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Four Steps to Help Military Families Develop a Financial Plan for College
HigherEdMilitary
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Earlier this year, I wrote an article about the importance of military families to college success for military-connected students. Right now, most colleges are in orientation season as we welcome new families to campus, help them take care of critical student business, and start the transition to campus in the fall. There has been a lot of talk within the last couple of years about how expensive college has become and a lack of cost transparency for families. Those conversations are on the minds of the new families visiting college campuses this summer for orientation. One way to address these concerns is to identify and explain the types of funding available to military families and how they can be used to make a college education affordable.
Types of College Funding
Understanding the types of college funding that are available is crucial to any discussion about planning financially for college. The following list of college funding sources is not meant to be all encompassing; it is a compilation of the main funding sources that military families will use on most campuses within the United States. These types of funding are the main vehicles that military families will use to pay for their college education. There are a lot of misunderstandings and questions about how these funding sources work together and how students can leverage multiple funding sources to limit the amount of debt or out-of-pocket expenses that students accrue.
It is important that college administrators and faculty members remember that most families come to college with a limited understanding of these funding sources. This is usually the biggest cause of anxiety for new families as they navigate the transition into the college setting. Administrators and faculty members should utilize empathy when meeting families for the first time at orientation, recruiting events, or firstyear activities. By taking the time to explain these funding sources to new families or connecting them with the correct college employees who can help, the college is building trust with families and helping them understand the best way for their family to afford a college education.
VA or Military Education Benefits
Most military families send students to college with the expectation that a Veterans Affairs (VA) or military education benefit will help pay for college. Whether it is one of the federal GI Bills or tuition assistance, military families utilize funding earned through military service or VA disabilities to help subsidize the cost of a college education. On top of the federal funding, many states offer additional state funding for military families.. With all this funding available, it is difficult for most military families to know what they qualify for, and more importantly, how they can use these different sources to pay for college. If a military family qualifies for multiple VA or military education benefits, understanding how they work together is critical to college financial planning.
Federal Aid
Federal aid is available to students who submit a Free Application for Federal Student Aid (FAFSA) every aid year. The FAFSA covers one aid year (fall, spring, and summer semesters) and has to be resubmitted for every subsequent aid year for the student to be eligible for federal aid. Families should get in the habit of submitting a new FAFSA during the spring every year they are in college. The main funding provided by the federal government through the submission of a FAFSA is the pell grant, federal unsubsidized and subsidized loans, and federal work study. The pell grant are funds that help pay for college costs that do not have to be repaid to the federal government, federal loans are funds that help pay for college costs and do need to be repaid, and federal work study funds allow students to earn money while in college via campus jobs. These funding sources do not impact the use of VA or military education benefits.
College-Specific Scholarships and Grants
Every college offers a variety of scholarships and grants to students based off a variety of factors that can be merit-based, need-based, or both. Scholarships and grants that are merit-based are usually based on high school GPA, test scores (ACT or SAT), or both. Scholarships and grants that are need-based are based off the financial need of the family that is collected through the submission of the FAFSA. It is important for prospective students to research the type of funding a college provides when applying to colleges beforehand. Understanding how and when scholarships and grants are offered are a big piece of the financial picture for military families. College-specific scholarships and grants often pay for tuition only and can impact the use of VA and military education benefits. Military families should consult with the college’s office that administers VA and military education benefits proactively to understand that impact.
Outside Scholarships
Military families can also seek out additional funding through organizations outside of the college. There are many opportunities for external scholarships, these scholarships require additional time and effort, but can pay off in the end. External scholarships are a great avenue to pursue for military families, especially if they have used up all their VA or military education benefits or don’t yet qualify for them. As with college-specific scholarships and grants, external scholarships often pay for tuition only which can impact VA or military education benefits. Military families should consult with the college office that administers VA and military education benefits to understand the impact in advance.
Importance of Financial Planning
With the variety of funding sources available, it is important for military families to start developing a financial plan for college. The composition of that plan will vary depending on the family’s financial situation and the type and amount of college funding available to the students. The thoroughness of the financial plan will determine not only how the student starts college, but more importantly how the student finishes their college education. There are several steps each military family can take to develop an effective financial plan for college. Each of these steps is equally important to the overall college financial plan and will take some effort from the entire family to complete.
Step #1: Apply for VA or Military Education Benefits Early
Every year, without fail, military families come into my office or catch me at a college event and are unaware of all the VA or military education benefits that are available to them. Often, families rely on information shared by other family members, friends within the military community, veteran service organizations, and veteran service officers. Those sources are often well-intentioned but may lack the relevant knowledge to guide military families to all of the education benefits they are eligible for. It is critical for military families to talk directly with the college office that administers VA or military education benefits, as they should have the full picture of benefits available to military families in that state. Once families know the benefits (both federal and state) that are available, it is important to apply for those early so that they can address any benefit application issues and not have a delay in the award of funding.
Step #2: Submit a FAFSA Yearly
There is a reason why every financial aid office, admissions recruiter, and high school counselor in the U.S. stresses the importance of submitting a FAFSA. The FAFSA provides access to an assortment of federal aid based on family financial need and college costs of attendance. Submitting the FAFSA yearly is a critical part of any college financial plan for military families, as it will provide funding options each year that families will need to have a complete financial plan. The college will provide a financial aid offer to the students every year they submit a FAFSA, this offer outlines the federal aid available to the students for the full year. Military families should discuss all the funding options available through federal aid with the campus financial aid office to understand which funding sources need to be paid back to the federal government, which do not, and how much funding will be applied each semester.
Step #3: Communicating Realistic Expectations
Military families need to have discussions about financial expectations early in the college application process. It is very common for this not to happen and students will show up on campus at the start of the first semester with no understanding of how they will pay for college. These students will not know what VA or military education benefit(s) they have, what federal aid is available, or if they still owe a balance to the college after all aid and benefits have been applied. A critical part of the college financial plan is for military families to have honest discussions about the college funding that is available, how much families can help the student pay for college, who is responsible for checking the student account for updates, and ultimately, who is responsible for paying student balances.
Step #4: Establish a Back-up Plan
As most adults learn the hard way, not everything goes according to the plans you make. Even when students build a college financial plan with steps 1-3, a complete financial plan requires that they incorporate a back-up plan. What happens if parents’ income increases year-to-year and the student receives less federal aid, or VA and military education benefits run out? What if the college-specific scholarships or grants and external scholarships have a timeframe attached to them, and those run out? A student’s financial plan could look very different from freshman year to junior year, that is why the FAFSA is such a critical financial tool for military families. Students may have to access federal loans, or they may require additional need-based scholarships or grants to finish their college education, and all of those sources require a FAFSA. Using college savings plans, working part-time jobs, or saving monthly stipends from VA education benefits over the first several semesters are good options when funding is needed later in their education.
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