College Savings Tips for Military Families

As September arrives, and the leaves begin to turn, we find ourselves planning for the future—particularly when it comes to saving for college. September is College Savings Month, a reminder to plan early for college expenses. With tuition costs on the rise, starting sooner rather than later is becoming more important than ever. Whether you're a parent who is working to provide the best for your child, or a future college student gearing up for the next chapter, we are here for you. Keep reading while we explore effective ways to save for college.

1. How to Create a College Savings Strategy:

Developing a savings plan is like preparing for missions ahead and securing your financial future—it's rewarding and strengthens over time. Here are some straightforward strategies to get you started:

Allocate a Percentage of Your Paycheck

Saving for college can feel overwhelming but breaking it down into manageable steps can make the process feel more achievable. A helpful strategy is to set aside a specific percentage of your paycheck—roughly 10-15%—toward a dedicated college savings account. Consistency makes a big difference, so we suggest setting up automatic transfers to help you stay on course.

Saving Cents Program

Imagine if every time you made a purchase, you could save a little extra money without having to think about it. That's the heart of Armed Forces Bank's Saving Cents program. By rounding up each debit card purchase to the nearest $1 or $5 and saving the difference, you can gradually build a savings fund over time. This simple yet effective strategy aids your savings journey without major changes to your spending habits.

Use Financial Calculators

Sometimes, figuring out how much you need to save for college can feel daunting, like solving a complex math problem. Afterall, it does involve crunching numbers. This is where financial savings calculators come to the rescue. Tools like the College Savings Calculator can help you refine your education savings strategy, offering personalized estimates based on your financial standing and goals.

2. How Students Can Pay for College:

Whether you are just starting to save or trying to grow your current funds, there are many ways for students to reach their savings goals and pay for college:

Student Savings Accounts

Starting a student savings account is a smart move for young adults preparing for college. Take Armed Forces Bank's Student Savings Account, for instance—it's tailored for those under 23 and offers quarterly compounding interest, helping your savings to increase faster. To ensure you get the best bang for your buck, compare interest rates and benefits across various financial institutions like military banks. It's like gathering intel before launching a mission to maximize your savings potential.

Find Scholarships

Scholarships can be a secret weapon for funding college education. Applying early and frequently can help reduce the financial burden of higher education. Look for scholarships that match your academic achievements, extracurricular activities, and community service. Many websites and organizations offer searchable databases to help you find scholarships that are a perfect fit for students like you.

ROTC Programs

The Reserve Officer's Training Corps (ROTC) program offers a unique opportunity for students looking to further their education while preparing for a career in the military. Through ROTC, college students can receive financial assistance for tuition and fees, along with a monthly stipend for living expenses. In return, students commit to serving as commissioned officers in the military after they graduate. Joining ROTC offers a great way to earn a degree, gain hands-on experience, and have a clear path to a career in the armed forces.

Military Tuition Assistance Program

The U.S. Department of Defense's Military Tuition Assistance (TA) Program  is a fantastic benefit available to eligible active-duty, National Guard, and Reserve component service members. This program helps military members further their education while serving our country during their off-duty time. It offers financial assistance for tuition expenses, covering up to 100% of the costs for college courses, vocational training, and other educational programs. Service members can receive up to $4,500 per fiscal year, making it easier to get a degree. Make sure to understand the eligibility requirements and application process (each military branch has its own rules).

After-School or Summer Jobs

Working during the school year or over summer can help increase your college savings arsenal. Not only will you build a strong resume with work experience, but you also start to gain financial independence. Balancing work with academics and extracurriculars may feel like a tough mission, but the rewards can be pretty great in the end.

3. How Parents Can Pay for College:

Planning ahead for your child's education can greatly impact managing college expenses, especially for military families. Here are some strategies that might help ease the financial burden for military parents:

Savings Accounts for Parents

Parents in military families have excellent options for saving for their children's college tuition, such as money market accounts and certificates of deposit (CDs). Money market accounts at Armed Forces Bank offer better interest rates than standard savings accounts, making them ideal for long-term savings. (They also are a great option for allocating part of your paycheck into a separate savings account). CDs are another great choice because they provide a fixed rate of return, allowing your savings to grow steadily and securely over time.

