GI Bill

    The GI Bill is arguably the best benefit for veterans and members of the armed forces. It helps service members pay for higher education for themselves as well as for their dependents, and is one of the top reasons young people are drawn to the armed forces.

    The first version of the GI Bill was passed immediately after the end of World War II. In addition to education and vocational benefits, it also included unemployment pay and home loan guaranty. Current versions of the bill focus solely on education and vocation benefits, continuing to change with the times.

    Through the bill, many veterans receive higher education or vocation training free or nearly free and they’re even able to pass the savings on to their children and spouses. But the pressure isn’t entirely off; veterans must now choose which program to use in order to optimize their benefits. In many cases, the difference between offered benefits is stark.

    The Original GI Bill

    The GI Bill of Rights originally passed in 1944 as the Servicemen’s Readjustment Act to support veterans after World War II. It had three key provisions: education and training, programs to help veterans get jobs, and loan guaranty for homes, businesses and farms.

    The bill was a resounding success. By 1952, nearly 2.4 million World War II veterans took out VA-backed home loans. And by the time the bill expired in 1956, nearly half of World War II’s 16 million veterans participated in education and training programs. Unemployment benefits were less successful, and less than 20% of the earmarked funds for that were used.

    Montgomery GI Bill

    Former Mississippi Congressman Gillespie V. Montgomery revamped the original GI Bill in 1984. This second version became known as the Montgomery GI Bill (MGIB) and included similar home loan and education provisions. Today, only the educational benefits are still in use, as all VA home loans are backed via the Home Loan Guaranty program.

    The Montgomery GI Bill is made up of two distinct sections: one for active duty personnel and the other for selected reserves. 

    Active Duty

    The Montgomery GI Bill Active Duty program (known as MGIB-AD or Chapter 30) is for current and former military personnel who have at least two years of active duty service.

    Eligible service members receive up to 36 months of education benefits, based on the type of training, length of service, college fund availability and whether you contributed to the $600 buy-up program while on active duty. Benefits last for up to 10 years, but the time limit can be extended.

    To be eligible for benefits under the MGIB-AD, you must meet the following requirements:
    • You are on active duty or had an honorable discharge
    • You have a high school diploma, GED or, in some cases, 12 hours of college credit
    • You fall into one of four categories that include service during specific time periods, for a certain length of time (between two and four years), and other minor qualifications

    If you enroll in this program, your monthly education benefits vary based on details like your type of training and length of service. However, general rates can give you an idea of what to expect. If you were enlisted for three years or longer and become a full-time student, you can expect $1,789 per month (as of October 2015). If you instead choose on-the-job training or an apprenticeship, you can receive $1,341 per month for the first six months, with the amount decreasing after that.

    Rates for those completing less than a 3-year enlistment would be $1,454 per month for full-time students and $1,090 for on-the-job training.

    If you opted for the $600 buy-up program, your monthly stipend may be up to $150 more.

    MONTGOMERY GI BILL – ACTIVE DUTY

    The Situation – You served on active duty for at least two years, but only five of those months were after 9/11. Now as a veteran, you plan to enroll full-time at University of California, Berkeley. You are an in-state student at the public university.

    The Solution – Choose the MGIB to receive the most benefits. You’ll receive $1,473 a month for all expenses, which works out to about $53,000 over the course of 36 months of classes.

    The Alternative – Because you were on active duty for such a short period of time, the Post-9/11 GI Bill would pay just 40% of your tuition and fees.

    In this case, that would work out to just under $3,000 per year, plus a monthly housing stipend of $853 and a book stipend of up to $200 each semester. This would work out to $44,300 in benefits over four years, or 36 months of classes.

    Selected Reserve

    The Montgomery GI Bill Selected Reserve (known as MGIB-SR or Chapter 1606) is for reserve members who are actively drilling. It requires a minimum of six years in the Selected Reserve, which includes the Air Force Reserve, Army Reserve, Coast Guard Reserve, Marine Corps Reserve and Navy Reserve, as well as the Air National Guard and Army National Guard.

    Other eligibility requirements for MGIB-SR include the following:
    • Complete Initial Active Duty for Training (IADT)
    • Have a high school diploma or equivalency certificate before completing IADT
    • Remain in good standing while serving an active Selected Reserve unit

    For eligible participants, this version of the Montgomery GI Bill provides up to 36 months of education benefits.

    In most cases, you are eligible for benefits until the day you leave Selected Reserve. However, if you are called to active duty from reserve status, your eligibility may be extended for however long you are mobilized, plus four months. For example, if you are mobilized for 12 months, you are typically eligible for these benefits for the 16 months after you leave active duty.

