Making the Most of the New Post 9-11 G.I. Bill

By FPA member Phil Dyer, CFP®, RLP®, CPCC

Last Updated: March 8, 2010

Part 1 of 2

There is no question that the new Post 9-11 G.I. Bill represents a game-changing educational opportunity for currently serving, recently separated and recently retired service members. The benefits have been updated to better meet the needs of today's students and cover not only tuition, but also provide a housing stipend and an allowance for books and supplies. In this two-part series, we will cover several key issues on how to make the most of the new Post 9-11 G.I. Bill benefits, including:

• The basics service members need to know
• Making the Montgomery G.I. Bill (MGIB) vs. Post 9-11 G.I. Bill decision
• How transferability works
• Crafting a post 9-11 G.I. Bill action plan
• Post 9-11 G.I. Bill resources

The Basics Service Members Need to Know

The primary qualification for the Post 9-11 G.I. Bill is qualifying for the Title 10 Active Duty military service on or after September 11, 2001. Title 10 Active Duty means Active Duty military, as opposed to National Guard or Reserve soldiers. Only Active Duty time counts towards qualifying for the basic Post 9-11 G.I. Bill. Drill time and annual training for National Guard and Reserve service members don't count. To meet the minimum qualification, you must either:

• Have 90 days of aggregate qualifying Title 10 Active Duty service or,
• Have 30 days of continuous qualifying Title 10 Active Duty service and be separated due to a service-connected disability.

The length of the education benefit is proportional to the amount of qualifying Post 9-11 Title 10 Active Duty time served. For instance, the minimum of 90 days allows the service member 90 days worth of educational benefits, while three years of qualifying service grants the maximum benefit of 36 months of full-time educational benefits. Use the following chart to determine benefits:

NOTE: Unlike the older MGIB, Service Academy graduates and Reserve Officers' Training Corps (ROTC) scholarship recipients qualify for the Post 9-11 G.I. Bill benefit, but their initial service obligation does not count towards their qualifying time. For example, a Service Academy graduate with a five-year initial obligation would need to serve eight full years (5+3) to qualify for the maximum G.I. Bill benefit. Of note: MGIB refers to the Montgomery-Era G.I. Bill, the predecessor to the new Post 9-11 GI Bill.

The basic educational benefit is paid at the highest in-state public university tuition/fee rate in which the student is attending school, plus a housing stipend equal to the E-5 with dependents rate for the zip code of the school and a $1,000 per year books/supplies stipend. The tuition benefit is paid directly to the school while the housing and books/supplies stipend is paid to the student.

In addition to the highest in-state tuition rate provided under the basic educational benefit, many private colleges and universities have teamed up with the Veterans Affairs (VA), through the "Yellow Ribbon" program, to help bridge the gap between the basic benefit and the higher cost to attend these institutions. Each participating university handles the Yellow Ribbon program differently, but this partnership makes it possible for many students to attend more prestigious private schools. To use the Yellow Ribbon program, the service member must qualify for the 100 percent benefit rate.

Learn more about the Yellow Ribbon program — including participating schools.

Several additional benefits are possible under the new G.I. Bill, including: a one-time $500 "rural relocation" allowance, up to $2,000 for a one-time licensing/certification exam and up to $100 per month for tutorial services. One key difference is that the Post 9-11 G.I. Bill benefits are only good for Institutions of Higher Learning (IHLs) that grant a degree — certificate programs, vocational training and non-degree programs do not currently qualify (unless you are transferring Title 30 MGIB benefits). Finally, the Post 9-11 G.I. Bill education benefits are good for up to 15 years after separation or retirement, as opposed to 10 years for the MGIB.

Important Note: Benefits for Active Duty service members (and spouses, if the benefit is transferred) work a bit differently. First, there is currently no tuition/fee cap for Active Duty service members and Active Duty spouses, meaning they can attend any IHL regardless of cost. However, they do not receive the housing or books/supplies stipends.

Making the MGIB vs. Post 9-11 G.I. Bill Decision

If a service member has MGIB (or other educational benefits such as Veterans Educational Assistance Program (VEAP), Reserve Education Assistance Program (REAP) and the Vietnam-era G.I. Bill) and separately qualifies for the Post 9-11 G.I. Bill, they have an important decision to make! They may elect to transfer remaining education benefits — if any — from these programs to the Post 9-11 G.I. Bill. This is an irrevocable decision, however, so they should do their research before switching over.

At first glance, the Post 9-11 G.I. Bill seems to be the better alternative, but there are numerous issues to consider, including:

• How much of the MGIB has already been used
• What program of study they are pursuing
• If they are nearing the end of their MGIB eligibility

As a general rule, if they have used none (or very little) of the MGIB benefits or if their primary concern is transferring it to their spouse and/or children, then electing the Post 9-11 G.I. Bill benefit is probably best. On the other hand, if the service member has used 50 percent of the MGIB or more, they may be better off finishing out their MGIB and then picking up the 12 months of Post 9-11 G.I. Bill benefits that are authorized for those that have exhausted their MGIB benefits and separately qualify for Post 9-11.

To help make this decision, the service member should first confirm with the VA how much of their MGIB benefits are remaining and review the case studies on the VA Web site.

View the new Step-by-Step Decision Tool the VA has recently implemented:

One key thing to remember is that the MGIB covers a broader range of educational choices than the Post 9-11 G.I. Bill and if they transfer their MGIB benefits to Post 9-11, that broader eligibility transfers with it. Once they make the decision to move their MGIB benefits, in cannot be undone, so do your homework!

Please keep an eye out for the next installment where we will cover the key issues of transferability and creating a Post 9-11 G.I. Bill action plan. We will also share important resources to access the latest information.

FPA member Phil Dyer, CFP®, RLP®, CPC, is a 1985 graduate of the United States Military Academy at West Point and former Army Captain. He has been a fee-only financial planner since 1996 and is the founder and principal of Dyer Financial Advisory in Towson, MD. He also serves as the Deputy Director of Financial Education for the Military Officers Association of America.