If your teen is heading off to college for the first time this fall, you're probably acutely aware that your "baby" is finally slipping out of your grasp. Once the kids are gone, they're gone!
But if you're still footing part of the bill, you have some influence. Use it, before it's too late.
Here are three tips for a must-have discussion -- one that you must have sometime
you're in the car headed to the airport. The discussion revolves around financial issues, and it's best to get them resolved before things get out of hand.
How Much Is Enough? For How Long?
The most obvious discussion revolves around how much money parents will provide, in addition to room and board, and how that money will be paid.
Don't assume that a previously responsible student will be able to manage an entire semester's worth of spending in the heady atmosphere of that first year of college. It's best to make support payments once a month, to help the budgeting process.
Your student may want to set up a checking account in the college town, since local checks will be more easily accepted. Parents can then set up an automatic monthly wire transfer from their bank to the student's account -- at a specific date each month.
An even better solution is found
here -- a fully loadable, prepaid debit card offered by many national banks. The student can use it to withdraw cash from an ATM or to make a purchase any place a VISA is accepted. There's no chance of running up huge bills, because the line of credit is equal to the money the parents deposit in the account. The card can be reloaded directly from the parents' checking account.
Big Bonus: Both parent and student can view the debits online, real time. So if there's a sudden cry for more cash because "books are expensive," parents can see that there have also been a lot of withdrawals for the campus grill.
Be sure to warn students about offers for credit cards, which are widely available on campus. Students are targets, and these are an easy way to get in trouble -- with parents eventually footing the bills. When you talk about the dangers of drugs, drinking and cutting class, be sure to add a warning about the seduction of easy credit.
Another, more profound money discussion that you simply must have is
. Far too many students are still in school long after the four-year traditional plan. They have excuses -- didn't get into a required course, didn't know about that language requirement, only need one more class in summer school, changed schools and the credits didn't transfer. This could turn out to be a never-ending drain on your finances. Parents, make it clear: Four years, and you're out! And stick to it!
Health Insurance Coverage
Parents should make sure their policy still covers the student at college. Most do, but there's another issue: Does the student health service accept parental insurance? That's the place most students head in an emergency -- and many don't accept the parents' insurance. That could leave you vulnerable to costs for emergency X-rays or other treatments.
If the school offers student health insurance, which is accepted by the on-campus health service, it might be worthwhile to pay the extra premiums. Get the school policy in writing so that there's no question of what coverage will be accepted in case of emergency.
You're sending your child off to college with almost all of his or her personal assets -- ranging from the new computer, iPod and other technology to all those new clothes and dorm furnishings. Most colleges don't cover losses from fire or theft. Check your homeowners insurance for coverage for your child at college.
If the student is living off-campus in an apartment, it might be worthwhile to purchase inexpensive renters insurance, which you can probably get at a low price in conjunction with your homeowners insurance. Check to see if specific items such as computers need to be individually registered to be covered. And be sure to keep receipts from all purchases of expensive items, in case of fire or theft. Asking your student to pay the premiums for that policy (it won't be expensive) is one way to start instilling the concepts of responsibility and the importance of insurance.
A little advance planning can go a long way in avoiding huge family fights over money in the college years. That's an education in itself. And that's The Savage Truth!
Terry Savage is an expert on personal finance and also appears as a commentator on national television on issues related to investing and the financial markets. Savage's personal finance column in the Chicago Sun-Times is nationally syndicated, and she released her fourth book,
The Savage Number: How Much Money Do You Need?
in June 2005. Savage was the first woman trader on the Chicago Board Options Exchange and is a registered investment adviser for stocks and futures. A Phi Beta Kappa graduate of the University of Michigan, Savage currently serves as a director of the Chicago Mercantile Exchange Corp. She also has served on the boards of McDonald?s and Pennzoil.