With the many available scholarships, grants and other options for financial aid, paying for college doesn’t have to be intimidating. There are plenty of resources to help you as you begin planning for your future.
As you think about how to pay for school, be sure to maximize financial aid, grants and scholarships first, then look into educational loans to cover the rest. You can also get a head start on saving with a 529 savings plan.
Where do I begin to develop a college savings plan?
- Talk to your guidance counselor. Take advantage of your counselor’s wealth of experience and make an appointment to discuss your individual options.
- Sit down with your parents or guardians. If you haven’t already, find time to sit down and talk candidly about your plans and your family’s financial situation. You’ll need to know all of your options before you begin formulating a college savings plan. Getting everything down on paper can help keep everyone on the same page.
- Connect with a free personal financial counselor. A financial counselor can give your family more information on your options. Learn more about how to arrange for free financial counseling through Military OneSource.
- Contact the education consultants at Military OneSource. Education consultants can help with college admissions, financial aid applications and more.
- Do your research. Lots of schools and organizations put their scholarship opportunities online, so a preliminary internet search is a great way to get your feet wet and see what’s out there.
What are 529 Plans?
A 529 plan is a tax-advantaged savings plan that can make it easier to save money for college. They are flexible and available in every state to start planning for college.
The basics about 529s:
- There are two kinds of plans. Talk to a financial professional to find out which is best for you.
- Prepaid tuition plans — These plans have in-state residency restrictions. This plan’s key benefit is that you can lock in tuition fees at participating in-state colleges and universities at the present tuition rate.
- College savings plans — These plans are not tied to a specific university and can be used for college expenses at any college in any state. They do not, however, allow you to lock in tuition rates.
- You won’t be taxed on your plan’s earnings. One of the biggest perks of a 529 plan is that any withdrawals made for eligible college expenses are not taxed. However, if the money is used for something other than college, like a new car, you will:
- Owe federal income tax on any withdrawals that exceed your eligible college expenses
- Pay a 10% penalty on your plan’s earnings for ineligible withdrawals
Make sure you read the fine print and know the details of your plan.
- You can get a plan in any state. 529 plans vary by state, but you aren’t stuck with your current state’s plan. You can choose a plan from another participating state if you like the features of that state’s plan better. This helps military families who have to consider residency requirements if they relocate to several states before their children head off to college.
- Anyone can contribute. Make sure you tell other important adults in your life — grandparents, aunts, uncles and the like — about your 529. Next time they’re wondering what to get you for your birthday or graduation, ask them to make a contribution to your education fund.
- Your parents/guardians will make the withdrawals. You may be the beneficiary of the plan, but your parents or guardians will be the ones to decide when withdrawals can be made to pay for college expenses.
- Plans are easy to compare. Visit the U.S. Securities and Exchange Commission website to get detailed plan information that includes a side-by-side comparison of the different 529 plan types.
How can I apply for scholarships and financial aid?
- Fill out a FAFSA® form. The Department of Education’s Free Application for Federal Student Aid, also known as FAFSA, should be the first step in your financial aid journey. Create an account and complete the FAFSA® form online. Some states and universities use information from the FAFSA® form to determine eligibility for grants, scholarships and loans. Don’t wait until the last minute. Check your state’s deadlines on the Federal Student Aid website. The earlier you fill out the application, the sooner you’ll know what type and amount of aid you can expect.
- Consider your qualifications. There are thousands of scholarships out there — it’s just a matter of finding the right ones for you.
- See what local scholarships are available in your area and from your potential college choices.
- Check for scholarships based on your individual strengths, credentials, talents and accomplishments.
- Explore military scholarships. Having a parent or guardian who is a service member may qualify you for certain scholarships. Talk to them, or contact your installation adult education center for more information.
What do I need to know about student loans?
After you’ve exhausted all financial aid or scholarship options and saved as much money as you can, it may be time to look into student loans. Consider these factors before accepting student loans.
- Remember, you have to pay them back. Loans are not “free money,” and you can end up paying back much more than you originally took out, depending on the interest rate.
- Pay attention to the terms. Make sure you understand the terms of any loans you accept. In addition to the interest rate, you should also pay attention to the repayment schedule and find out about the “grace period,” or how soon you have to pay it back after graduation.
- Go for federal loans first. You can apply for loans through the government or private institutions, but federal loans tend to have lower interest rates and a more generous grace period.
- Check for military-offered loans. Talk to your parents and research whether you’re eligible for any interest-free loans through the military. Find additional information about financing your child’s higher education on Military OneSource, including grants, scholarships and loans.
There are many ways to finance your college education; it’s just a matter of seeking out the options that work best for you. Military OneSource has your back to connect you with the best support for the next step in your education. Before you know it, you’ll be walking across the graduation stage with a diploma in your hand.
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