Let’s face it: the cost of college keeps climbing. If you’re a parent today, you may be staring down future tuition bills that feel overwhelming. In fact, a child born in 2025 could easily face total college expenses of $400,000 to $600,000 or more for a four-year degree at a public university, even higher for private schools. And that’s assuming costs continue to rise at the modest pace they have over the last decade.
If you’ve served in the military, you may be counting on the GI Bill to help. The Post-9/11 GI Bill offers tremendous benefits — covering full in-state tuition at public colleges, a generous housing allowance, and some fees. You can even transfer unused benefits to your children in many cases.
But what happens if you have multiple children? Or if you’ve already used your GI Bill for your own education? That’s when having a backup plan matters. The good news: you have several other options to help you prepare.
529 Plans: Tax-Advantaged Education Savings
A 529 plan is one of the most popular and powerful tools for college savings today. These plans offer federal tax-free growth and tax-free withdrawals when you use the funds for qualified education expenses.
What can you use a 529 plan for? In 2025, eligible expenses include:
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College tuition and fees
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Room and board (for students enrolled at least half-time)
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Books, supplies, computers, and internet access
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Certain apprenticeship program expenses
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Up to $10,000 per year for K-12 tuition
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Up to $10,000 in lifetime student loan repayment per beneficiary
There are two types of 529 plans:
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Savings Plans: You contribute money into an investment account (managed by states or financial institutions like Vanguard, Fidelity, and T. Rowe Price). The funds grow over time based on your chosen investments.
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Prepaid Tuition Plans: Some states allow you to prepay future tuition at today’s rates for in-state public colleges.
Each state administers its own 529 plans, but you don’t have to live in a particular state to open or benefit from its plan. Be sure to review any state-specific tax incentives — many states offer deductions or credits for residents who contribute.
UGMA Accounts: Simplified Gifts for Minors
The Uniform Gifts to Minors Act (UGMA) allows you to transfer assets such as cash, stocks, or mutual funds to your child without setting up a formal trust. You manage the account as custodian until your child reaches the legal age of majority (usually 18 or 21, depending on your state).
Keep in mind:
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Earnings in a UGMA account are taxed annually, but often at your child’s lower “kiddie tax” rate (subject to annual IRS thresholds).
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Once your child reaches legal age, they gain full control of the funds, with no restrictions on how they spend them.
UGMA accounts offer flexibility but may not be ideal if you're specifically trying to lock funds in for education purposes.
UTMA Accounts: Broader Gifting Options
The Uniform Transfers to Minors Act (UTMA) works similarly to UGMA but allows you to transfer a broader range of assets — including real estate, patents, or artwork — into your child’s name.
With a UTMA account:
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You still act as custodian until your child reaches the legal age of majority (which can be extended up to age 25 in some states).
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Like UGMA accounts, earnings are taxable, and your child will eventually control the funds outright.
Both UGMA and UTMA accounts may impact your child’s eligibility for financial aid more significantly than 529 plans because the assets are considered the child’s property.
Start Early, Stay Consistent
Saving for college is one of the biggest financial gifts you can give your child, but it takes discipline, consistency, and a solid strategy. With tuition costs showing no signs of slowing down, starting early allows compounding growth to work in your favor. Even small, regular contributions can make a huge difference over time.
If you’re unsure which option makes the most sense for your family, consider speaking with a financial professional who understands the unique planning needs of military families. With the right plan in place, you’ll give your child a strong financial start — and give yourself peace of mind.
Secure Your Family's Future with AWM&T
Providing an education to your children and grandchildren can build a strong foundation for your family's future. Contact an AWM&T Relationship Manager or call 1-910-307-3500 to discuss how they can start their journey with us today.
About Us
Founded in 2012, AAFMAA Wealth Management & Trust LLC (AWM&T) was created to meet the distinct financial needs of military families. We proudly deliver experienced, trustworthy financial planning, investment management, and trust administration services – all designed to promote lasting security and independence.
We are proud to share the mission, vision, and values of Armed Forces Mutual, our parent company. We consistently build on the Association’s rich history and tradition to provide our Members with a source of compassion, trust, and protection. At AWM&T, we are committed to serving as your trusted fiduciary, always putting your best interests first. Through Armed Forces Mutual's legacy and our financial guidance, we provide personalized wealth management solutions to military families across generations.
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