School Daze

August 24, 2022
By Cheryl Langston, CFP®
Students walking. West Financial Services.

As summer winds down and back to school ads ramp up, things are a little different at our house. Our daughter is off to college. Once she made her school choice official, her gleeful plans for dorm décor and collegiate life began, while I agonized over other matters. Was there enough in the 529 plan? How do we go from contribution to distribution mode? Was she disciplined enough to avoid the high cost of daily stops at the campus’s Starbucks and Chick-fil-A? To avoid obsessing over nightmarish scenarios, I went into my typical list making, planning, and basic preparations mode. Here is my homework.

While 529 plan contributions are fairly straightforward, there are some things to keep in mind with distributions. You have the option of paying expenses yourself and seeking reimbursement from your 529 plan administrator, or you can have your plan administrator pay college bills, directly. For example, you can direct tuition and other payments directly to the school, which is an efficient way to make these payments. Distribution checks for reimbursement can be paid to the account owner or the beneficiary, with different potential tax implications. If seeking reimbursement, 529 distributions should match and be paid in the year that qualified expenses were incurred. Before seeking reimbursement for costs, know what expenses are considered qualified to avoid taxes and penalties. Typical qualified expenses are tuition, fees, books, supplies, and equipment. Room and board may be a qualified expense in certain situations. Transportation and other travel expenses to and from college are not qualified. You need to keep documentation, whether receipts, statements showing payments, or Form 1098-T, which schools provide (either mail or electronic portal) by the 31st of January.

In addition to planning for the coverage of college costs, you should plan for your child’s insurance coverage as well. If your child is on your auto insurance, but will not take a vehicle to school, you may qualify for a discount. Also review your homeowner’s policy to determine what coverage you have for your child’s belongings at school. Be sure to consult with your insurance agent.

Your child has changing legal rights, and you should plan accordingly. For example, once your child turns 18 years old, all rights under The Family Educational Rights and Privacy Act (FERPA) transfer from you to your child. FERPA protects college students’ education records so they remain confidential between the college and the student. This means that, even if you are paying the bill, you will not see how well (or poorly) your child is doing in his or her classes. The Health Information Portability and Accountability Act (HIPAA), similarly gives students control over their health care records.

Each family should decide what is right for them and their student. Whether your student signs a FERPA waiver allowing you to have access to their education records, or a HIPAA release form for medical records, or you have a more relaxed policy of “parents will pay your cell phone bill once we see your grades,” know there are options to give students some independence while keeping parents in the loop. We asked our children to sign durable financial and medical powers of attorney. This allows us to step in, as needed, for major medical or financial decisions if our children become unable to do so on their own, or if they need help. You should consult an attorney if you have questions about what is best for your situation.

Next, make sure your student has the necessary documents with them at school. For example, a counselor told us that an original social security card is required for any on campus job or paid internship. Some other documents to have are health insurance cards, medical records (to include vaccine history), and a list of key contacts. It is a good idea for parents to have copies of these documents.

Don’t forget to congratulate yourself and your child on this exciting accomplishment. Embrace the new opportunities that lay ahead. I am excited for our daughter, but I am also thrilled to be working on my next checklist: planning for a fabulous she-cave!

Read the Financial Planning Focus August 2022:


  • West Financial Services, Inc. (“WFS”) offers investment advisory services and is registered with the U.S. Securities and Exchange Commission (“SEC”). SEC registration does not constitute an endorsement of the firm by the SEC nor does it indicate that the firm has attained a particular level of skill or ability. You should carefully read and review all information provided by WFS, including Form ADV Part 1A, Part 2A brochure and all supplements, and Form CRS.
  • Certain information contained herein was derived from third party sources, as indicated, and has not been independently verified. While the information presented herein is believed to be reliable, no representation or warranty is made concerning the accuracy of any information presented. Where such sources include opinions and projections, such opinions and projections should be ascribed only to the applicable third party source and not to WFS.
  • This information is intended to be educational in nature, and not as a recommendation of any particular strategy, approach, product or concept. These materials are not intended as any form of substitute for individualized investment advice.