ACE loan

[SRJ]

Hello,

Incoming plebe here. A question about the ACE loan:

My parents have kept a 529 plan for me and said they are completely willing to use it to pay off my ACE loan. I believe the loan is somewhere around 8.5k, but the academy says they can receive up to 17.5k. My parents said they will pay the 17.5. If we end up doing this, will this mean that close to nothing will be deducted from my held pay?

I was talking to a midshipman the other day, and I asked if some midshipman graduate with a good amount of money in their accounts, but she said none do, even when I specified in the case of midshipman that pay off the 17.5k. If that much money is paid off, wouldn’t it make sense to have at least several grand saved up from four years of pay?

Any advice or details would be great.

John

 

[Capt MJ]

Hello,

Incoming plebe here. A question about the ACE loan:

My parents have kept a 529 plan for me and said they are completely willing to use it to pay off my ACE loan. I believe the loan is somewhere around 8.5k, but the academy says they can receive up to 17.5k. My parents said they will pay the 17.5. If we end up doing this, will this mean that close to nothing will be deducted from my held pay?

I was talking to a midshipman the other day, and I asked if some midshipman graduate with a good amount of money in their accounts, but she said none do, even when I specified in the case of midshipman that pay off the 17.5k. If that much money is paid off, wouldn’t it make sense to have at least several grand saved up from four years of pay?

Any advice or details would be great.

John

Wade through this link with a mental highlighter:
https://www.usna.edu/Admissions/_files/documents/BUDGET-BOOK.pdf

As always, read every page, link and drop-down to find answers at the primary source, USNA.edu

Good that you are thinking about this - the Budget Books don’t change much from year to year.

 

[Dadof2]

Definitely follow Capt MJ's advice and get the information from the source.

For some additional, unofficial information - my DD is a Firstie. We paid off her ACE loan with 529 money. In a nutshell, you won't see more pay each month initially (especially as a Plebe) as only a small amount is released to you each month and the rest is held pay. As years go by you will get a bit more released monthly pay and I think a few periodic releases of a chunk of held pay - I am not sure of the details on this since I am not at all involved with DD's pay. If your parents pay off your ACE loan with 529 money your held pay is not going toward paying off the loan and you should end up with a decent chunk of money by the time you graduate if you are good with money. There are other fees separate from your ACE loan that will still come out of held pay.

If your parents do this for you this is a great opportunity to start to set yourself up financially for the future. Lots of smart things you could do like invest in an IRA, put aside some money for future moves and housing costs, etc. Talk to your parents or a financial planner and be smart with the money.