As your child enters high school, it’s crucial to start planning for their transition to college and the financial responsibilities that come with it. Here are the key financial issues to address:

1. College Savings

• Review 529 Plan: Assess the balance of your college savings account and determine if you need to increase contributions.

• Set a Goal: Estimate college costs based on the type of institution (public, private, in-state, out-of-state) and inflation.

• Explore Prepaid Tuition Plans: If your state offers prepaid tuition plans, consider whether they fit your goals.

2. Scholarships and Financial Aid

• Research Early: Start looking for scholarships, grants, and merit-based aid that your child may qualify for.

• Encourage Academics and Activities: Help your child focus on academics, sports, or extracurriculars that improve their scholarship chances.

• Learn About FAFSA: Familiarize yourself with the Free Application for Federal Student Aid (FAFSA) process and key deadlines.

3. Budgeting and Financial Literacy for Your Teen

• Teach Money Management: Help your child learn budgeting basics, saving, and responsible spending.

• Set Up a Bank Account: Open a checking and savings account for your teen to manage personal expenses.

• Discuss Credit: Introduce the concept of credit, interest rates, and responsible borrowing.

4. High School Expenses

• Plan for Increased Costs: High school often includes fees for advanced placement (AP) exams, SAT/ACT tests, sports, extracurriculars, and prom.

• Tutoring or Test Prep: Budget for academic enrichment programs or test prep courses.

5. Career Exploration and Planning

• Encourage Career Interests: Help your child explore potential career paths and understand the education required for those fields.

• Discuss ROI of College Choices: Talk about the return on investment (ROI) for different colleges, majors, and career paths.

6. College Decision Planning

• Public vs. Private: Discuss the pros and cons of public vs. private institutions and how these choices impact cost.

• Community College Option: Consider starting at a community college to save money before transferring to a four-year institution.

7. Part-Time Jobs and Savings

• Encourage Summer Work: Help your child find part-time or summer jobs to save for college expenses and build responsibility.

• Set Savings Goals: Create a plan for your child to contribute to their college fund or personal spending money.

8. Discuss Family Contributions

• Set Expectations: Be clear about how much financial support you can provide for college, so your child understands their responsibilities.

• Include Extended Family: If grandparents or relatives want to contribute, discuss how their support will be managed.

9. Prepare for Student Loans

• Understand Loan Options: Research federal and private student loan programs, focusing on low-interest and forgivable loans.

• Limit Borrowing: Teach your child the importance of borrowing only what is necessary to avoid excessive debt.

10. Tax Planning

• Education Tax Benefits: Familiarize yourself with tax credits like the American Opportunity Tax Credit (AOTC) and deductions for tuition.

• 529 Plan Withdrawals: Plan tax-free withdrawals from 529 accounts for qualified education expenses.

11. Emergency Fund

• For Your Child: Help your teen build a small emergency fund for unexpected expenses during college.

• For Your Family: Ensure your family’s emergency fund is robust enough to handle unexpected financial needs.

12. Reassess Insurance Needs

• Health Insurance: Ensure your child will be covered under your policy during college or research campus health plans.

• Car Insurance: If your child will be driving, update your policy to reflect any changes in use or location.

• Life Insurance: Ensure your life insurance policy is sufficient to cover education costs in case of an emergency.

13. Housing and Transportation Costs

• Dorm vs. Commuting: Discuss the financial implications of living on campus, off-campus, or commuting from home.

• Plan for Transportation: Budget for car expenses, public transportation, or flights if your child is attending school far from home.

14. Estate Planning Updates

• Power of Attorney: Once your child turns 18, set up medical and financial power of attorney in case of emergencies.

• Wills and Trusts: Update your estate plan to reflect your family’s current goals and ensure your child’s future is protected.

15. Start College Applications Early

• Application Fees: Budget for application costs, including test scores, essay tutoring, and submission fees.

• Early Action/Decision: Encourage your child to apply early to maximize scholarship opportunities.

16. Evaluate Retirement Savings

• Balance Priorities: Ensure you are still contributing to your retirement accounts while saving for your child’s education.

• Avoid Draining Savings: Remember, you can borrow for college, but you cannot borrow for retirement.

17. Explore Alternative Education Paths

• Trade Schools: Research trade or vocational programs if your child is interested in a hands-on career.

• Gap Year: If a gap year makes sense, plan for the financial implications and opportunities it might bring.

By addressing these financial issues before your child goes to college, you can prepare them for a smooth transition into adulthood while maintaining your family’s financial stability.