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Military Finances 101: 6 College Planning Mistakes to Avoid

College Planning Veterans Benefits Managing Your Finances

I'm pretty sure that the only thing that goes by faster than a military career is your kids growing up. One day they're 2 years old and two weeks later they're off to college. So whether you are preparing to send your child to kindergarten or are dealing with teenagers, it’s never too early (or too late) to start planning for their higher education. Not sure where to start? We’ve gathered some of the most common financial mistakes parents make when it comes to college planning.

Mistake #1: Procrastinating

Raising children is no easy task. You have so much to think about as they’re growing up that college might not always be at the forefront of your mind. But the reality is, the earlier you get started on planning how to fund your child’s education, the better off you will be. With the impact of compounding interest, even just a couple of years can make a difference in your savings. Take the first step by calculating the potential future cost and consider how many years you have left to save. This way, you’ll have a specific number in mind when it comes to putting money aside each month.

Mistake #2: Not Researching Account Types

While it’s good to have options when it comes to saving for your child’s education, choosing the right savings account can be overwhelming. Take the time to research the types of accounts that can be used to cover educational expenses.

Options could include: 

  • 529 plans
  • Coverdell ESAs
  • Parent's taxable accounts
  • UTMAs
  • UGMAs
  • Trusts

Consider how they differ and what aspects are most valuable to you. You’ll also want to consider factors such as your risk tolerance and how much time you have left to save. Also look to see how different account types are "counted" when determining how much needs-based financial aid for which your child might be eligible. 

Mistake #3: Buying Investments with High Annual Fees

You probably don’t want to have to think about additional fees when you’re trying to save for a huge expense such as college. However, excessive fees can make it much more difficult to reach your college planning goals. When choosing an investment vehicle or savings account for college planning, review any potential fees that could negate or diminish earnings.

Mistake #4: Relying on Your Retirement Funds to Pay for College

Depleting your retirement savings in order to send your child to school is a common mistake that parents make. It’s important to think ahead, because restarting your retirement savings in your 40s and 50s is going to make it difficult to actually retire when you want to. Instead of turning to your 401(k) or other retirement savings, look into student loans, scholarships, 529 plans and other college savings accounts.

Mistake #5: Failing to Consider Student Loans

Taking out student loans does not mean that you don’t make enough money. College is getting increasingly expensive every year, and there’s no shame in taking out a loan for a little help. In fact, when it comes to federal student loans there are about 42.9 million borrowers each year.1 Research different federal student loan programs and understand the difference between subsidized and unsubsidized loans to determine if taking out a loan would work for your situation.

Even if you don’t plan on borrowing money, fill out the FAFSA before sending your child off to school. It’s a quick and easy way to potentially receive aid, and you don’t have to take it even if it’s offered. Some universities require that you file a FAFSA to qualify for merit-based scholarships. Additionally, research loan types, as federal loans may offer lower-interest rates than private lenders - but this may not always be the case.

Mistake #6: Not "Thinking Through" GI Bill Benefits

GI Bill benefits need to be used carefully. If scholarships are involved, using GI Bill benefits can turn tax-free scholarships into taxable income. Or it might make sense to use GI Bill on the child who goes to a school in a higher cost (and higher BAH) area. Using GI Bill with scholarships that are "tuition only", can cause you to leave GI Bill benefits on the table. There isn't a formula, so make sure you think it through.

Still stressed out by the thought of starting your college planning journey? Use these tips as a jumping off point as you work with your financial advisor to develop a college savings strategy for your future graduate.


If you found this article useful, you might like the following blog posts:

GI Bill. 529 Funds. Which Should I Use First?


Coordinating GI Bill Benefits and Scholarships


8 FAFSA Rules Military Officers Should Know


  1. https://studentaid.gov/data-center/student/portfolio

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