<p>I’m kinda confused about the money situation while at the Academy. Is it possible to pay for things such as the laptop and uniforms upfront instead of taking out the Air Force loan? I have a college savings account which has grown over the years and I am trying to figure out how best to use that money for educational expenses.</p>
<p>Anyone have any advice on this topic?</p>
<p>If you are referring to a college savings plan, such as a 529 or something like that, which must be spent on college expenses. Your out of luck. USAFA does not qualify under those plans.</p>
<p>If you are speaking of just regular savings you have saved for college, that are not restricted. Well, I would say keep saving them. The loan for computers etc is interest free, so there is no cost to use it.</p>
<p>KBD they changed things for your class. You are going to be responsible for a lot more financially then the classes before you. They recently sent out some info about how the pay system will work. I believe you will have what used to be known as a pay advance to cover initial expenses like Uniforms, and this will be deducted from your full cadet pay over time. Previously this was called a majic money account and USAFA held pay over the first couple of years. Under the new system I believe you will be able to immediately apply your scholarships and reduce the amount of the pay advance, but don't quote me on that.</p>
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I have a college savings account which has grown over the years and I am trying to figure out how best to use that money for educational expenses.
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<p>I <em>think</em> you can use this for grad school. I think it would be kind of nice to have a tidy sum tucked away - even if you only took a course or two at first.</p>
<p>there's some type of rule... some education IRAs can be used, some cant. if it's just a savings account, yeah use it. but like they said, things are gonna be different starting w/ our class</p>
<p>I had my financial planner do some research on 529 plans and USAFA. The comment above that the Academy is not a "qualified institution" for 529 plans is absolutely correct. However, there is a clause in the tax law about service academies that allows you to withdraw funds from a 529 plan -- equivalent to the value of the USAFA education -- without paying the tax penalty. Hence, you can withdraw $300,000 plus from the 529 plan and pay tax on the portion of the withdrawal that represents the earnings above your original investment.</p>
<p>I just withdrew $8,600 from S's 529 plan so that he can re-pay the interest-free loan that he will receive. (I was informed during orientation that the cadets can re-pay that loan at any time.) That way, S won't be burdened with the debt. </p>
<h2>See comments below:</h2>
<p>"It does not appear that any of these costs (laptop, uniform, etc.) can come out of the 529 plan. The reason: while all of the expenses do appear to be "qualified education expenses", the Air Force Academy is not a qualified educational institution. We did some digging when we came across this rule - we went to Savingforcollege.com</a> - The internet guide to funding college and Section 529 college savings plans.. This website confirms what we saw - none of the US Academies (Air Force, Naval Academy, etc.) are qualified education institutions. </p>
<p>There is, however, a provision that allows you to take money out of the 529 plan penalty free made on account of attendance of "the designated beneficiary at a US military academy". The withdrawal itself is subject to regular tax (principal amounts originally invested come out tax free, earnings while invested are subject to tax), but not the 10% penalty. This exception applies only to the extent that the amount of the distribution does not exceed to costs of advanced education (this number can be obtained from the academy).</p>
<h2>So... while the costs you specifically questioned are not covered, there does appear to be a way to get the money out of the plan to cover the amount of the loan. The earnings on the 529 plan investment end up being taxed as if it were any regular investment, but you can still get the money out."</h2>
<p>Hope this helps!</p>
<p>Could someone explain that "new rule" again? I think I might get it, but I'm not a financial expert.</p>
<p>while we're on this topic; i've got a Coverdell education savings account. i talked to my family's financial advisor and he didnt seem to know whether or not i could use it for the academy.. any facts from anyone who's more "in the know" ?</p>
<p>Thanks everyone for your help!</p>
<p>The link below provides more detailed information on 529 and Coverdell education plans for service academy appointees</p>