Hi Ho, Hi Ho, It's Off to School We Go - 2013 Edition
I think most college students will agree that going off to school may involve some fun but it’s basically going to be their job for several years. That said, borrowing today’s title from the Disney movie Snow White and the Seven Dwarfs seems appropriate since that’s the song the dwarfs sing as they head out to work at the mine. While I don’t think most students expect to locate diamonds like those for which the dwarfs are digging, I do think most expect to find the means of earning a living buried somewhere amidst the dirt and rocks of their post-secondary education.
With another school year about to start, I thought it might be helpful to suggest a few financial planning tips to add to the pre-departure check list.
Books. As syllabi become available for various classes, you might want to consider trying to save money by shopping for used textbooks and/or consider renting them. Three of the best used textbook sites are BigWords, EFollet & ECampus (all .com). Also both eBay and Half Price Books offer used textbooks for sale by owner. And, in a testament to the ingenuity of the American student, TextBookRevolution.org features information about and links to free textbooks.
Data Safety. No one plans to lose their wallet at home or at school but it can happen so it’s best to be prepared. One easy safety measure is to photocopy all its contents and keep that copy somewhere other than in the wallet. Most people leave that copy at home and we’re also glad to keep a scan of it here so there’s another place it can be found if necessary. Today’s students are probably more conscious of electronic security than I am but a computer that seems safe enough without password protection at home might need a strong password when taken to school. The potential for laptop theft is also worth considering. I’ve subscribed to LoJack for Laptops from absolute.com for several years and believe the potential benefits of data protection and probable recovery are well worth the $20 per year.
Medical Issues. No one plans on needing medical care either but that too can happen. Be sure your student is still included on your insurance plan (under the ACA they can be as old as 26) or that you’ve made other arrangements. Some schools offer health coverage for their students and those plans are often a good deal. Be sure all ID cards are up to date and any prescriptions are on file at the pharmacy so refills can be obtained with an email or phone call.
We recommend that everyone eighteen or older have Durable and Medical Powers of Attorney, along with an Advanced Medical Directive. These sometimes go by other names but they are the documents necessary for one person to make business (DPoA) and medical (MPoA) decisions for someone else. The Advanced Directive (sometimes known as a Living Will) clearly states the person’s wishes regarding heroic life-sustaining measures. Copies of these documents are usually satisfactory and we’re glad to burn them to a business card-sized CD which can be carried at all times. We don’t charge either clients or non-clients to prepare these small CDs.
Property Insurance. Most homeowner’s policies provide coverage for a student’s possessions while living on-campus. Coverage is generally capped at a percentage all household property, so be sure to speak with your agent about coverage limits. If necessary, a rider can be added to cover unusually valuable items; these riders are usually quite inexpensive.
Personal property located in off-campus housing is often not covered under a homeowner’s policy so renter’s insurance may be necessary. Casualty insurance is also important for anyone living off campus and, again, your agent will be able to provide details about your present coverage and a quote on other policies.
If your student has a vehicle at school, be sure all insurance details are up to date and easily accessible in case of an accident. These days almost everyone has a cell phone, so saving a picture of the front and back of the insurance card might be the easiest way to keep that info handy. A cell phone is also a good way to record any details of an accident – physical damage, skid marks, etc – and obviously to contact the police if necessary. Someone who’s involved in his or her first accident may not be thinking clearly, so going over these details before your student leaves for school might be a good idea. We suggest that, regardless of what appears to have happened, no one ever make a statement admitting being at fault. Let your insurance company work that out.
Paying for college. Again this year, Indiana residents have the option of putting up to $5000 into a state-sponsored 529 savings plan, receiving a $1000 credit against 2013 taxes, then immediately writing checks to pay for schooling expenses. This tax credit is a year-by-year decision made by the legislature but is certainly worth taking advantage of this year, even if your college student is a senior or in grad school.
Presumably by this time, some sort of college financing has been worked out. According to Sallie Mae, 27% of the cost of college is paid for by household (parental) borrowing. A wide range of loan options is available and we suggest you begin shopping for next year’s needs sometime this winter.
The FAFSA is a key element in obtaining grants and other free aid to help pay for college. The form must be updated every year and the process should be started in January to be sure of meeting priority filing deadlines. We have considerable experience with these and may be able to help get them completed more quickly. In the case of younger siblings, we can sometimes suggest a more strategic distribution of assets to optimize that student’s eligibility for assistance.
We actually enjoy our work here at Warren Ward Associates and don’t think of ourselves as heading off to the mines every morning, so feel free to get in touch if you think we might be able to help.