Financial Considerations – College

If you or someone in your network is a parent of one of the over 18 million students headed off to begin or continue their undergraduate studies this fall, We want to highlight an important aspect that often arises during this time of year: financial considerations for college students.

With tuition more than doubling since the 1960s, it’s essential to plan wisely to ensure a smooth transition in and through the college years. Here are some practical tips and considerations that will help: 

1. Budgeting basics: Encourage your student to create a budget, outlining their expenses (i.e., tuition, books, housing, food, and miscellaneous costs) and adjusting it each year as necessary. 
2. Educate about responsible borrowing: Knowing the implications of student loans and the importance of borrowing responsibly is crucial. Talk honestly and regularly with your student about the long-term impact of student loan debt on financial goals post-graduation.
3. Explore or revisit financial aid: Securing financial aid isn’t a one-time affair — it’s an ongoing process. Every fall, revisit your student’s financial assistance, from scholarships and grants to student loans. Keep in mind the Free Application for Federal Student Aid (FAFSA) must be completed annually to ensure continued support throughout college.
4. Understand your tax-advantaged savings plans: If you have a 529 plan or Coverdell Education Savings Account (ESA), ensure you and your student know how to use it.  These accounts offer tax benefits and can help offset the burden of tuition and related costs, but distributions must be used for qualifying expenses. 
5. Encourage part-time work: While focusing on academics is essential, encourage your student to consider part-time work or internships to supplement their income and gain work experience. 
6. Take advantage of student discounts and resources: Apple, Verizon, Sam’s Club, and Amazon Prime are just a few of the companies that offer education discounts. You can find a comprehensive list here to help your student maximize these opportunities. Additionally, encourage your student to utilize campus resources such as career services and financial literacy programs.
7. Plan for post-graduation repayment: Whether graduation is one or four years away, help your student develop a plan for post-graduation loan repayment, considering factors such as income-driven repayment plans, loan consolidation, and strategies for accelerating debt repayment.
8. Prepare for emergencies: Establishing an emergency fund is crucial to prepare for unexpected expenses that may arise during the college years. Additionally, consider creating essential legal documents such as a power of attorney, a living will, and a HIPAA authorization for your young adult.

We hope these tips provide helpful insights as you (or someone in your network) navigates finances for your children this fall.

Emerald Advisors, LLC is a registered investment adviser.  Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies.  Investments involve risk and, unless otherwise stated, are not guaranteed.  Be sure to first consult with a qualified financial adviser and/or tax professional before implementing any strategy discussed herein. Past performance is not indicative of future performance.