Transfer GI Bill Benefits

Parents can use the GI Bill  to cover their children's education by transferring their unused benefits through the Transfer of Entitlement (ToE) option. If eligible, they can pass on these benefits to their spouse or children, helping pay for tuition, fees, books, and even housing. This transfer can greatly reduce the financial stress of paying for college education, letting your kids attend school without building up a lot of debt.

529 Savings Plan

When it comes to saving for college, are often recommended because they offer both tax advantages and flexibility. Specifically, contributions grow tax-free, and when it's time to cover qualified education expenses, withdrawals are also tax-free too. These plans can pay for a range of educational costs, like tuition, room and board, and even some K-12 expenses. Each state offers its own 529 plans, so be sure to compare options to find the best fit for our needs.

Reduce Spending and Reevaluate Budgets

One of the most effective ways to build your college savings fund is by taking a closer look at your current spending habits. Do you truly need a Starbucks coffee every day? It is incredible how small changes can lead to BIG savings over time.

Take a moment to go through your monthly expenses and conduct an "expense recon" to identify areas where you can cut back. For instance, a simple way to save is by looking at your lunch spending. A recent US Foods survey  showed that the average American spends $166 monthly dining out. This amounts to nearly $2,000 each year that you could instead contribute to your child's college savings fund. To assess your own lunch spending habits, we suggest trying out a Lunch Savings Calculator.

You could also look into refinancing your mortgage with a VA Home Loan if you qualify. To see what you could save on your mortgage with a VA Home Loan use our VA Home Loan Calculator. Learn more about VA Mortgage benefits on our VA Loan page.

4. How to Pay for College with Loans:

Financing education through loans is crucial for students, allowing them to concentrate on their studies rather than financial concerns. Here are some loan options:

Student Loans

Although saving is ideal, it may not always be enough to cover all college costs. In these situations, student loans can help with funding. Federal student loans are the most popular choice because they come with lower interest rates and more flexible repayment options than private student loans. You can start by completing the FASFA (Free Application for Federal Student Aid) as your first step. Once submitted, explore different federal student loan options.

TIP: Be familiar with the terms and conditions, and you can minimize debt by borrowing only what's necessary.

Personal Loans for Military Families

When student loans don't quite cover it all, military personal loans can be a helpful alternative. They can bridge the gap for any remaining education expenses like books, a new laptop, and meals. Personal loans might come with slightly higher interest rates than student loans, but they often offer quicker disbursement, giving you fast access to funds when it matters most.

How Armed Forces Bank Can Help:

Starting early and staying consistent with your savings can make all the difference when it comes to affording college. College Savings Month is an excellent opportunity to jumpstart your savings goals, but it’s important to keep the momentum going year-round to ensure you are prepared for future expenses.

At Armed Forces Bank, we are here to support the military community in achieving their college savings goals. We offer personalized service and a range of products to help you navigate life’s important milestones with confidence. This includes:

• Financial calculators to help you plan effectively
• Saving Cents¹ to make saving effortless throughout your journey
• Student savings accounts² designed to help young savers
• Money market accounts³ and CDs⁴ with competitive interest rates
• Military personal loans⁵ to help your reach your financial goals

With the right strategies and some determination, you'll be on the front lines of securing the educational future for you or your child. Get started today!

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¹ Choose from $1 to $5 increment to round up on your debit card purchases from your checking account. Each night all the extra change will automatically transfer from your checking to your savings.

² $25 opening deposit required. $5 paper statement fee applies. Interest begins to accrue no later than the business day we receive credit for the deposit of non-cash items. The interest rate is subject to change daily. If the account is closed prior to the interest payment date, no interest will be paid. Fees may be charged to the account which could reduce earnings on the account. Closing new savings account within 90 days of opening will result in a $25 early closure fee.

³ $25 opening deposit required.  $5 paper statement fee applies A monthly service charge of $10 will be imposed every month or statement period if the balance in the account falls below $1,000 on any day of the month or statement period. Six (6) transactions per statement allowed. Closing your account within 90 days of opening will result in a $25 early closure fee.

⁴ $500 minimum deposit to open. A penalty may be imposed for early withdrawal. CD rates are subject to change at any time and are not guaranteed until CD is opened. Fees charged to the account could reduce earnings on the account.