campus apartment? Is any extra coverage needed for the student’s automobile policy?
5. Banking and finances
- Identify ways to transfer and manage funds. Review the student’s checking account and make sure it can be easily accessed. If they do not already have a checking account, they may want to set up an account at a local bank. Consider linking accounts for easy transfer of funds. Parents may also want to set up a savings account to encourage their child to save money, particularly if they are working part-time while attending college.
- Consider a credit card for use in emergencies. Educate the student about the importance of developing credit, making payments on time, and maintaining a good credit score. Explore special offerings for students.
- Students may also build up credit with a retail credit card. They may need a parent to co-sign or proof that they have an income-generating job.
- Review mobile apps such as VENMO for students to use to receive funds and pay for expenses.
- Many colleges offer formal work-study programs if certain requirements are met. Students and parents should become familiar with the paperwork needed to apply for these jobs, such as tax forms and payment information. The student also needs to understand how they will be paid and their tax-filing responsibilities.
Students and advice
As parents review their checklist, they may also want to schedule a time to speak with the family’s financial professional. Thinking about costs and expenses may lead to questions about financial aid. Getting professional advice can help families find answers quickly. Consider including your child in this discussion. A financial professional can help answer their questions about money management. Families may also want to learn more about 529 college savings plans.
Financial professionals may also have the latest updates on financial aid programs. Due to the pandemic, many students may have lost their summer jobs. Some advocacy groups have called on Congress to double the amount awarded in Pell grants this year. To date, no action has been taken on this issue.
For informational purposes only. Not an investment recommendation.
This information is not meant as tax or legal advice. Please consult with the appropriate tax or legal professional regarding your particular circumstances before making any investment decisions. Putnam does not provide tax or legal advice.