Many military parents of small children today worry about how they will be able to pay for their children’s cost of college. In a recent survey, 98% of parents believed a college education was key to their child’s future, yet only 38% of parents had a plan to pay for college.

According to the College Board, public colleges in 2017 on average cost around $21,500; private schools nearly twice at $42,000.  Factoring in an average 5% increase per year (and even that is low), and including room and board, books and supplies, personal expenses and tuition, your newborn today will need around $63,818 for the first year of college at a public 4-year school; nation-wide, parents contribute 42% to their child’s education meaning you will need to have saved $107,216 pay your portion for your child to get a four-year degree.  Will you be ready?

Based on another college calculator, it estimates today’s college costs at $24,610 per year; here is how it breaks down:

As daunting as it is, there are some tactics you can use to be as ready as you can. They include:

  • Make a Post 9/11 GI Bill Transfer of Entitlement
  • Set up a 529 Education Savings Plan
  • Use a 2-year/4-year college combination

Make a Post 9/11 GI Bill Transfer of Entitlement

Having your child use some (or all) of your Post 9/11 GI Bill entitlement will reduce the amount left to pay considerably. At a public 4-year school, tuition is paid in full offsetting the $9,650 in our example, plus the student gets on average $1,300 in monthly housing allowance and up to $1,000 per year in book money; this offsets another $12,700, leaving only $1,135 left to pay.

But keep in mind, you can’t make transfers to dependents once out of the military. A good tactic is to transfer at least one month of entitlement to each child (and your spouse) while still serving. Then, even after retiring, you can freely move the entitlement around as necessary. It doesn’t matter how young your child is at the time of transfer, the entitlement will be there to use after they graduate from high school and must be used up by age 26.

Set up a 529 Education Savings Plan

As with most savings plans, time is your friend. To meet your goal of 42% without using Post 9/11 GI Bill entitlement, you must reduce the cost of a bachelor’s degree by $96,357 through grants and scholarships, or save around $500 per month from birth to age 13 (assuming a simple interest annual 4% return on investment; compounding will shorten the amount of time).

Besides offering some tax-saving benefits too, 529 money can be used for other expenses besides tuition, which means it can be used in conjunction with Post 9/11 GI Bill entitlement without a reduction in the amount the VA pays toward tuition. Also, many schools award their own scholarships thus reducing the overall cost even more. Grants are another non-payback option. Taking out student loans should be a last resort.

Use a 2-year/4-year college combination

Because two-year colleges are generally cheaper to attend, it can make sense to either pay for the first two years out of pocket, from your child’s 529 plan or use GI Bill entitlement, if you have enough for 4 years of school. If you only have enough entitlement for two years or less, save it for the more expensive last two years of college.

Use these three tactics (and many more, like cash-back credit cards, reward programs and pre-paid tuition plans) to have the money necessary to support your child’s education when the time comes. With time on your side, it is never too early to start preparing for your child’s future college education.

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Kness retired in November 2007 as a Senior Noncommissioned Officer after serving 36 years of service with the Minnesota Army National Guard of which 32 of those years were in a full-time status along with being a traditional guardsman. Kness takes pride in being able to still help veterans, military members, and families as they struggle through veteran and dependent education issues.