    If you meet the requirements for the MGIB-SR and become a full-time student, you are eligible for a monthly stipend of up to $356. If you receive on-the-job training or take on an apprenticeship, you can receive up to $267 for the first six months, with the amount decreasing thereafter.

    Yellow Ribbon Program

    There are more than 1,800 colleges in the United States that understand the cost of attending their school may exceed the amount of education benefits a veteran earned serving the country. To make more funding available, they created the “Yellow Ribbon Program.”

    Colleges enter a voluntary agreement with the Veterans Administration to waive some or all of the tuition costs that exceed the maximum Post-9/11 GI Bill reimbursement. The program largely is intended to help veterans deal with the cost of private school tuition.

    The VA will match the amount of that waiver and apply it to the veteran’s tuition. For example, if the school waived $10,000 of the tuition due, the VA would match that, giving the veteran a total of $20,000 in savings.

    To be eligible for Yellow Ribbon benefits, you must do the following:
    • Serve at least 36 months of active duty after September 10, 2001.
    • Be honorably discharged from active duty for a service-related disability and serve 30 continuous days after Sept. 10, 2011.
    • Be an eligible dependent under the Post 9/11 GI Bill based on the two conditions listed above.

    Schools that offer the Yellow Ribbon Program often limit it to a set number of veterans and may only be available on first-come-first-serve basis. Schools might also limit it to either graduate or post-graduate studies; it is best to check in with the specific school you have in mind to be sure of the benefits. 

    Vocational Rehabilitation & Employment

    The Vocational Rehabilitation & Employment program is designed to assist service-disabled veterans prepare for and maintain employment suited to their skills. If employment is not a viable option because of severe disabilities, the program assists veterans with housing that allows them to live more independently.

    To be eligible, veterans must receive an honorable — or other than dishonorable — discharge, have a service-connected disability rating of 10% with a serious employment handicap, and be determined to be in need of rehabilitation services because of an employment handicap.

    The benefits include ongoing counseling, tutorial assistance, training for job-seeking skills, medical referrals and other assistance as needed. 

    Post-9/11 GI Bill

    The most recent version of the GI Bill is known as the Post-9/11 GI Bill. It applies to individuals with active duty service on or after September 11, 2001, and provides enhanced education and housing benefits. Eligible participants can receive up to 36 months of benefits, which are payable for 15 years after you are released from active duty.

    POST 9/11 BILL

    The Situation – You served on active duty for at least 36 months since 9/11. You’re now a veteran and plan to enroll full-time at Columbia University, one of the best — and most expensive — schools in the country.

    The Solution – Choose the Post-9/11 GI Bill to get the most benefits. This will pay the maximum $17,500 per year for tuition and fees, which is less than half the total in this case. You will also receive a monthly housing stipend of $2,754 and a book stipend of up to $500 per semester. Over four years, or 36 months of classes, you’d receive $173,100 in benefits.

    The Alternative – The Montgomery GI Bill would give you only $1,473 per month, with no other benefits. That’s less than your housing stipend under the Post-9/11 GI Bill. During your academic career, this would be just $53,000.

    To be eligible for benefits under the Post-9/11 GI Bill, you must have served at least 90 days after September 10, 2001. You can also meet eligibility requirements if you served at least 30 days and were honorably discharged with a service-connected disability.

    If you take advantage of the bill, your benefits can include the following:
    • Full tuition and fees if you attend a public, in-state school, paid directly to the school
    • As of 2016, up to $21,970 per academic year for tuition and fees if you attend a private or foreign school, paid directly to the school (There are exceptions in Arizona, Michigan, New Hampshire, New York, Pennsylvania, South Carolina and Texas: if the annual amount is not enough, the Yellow Ribbon Program can help cover additional needs)
    • A monthly housing allowance, which is based on the location of your school
    • An annual stipend of up to $1,000 for supplies and textbooks for college
    • A one-time rural benefit payment of $500 if you relocate from a rural area in order to attend school

    The actual amount of benefits you receive depends largely on how long you served. To be eligible for full benefits, you must have served for at least three years. For shorter lengths of service, you’ll receive a percentage of the full benefits.

    Eligibility for Post-9/11 GI Bill

    If you served at least 90 days of active duty after Sept. 10, 2001 and received an honorable discharge, you are eligible for Post-9/11 GI Bill benefits. To receive full benefits, you must serve three years of active duty after Sept. 10, 2001.

