Have you ever made a college savings goal but didn’t hit it because you forgot to transfer the money from your checking account? Did you also find that there was not as much money in that account in the end because you used the funds for something else? This happens to all of us. Fortunately, there is an efficient and often free way to help you stay honest with your college savings goals - direct deposit.
Direct Deposit is an automatic electronic payment of wages or excess financial aid funds to a designated account. In fact, many employers, pension administrators, and even government public benefit administrators promote direct deposit. This is the fastest way to receive these funds, but it can also be the fastest way to transfer savings.
It’s typically really easy. You set up a direct deposit once with the payer on a recurring basis. You get to determine the frequency like weekly, bi-weekly, monthly, quarterly, or annually. Then, it all happens automatically based on your request.
Most banking accounts want the following information to set up a direct deposit:
- The name of your bank, credit union, or financial services company
- Your account type – savings, 529 plan, other investment fund
- Your account number
- Depending on the type of account, you may also need the bank’s ABA routing number or voided check
Many banks have moved to online direct deposit request forms while others still you paper documents. For those with online forms, you typically have 24/7 access to request for changes or cancellations.
Know the rules for making adjustments to direct deposits. Many banks, credit unions, and financial services companies have rules that changes or cancellations will be processed in the following business day or any day but Saturdays or holidays. Read the fine print to ensure you know your options for changes.
Colleen MacDonald Krumwiede is a financial aid expert with over a decade of financial aid experience at Stanford GSB, Caltech, and Pomona College and another decade at educational finance and technology companies servicing higher education. She guides go-to-market strategy and product development at Quatromoney to transform the way families afford college.