The Bank of Mom and Dad

Graduation season is a milestone worth celebrating. But once the caps are thrown and the family photos are taken, there’s  financial inflection points that most families never talk about. If you are sending your child to college what financial preparations need to happen? If your child just graduated from college what happens to all the money you’ve been spending on your child’s education?

Sending Your Child to College? Here are Three Financial Preparations.

With big changes ahead, parents should ensure that they can help their kids and access important information if necessary.

Sending a child off to college is a milestone that most parents might feel mixed emotions about, including excitement for their future and anxiety over the unknown. Amid the many considerations that arise during this time, financial preparations can often be overlooked. Nevertheless, these are necessary to ensure that students can manage their expenses, prevent excessive debt and have a successful college experience.

Preparing the document every 18-year-old should have.

One of the most important financial decisions parents and their adult children going to college should consider is a financial power of attorney (POA), which authorizes an agent to act on the student’s behalf in financial matters. Additionally, parents and students should consider a health care POA, which allows an individual to appoint another person to make medical decisions on their behalf if they become incapacitated or unable to communicate. A POA grants a trusted individual the legal authority to make decisions and take actions if the student is unable to do so themselves. Since college students may be living away from home, having a POA ensures that someone can manage their affairs promptly and effectively in the event of timely financial matters or legal issues. It offers peace of mind to both the student and their parents when they are not physically present.

Getting access to information and setting financial expectations for students.

While the Family Educational Rights and Privacy Act of 1974 (FERPA) states that post-secondary institutions may provide info to a parent, the student must grant access. Colleges determine what the students can allow parents to see, financial information and/or academic records. When a child is selecting an institution, parents should research what information will be made readily available to them and what their child must sign to allow them access.

From there, parents can openly communicate with their child and set clear expectations based on finances, grades and performance. Financial best practices that parents can set for college students include creating a budget to track income and expenses and setting an allowance. This can include an allowance timeline, expectations around the amount of money they will receive and how it should be spent, and how their educational responsibilities directly impact their allowance (i.e., meeting specific grade requirements).

For many students, they have relied on their parents to handle the big-ticket items (college expenses, transportation and housing, etc.). They most likely do not have a credit score, as students aren’t allowed to have a credit card in their name without a verified income until they’re 21 years old. Gone are the days of credit card companies signing college students up on their first day of school. This is certainly a good thing, as students won’t have the opportunity to rack up credit card debt without any actual income.

But it also means that many students are leaving college with little to no credit history. This affects them after graduation, particularly if they’re looking to rent. There are options available to help students learn responsible lending habits and to build credit, such as secured credit cards (with a deposit that matches the limit), cards that require a co-signer or adding a student as an authorized user on a parent’s card. These allow a student to learn responsible lending and build credit.

Ensuring some financial education.

Each tip comes down to one thing: financial literacy. There’s no better time to ensure that children have a basic understanding of financial topics than when they’re going off to college. Many students may begin being exposed to topics that may impact their financial health, especially when inflation is an issue. In fact, in a WalletHub survey, 79% of college students said their financial literacy improved due to inflation.

When sending a child off to college, parents are helping them make decisions about their professional future, so it only makes sense to equip them for success in their financial future as well. While students are preparing for dorm life, enrolling in classes and more, parents should prioritize meaningful discussions on financial matters with them — to ensure that there are clear expectations while on campus and to lay the groundwork for long-term financial independence

If your child just graduated from college what happens to all the money you’ve been spending on your child’s education? For families paying college costs, the end of tuition can free up $27,000 to $59,000 per year, depending on the school.1 That’s a significant shift in cash flow. But here’s what the data tells us about what actually happens next: for many families, that money doesn’t get redirected toward new financial goals, including retirement. It quietly flows into continued support for adult children.The

Numbers Are Striking

According to a 2025 Savings.com survey, half of all parents with adult children now provide regular financial assistance, spending an average of $1,474 a month. Working parents who support adult children contribute more than twice as much to their grown kids each month as they do to their own retirement accounts.2 An AARP study found that 75 percent of parents aged 45 and older are financially supporting at least one adult child, even though more than half of those children are capable of meeting their own basic needs. Forty-two percent of supporting parents report financial stress as a result.3 None of this comes from a lack of love. It comes from a lack of structure. Without a clear direction for when and how support will taper, the transition from “helping with college” to “indefinitely subsidizing an adult” happens gradually and invisibly.

Why Graduation Is the Right Moment to Reset

Graduation creates a natural opening for conversations that might otherwise feel uncomfortable. Both generations expect things to change, which makes it the ideal time to clarify a few things: which expenses will shift to the graduate and on what timeline, what the graduate needs to know about enrolling in employer benefits like health insurance and retirement plans, and what the parents can realistically continue to provide without compromising their own financial position.These conversations don’t need to be adversarial. In fact, Ameriprise Financial research found that 96 percent of parents who work with a financial professional feel confident they will pursue their top financial goals, and 78 percent said their financial professional was helpful in navigating financial decisions related to their adult children.4

Where Should That Recovered Cash Flow Go?

For parents in their 50s and early 60s, the end of tuition creates a rare opportunity to accelerate retirement savings during the years when it matters most. The 2026 employee retirement plan contribution limit is $24,500, with catch-up contributions of $8,000 for those aged 50 and older and a new “super catch-up” of $11,250 for those aged 60 to 63 under SECURE 2.0. If both spouses are working and contributing, the combined annual opportunity can be worth considering.5It’s also a good time to evaluate whether Roth conversions make sense before Social Security and required minimum distributions begin. Having a strategy in place is key if you’re considering this opportunity.The Real QuestionThe decision to support an adult child is deeply personal, and there is no single right answer. But the question worth asking is whether that support is happening intentionally as part of a broader approach, or whether it’s happening by default because no one has had the conversation.If your family is approaching a graduation milestones, or if you’re already supporting adult children and wondering how it fits into your broader financial picture, I’d welcome the conversation.

1. Education Data Initiative, “Average Cost of College,” February 20262. Savings.com: “Percentage of Parents Financially Supporting Adult Children Reaches a Three-Year High,” March 20253. AARP Research, “Parenting Longer,” November 20254. Ameriprise Financial, “Parents Balance Retirement and Supporting Adult Children Financially,” 20255. Internal Revenue Service, “401(k) Limit Increases to $24,500 for 2026,” November 2025Reference: Kiplinger- Sending your child to college? Three Financial Preparations, by Kelley Wolfington, June 13, 2024