    You also could receive 100% of maximum benefits if you served 30 continuous days on active duty and were discharged because of a service-related disability.

    Other qualifying categories for the Post-9/11 GI Bill include the following:
    • Full tuition and fees if you attend a public, in-state school, paid directly to the school
    • From 30–36 months – 90% of maximum benefits
    • From 24–30 months – 80% of maximum benefits
    • From 18–24 months – 70% of maximum benefits
    • From 12–18 months – 60% of maximum benefits
    • From 6–12 months – 50% of maximum benefits
    • From 90 days to six months – 40% of maximum benefits.

    Transferability

    The Department of Defense determines whether eligible service members can transfer Post-9/11 GI Bill benefits to spouses or children. If the DoD approves a benefits transfer, the beneficiaries must apply for them through the Veterans Administration.

    Spouses and children of eligible members can receive all or some portion of unused Post-9/11 GI Bill benefits, but must sign up with the Defense Eligibility Enrollment Reporting System.

    The option to transfer benefits is available to members of the armed forces who have at least 10 years of service in the armed forces (active duty and/or Selected Reserve).

    Spouses may use the benefits immediately. Your child can only receive benefits after you have completed 10 years in the armed forces. Your child is eligible for the monthly housing allowance and the stipend for books and supplies, regardless of whether you are on active duty. Your child will not have a 15-year expiration but cannot collect benefits after the age of 26. 

    Eligible for Both? Here’s How to Choose

    Many current and former members of the armed forces meet the eligibility requirements for both the Montgomery GI Bill and the Post-9/11 GI Bill. If you meet both sets of requirements and would like to collect benefits, you’ll have to choose to accept benefits through one bill or the other.

    Under normal circumstances, your decision is permanent. In some cases, however, you may be able to switch from the MGIB to the Post-9/11 GI Bill.

    How do you choose which bill will provide you with the best benefits? In some scenarios, the choice is easy, or you may not have a choice at all.

    Here are some examples:
    • If you have not served in the armed forces since September 10, 2001, you are ineligible for the Post-9/11 GI Bill and can collect education benefits through the MGIB only.
    • If you plan to pass benefits on to a spouse or dependent, you must choose the Post-9/11 GI Bill as the MGIB does not allow transfers.
    • If you plan to use benefits for on-the-job training rather than for school, you must choose the MGIB as the Post-9/11 GI Bill only offers assistance for college or university education.
    • If you are already out of the armed forces and did not sign up for the MGIB, you’ll only be able to take advantage of the Post-9/11 GI Bill, as the MGIB requires you to sign up and pay while you are on active duty.

    Most situations are more complex and require careful comparison between the two benefits. Although the final decision depends on your particular situation, it’s good to get an idea of what to expect.

    Combining Benefits

    If you’re eligible for benefits under the MGIB and the new GI Bill, you are entitled to up to 48 months of benefits, which is an additional 12 months. The benefits must be split between the two versions, as you are still only eligible for a maximum of 36 months’ worth of benefits under any one version.

    You must use all MGIB benefits first in order to be eligible for the additional 12 months of benefits under the Post-9/11 GI Bill. This is particularly helpful if you expect to be in school for more than 36 months, such as for a lengthy undergraduate program or for graduate studies.

    If you use less than 36 months of benefits under the MGIB before switching to the Post-9/11 GI Bill, you are only eligible for benefits for the remainder of the 36 months, and you forfeit your right to an additional 12 months of coverage.

    Other Options

    Besides the GI Bill and its variants, you and your family have additional options when it comes to paying for higher education, including:
    • The Reserve Educational Assistance Program(REAP) – for members of the reserves who were called up to active duty for at least 90 days after September 11, 2001
    • Survivors and Dependents Educational Assistance(DEA) ­– offers up to 45 months of education benefits for survivors and dependents of certain veterans
    • The Veterans Educational Assistance Program(VEAP) – is for veterans who bought into the program, enabling them to receive up to 36 months of benefits.
    • The Veterans Retraining Assistance Program(VRAP) – is for older, unemployed veterans who are not eligible for other education benefit programs through the VA.

    If you’re still unsure about which program is right for you, visit the official website of the GI Bill to find more information. Take your time choosing a program and review all your options carefully. When these programs are used properly, they can save you money and cut down on total student loan debt.

    Bill Fay

    Bill Fay is a journalism veteran with a nearly four-decade career in reporting and writing for daily newspapers, magazines and public officials. His focus at Debt.org is on frugal living, veterans' finances, retirement and tax advice. Bill can be reached at bfay@debt.org.

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