How Financial Aid for Veterans Works

The GI Bill was introduced back when these guys served in the military. These days, it's more robust than ever.
The GI Bill was introduced back when these guys served in the military. These days, it's more robust than ever.
Tim Bieber/Getty Images

The idea that the United States should repay the service of its soldiers hasn't been around forever. In fact, veterans got $60 and a train ticket after returning home following World War I. When the Great Depression struck, veterans demanded help and in 1944, the government answered with the GI Bill of Rights.

The GI Bill was fairly radical for its time. College was seen then as a place where America's rich elite went, not soldiers returning from war. But the GI Bill greatly changed that concept and vastly opened higher education to the American public. It's credited with helping to contribute to the post-World War II economic boom by greatly widening the pool of educated professionals in the American work force.


In August 2009, the GI Bill got a makeover. The Post-9/11 GI Bill is considered to contain one of the most robust education benefits packages the U.S. military has ever offered its veterans or troops. The bill expands payments for costs associated with school. It more resembles real financial aid than ever before -- payments are made to colleges rather than to the veterans themselves. And the potential for getting a world-class private education is within reach of veterans with the accompanying Yellow Ribbon Program (more on that later).

But the Post-9/11 Bill didn't come into effect until 2009 and it retroactively covers soldiers who enlisted after September 2001. For soldiers who enlisted after August 2009, the Post-9/11 Bill is the only option. But for the tens of thousands of soldiers who have Montgomery Bill benefits available have a choice: keep the old benefits or switch to the new ones.

There are a lot of factors to consider; this article is meant to provide a rough outline of the more important ones. If you're a veteran or a family member of a veteran seeking financial aid based on military service, be sure to contact your local Veterans Affairs office for more guidance.

In this article, we'll look at the Post-9/11 Bill and compare it to other GI Bill coverage. We'll also look at benefits for family members as well. Read the next page to find out some of the key points to the Post-9/11 GI Bill.



The Post-9/11 GI Bill

If these guys decide to go back to Texas A&M for their Masters degrees, they're going to have a lot of choices to make.
If these guys decide to go back to Texas A&M for their Masters degrees, they're going to have a lot of choices to make.
Getty Images

In its most recent incarnation, the GI Bill has been expanded tremendously. The Post-9/11 GI Bill came into effect in August 2009, and retroactively includes all service members who were active at least 90 days since September 10, 2001. These benefits are also extended to National Guard and Reserve members who were active for at least 90 days during the time requirements. It extends the customary 10 years from separation of service for use of the benefits to a full 15 years out after discharge.

This new version of the GI Bill covers a tremendous amount of the expenses associated with a secondary education. A frugal veteran can actually make it entirely through school without spending a penny, if he or she meets the qualifications.


The Post-9/11 GI Bill covers tuition and fees based on the highest cost of a public school in the state where the veteran plans on attending. This restriction doesn't include active duty members who also attend school, but veterans who have already been honorably discharged can receive additional money through the Yellow Ribbon Program. This program applies to participating schools that agree to waive up to 50 percent of the additional costs and fees that exceed the state restriction. The VA will match what the school waives, up to the other 50 percent [source:].

In addition to tuition, the GI Bill also offers additional stipends to help cover other costs associated with school. A stipend of up to $1,000 a year goes toward books. There's also a housing stipend of as much as $2,700 a month and a one-time $500 moving allowance if you relocate from a rural area to school.

The GI Bill also allows soldiers to transfer their education benefits to their spouses or children, so long as they agree to or carry out a 10-year enlistment in the military. We'll look at how financial aid can benefit family members more later on. But first, let's take a look at some of the other financial aid that's available for veterans.


The Montgomery GI Bill

Soldiers who enlisted prior to August 2009 will have to choose between the Montgomery Bill and the Post-9/11 Bill.
Soldiers who enlisted prior to August 2009 will have to choose between the Montgomery Bill and the Post-9/11 Bill.

Since its inception in the 1940s, the GI Bill has helped put millions of veterans through school. It has perhaps never been as robust as it is in its Post-9/11 incarnation. The Veterans Administration is only accepting applications for the Post-9/11 Bill; if you have Montgomery Bill coverage, you can switch over to Post-9/11 enrollment (the VA will even reimburse your $1,200 enrollment contribution from the Montgomery Bill). But not so fast: The Post-9/11 bill isn't a perfect fit for everyone. You may want to figure out which bill is right for you.

For example, the Montgomery GI Bill is paid in a set monthly rate directly to the veteran. As of August, 2008, that rate was set at $1,321 per month. For some veterans, this may be more than the cost of school and other expenses. Since the Montgomery benefit is paid directly to the veteran, he or she can pocket the difference. The Post-9/11 benefit can pay out much more for veterans who meet the qualification criteria, but checks for tuition and fees are paid directly to the school and won't exceed the total cost.


