Question: Greetings Tess and Chris, I love the show. I'm a military officer, but since I graduated from a service academy, I was never eligible for education benefits through the old GI Bill. Apparently, with the new one, I now have benefits and can pass them to my wife or children. We have 2 girls, 6 and 4. We've completed a state sponsored pre-paid college program for the elder, and now we add $100/month to a 529 for her. We have $7500 in a 529 for the younger, and add $250/month to that account. So my question is: Do I now have overlapping benefits that I won't be able to use fully? If so, should I adjust our college savings rates to prevent having more money than we need allocated solely to higher education for our girls? As I tell my wife, if they go to a service academy, they won't need any of it! Micah, Kodiak, AK
Answer: Well, if they do go to a service academy maybe you and your wife can tap the 529 savings plan for your own education! It's great that you've saved for them. The bottom line is that your daughters will have a lot of choice when it comes to college. However, I would probably stop making contributions to the 529 plans for now. (I'd keep saving the money but in your name. It never hurts to add to savings.) The details and rules about transferring education benefits in the new G.I. Bill haven't been finalized. When they are, you'll be able to take a look at what you've saved, the value of the benefits from the military, and then make some adjustments to set it up so there will be few out-of-pocket costs when your daughters do go to college.
One reason why I don't think you've wasted any money is the cost of college. The most recent data has tuition and fees at an in-state public four-year college at $6,585. But the average cost including room and board is $14,333. And that's assuming they go to an in-state public university. The advantage of what you've done, coupled with the military education benefit, is that it will also bring the price of a private college within realistic reach if that's what they and you want a decade from now.