Since the Post-9/11 benefit payments are made directly to the school, colleges and lenders will take this into account when considering what amount of financial aid and student loans may be available for the veteran. This is not the case with the Montgomery Bill. A veteran can still apply for scholarships and student aid like any other student; a full ride in grants and scholarships would mean that the veteran's Montgomery Bill benefit checks are extra monthly income rather than payment for school. This is something to consider when calculating what benefits you're qualified for under the Post-9/11 Bill. If you're not eligible for the housing stipend and you've got grants and scholarship money available, then the Montgomery Bill may be the best for you.

Keeping the Montgomery Bill is also wise if you're unsure of whether you plan on transferring your benefits to your spouse or children. The Post-9/11 Bill requires that the soldier transfer benefits while on active duty; the Montgomery Bill allows transfer during the 10-year period the benefits are in effect. You may also want to keep the Montgomery Bill if you participated in the $600 buy-up. The additional $5,400 in aid won't transfer to the GI Bill.

Read the next page to learn about financial aid for Reserve veterans.


Reserve Educational Assistance Program (REAP)

Veterans of the Armed Forces' Reserves can pay for college with financial aid through the REAP benefit.
Veterans of the Armed Forces' Reserves can pay for college with financial aid through the REAP benefit.
Frank Rossoto/Stocktrek/Getty Images

As part of the Defense Authorization Act of 2005, Congress acknowledged the debt the country also owed to the Reserve troops called up to active duty during the wars in Afghanistan and Iraq. As a result of this acknowledgement, it created the Reserve Educational Assistance Program (REAP).

Reserve and National Guard soldiers who've served 90 days or more of active duty since September 2001 are eligible for educational assistance that resembles the Montgomery GI Bill. Depending on the amount of time served, anywhere from $528 to $1,056 per month is sent directly to the veteran as benefits. This represents a 20 percent increase over the original amounts provided by the REAP bill [source:].


The benefits are also retroactive, so any member of the National Guard or a Reserve unit may be eligible if he or she served for 90 days or more since September 2001. In total, the REAP benefit can mean as much as $38,000 for a veteran of the Reserves or National Guard who's looking to further his or her education.

But what if you haven't served, but your parent or spouse did and tragedy befell him or her? The Veterans Affairs Administration also offers financial aid for some family members as well. Read about these on the next page.


Financial Aid for Veterans' Families

The family members of veterans disabled in the line of duty also have financial aid for school extended to them.
The family members of veterans disabled in the line of duty also have financial aid for school extended to them.
Robert E. Daemmrich/Getty Images

In addition to providing financial aid directly to veterans, the U.S. government also extends benefits to the families of veterans under some circumstances as well.

The Veterans Administration provides full financial aid for 45 months of schooling in higher education and vocational training for sons and daughters ages 18 to 26 of veterans. Under the purview of the Survivors' and Dependents Educational Assistance Program (DEA), the children of a veteran who has been killed in the line of duty or permanently disabled in service or who has died while debilitated by a service-related disability can look forward to a token of repayment for their parent's sacrifice in the form of tuition assistance from the government [source: VA].


The DEA also allows children of soldiers who are missing in action or who have been captured by a hostile force or government in the line of duty to be eligible as well. As long as death, capture, a disability or permanent injury befell the soldier parent during active duty, the DEA should apply to his or her children.

What's more, the spouses of soldiers who fall into these categories are also eligible for assistance with correspondence courses. For spouses, the period of eligibility extends 10 years following the death of the solider, or 20 years from the day the soldier was rated as permanently disabled [source: VA]. Sons and daughters can file for an extension for the DEA benefit that covers them until their 31st birthdays.

As you can see there is a lot of information to consider and decisions to make when evaluating what type of financial aid best serves veterans. Before making any final commitments, contact your Veterans Affairs office.

Until then, read the next page for more helpful information and links on financial aid.


Lots More Information

Related HowStuffWorks Articles

  • FinAid. "Financial aid for veterans and their dependents." Accessed February 2, 2010.
  • "GI Bill FAQ." Accessed February 4, 2010.
  • "New GI Bill overview." Accessed February 2, 2010.
  • "Reserve Education Assistance Program (REAP)." Accessed February 4, 2010.
  • "The Yellow Ribbon Program Explained." Accessed February 3, 2010.
  • "Veteran GI Bill user's guide." Accessed February 4, 2010.
  • U.S. Department of Veterans Affairs. "Benefit comparison chart." November 6, 2009.
  • U.S. Department of Veterans Affairs. "Born of controversy: the GI Bill of Rights." November 6, 2009.
  • U.S. Department of Veterans Affairs. "Education benefit payment rates." September 30, 2009.
  • U.S. Department of Veterans Affairs. "Survivors' and Dependents' Educational Assistance Program (DEA)." November 6, 2009.
  • U.S. Department of Veterans Affairs. "The Montgomery GI Bill - active duty." March 2007.