New GI Bill Becomes Law
Congress passed it. President Bush signed it. Now, the federal government has a year to get a landmark post-9/11 GI Bill functioning for the benefit of active duty members, frequently deployed Guard and Reserve members, and veterans who have had active duty service since Sept. 11, 2001.
The program will be set up jointly by the Department of Defense and Department of Veterans Affairs. It could affect 2.6 million uniformed military personnel and a chunk of the nation’s 30 million veterans. The program nearly doubles the value of GI Bill education benefits for a new generation.
The Bush Administration had worried that the bill would adversely affect retention. However, President Bush came on board after Congress agreed to add a $1 billion-a-year transferability feature as a new retention tool.
The Post-9/11 Veterans Education Assistance Act of 2008 got the Presidential signature on June 30.
The program could benefit anyone who served at least 90 consecutive days on active duty since Sept. 11, 2001. It will not take effect until Aug. 1, 2009, but the package included an immediate 20 percent increase in Montgomery GI Bill benefits to ensure that veterans and service members attending college or vocational training this fall see some instant relief from rising education costs.
The total package is projected to cost $62 billion in its first 10 years. When the Senate refused to approve higher taxes to pay for the new GI Bill, the full Congress this election year simply decided to ignore a budget rule that new entitlements must be paid for, either through higher taxes or reductions in current entitlement spending.
Lead architects of the bill were Sen. James Webb (D-Va.) and Sen. Chuck Hagel (R-Neb.).
Opponents claimed a World War II-style benefit would cause sharp drops in re-enlistment rates. The two sponsors denied this, claiming departures would be offset by a boost in the number and quality of new recruits. Webb and Hagel argued that a generation fighting multiple tours to Iraq and Afghanistan deserved their own education benefit like past wartime generations, whatever the cost in dollars or challenges posed to the volunteer force.
The transferability feature, pushed by Sen. John McCain (R-Ariz.) and Sen. Lindsay O. Graham (R-S.C.), would allow long-serving members to pass unused benefits to spouses or children.
Rundown on GI Bill Changes
• MGIB Improvements. Effective Aug. 1, 2008, MGIB and Reserve MGIB benefits climbed by 20 percent. For full-time students, that meant monthly payments jumped from $1,101 to $1,321. After this, benefits will be adjusted automatically each year to match the national average increase in four-year public college costs.
A $1,200 “buy-in” requirement remains for those who stay in the MGIB program. For those who transfer into the post-9/11 plan, the $1,200 will be refunded in the form of an additional stipend after all post-9/11 benefits are used up. Individuals who don’t use all of their post-9/11 benefits will not see their MGIB contribution refunded.
• Post-9/11 GI Bill. On Aug. 1, 2009, the alternative to MGIB becomes available to eligible persons. Active service since 9/11 from 90 days up to six months entitles a member to 40 percent of the new benefit. Longer active service delivers a higher percentage up to a maximum of 36 months’ benefits (four years of college) in return for 36 months on active duty since 9/11.
Reserve and Guard members who have been mobilized multiple times will be able to earn the same education benefits as active duty peers. The full post-9/11 benefit also is payable to members separated for service-related disabilities after 30 consecutive days of active duty.
There are three payments: The first covers tuition and fees at any college up to a ceiling set to equal tuition and fees at the most expensive public college or university in the state. The second payment is a monthly living allowance equal to the local rate of Basic Allowance for Housing near the school for a married enlisted member in pay grade E-5. Students will get this money from the VA regardless of whether they live in a dorm or off campus. It will not be paid to active duty members, or for online education programs, or to students enrolled in too few classes. They must be at least “half-time” students. The third payment will be a $1,000 a year stipend for books and supplies.
Federal officials estimate the new post-9/11 benefits will have an average starting value of about $2,100 a month, compared to $1,329 under MGIB. The value could go significantly higher. To entice private colleges to participate, the Post-9/11 GI Bill includes a “yellow ribbon” provision. This authorizes the VA to pay half of tuition costs and fees charged by private schools, above the most costly public college yardstick, if the private college agrees to waive the other half of excess tuition and fees. This could make every college or university in the country financially affordable to veterans able to meet their academic standards.
MGIB, which will remain an alternative to the post-9/11 plan, could be the better deal for some, particularly students attending college where rents are low and tuition costs are modest or even waived entirely for in-state veterans. With MGIB, veterans are paid benefits directly and can pocket money in excess of tuition, fees, or training costs.
Also, post-9/11 benefits are intended primarily to cover the cost of earning a college degree. The MGIB will continue to cover a broader array of education and training programs.
The new GI Bill will be available to officers with post-9/11 service, including graduates of service academies and ROTC scholarship recipients who were ineligible for the MGIB.
Transferability. This retention tool will not be offered to any veteran already retired or separated. It will only be available to members on active duty or in drill status on or after Aug. 1, 2009. This date then will be the earliest that any post-9/11 benefits can be transferred to family members.
Transferability will be available only to members with at least six years of service who agree to serve at least four more years. The Secretary of Defense is given flexibility to change those requirements, or even to elect not to offer transferability if it proves to be an ineffective tool versus other measures that could be used to retain quality careerists.
There are still some loose ends, including how to handle the four-year added service commitment to win transferability for careerists bumping up against high-year tenure rules. Longer careers might not be desirable for managing overpopulated skills.
The new GI Bill represents a significant gain for eligible members and veterans, and a far more valuable educational benefit than previously envisioned for an all-volunteer force.
Defense officials still predict lower retention rates as a result of the new GI Bill. However, they also sound increasingly excited about likely improvements to the number and quality of service recruits. “It is a very attractive incentive package, there’s no question about that,” said Curtis L. Gilroy, director of accession policy for the Department of Defense.
The VA posted an explanatory pamphlet at www.gibill.va.gov. It also has a toll-free number, 1-888-GIBILL1, for questions.
Help for Mortgage-Strapped Vets
Congress and Veterans Affairs are striving to help thousands of service members and veterans who face foreclosure on their homes as a result of the US credit crisis.
In the recent easy-credit years, VA’s no-down-payment loans had lost favor with home-buying veterans who sought loans beyond what the VA would approve. Veterans were tempted by teaser loans and relaxed credit checks.
The VA Loan Guaranty program avoided the subprime loan debacle. However, said Rep. Bob Filner (D-Calif.), chairman of the House Veterans’ Affairs Committee, the program just became “irrelevant,” particularly in his home state where only 2,000 VA home loans were issued last year.
The ceiling on VA loans, now $417,000, just didn’t cover many new mortgages in California or other states with soaring housing markets. VA loan rates and fees often were seen as less competitive. Though that trend seems to have bottomed, Filner and fellow lawmakers want to see VA home loan reforms.
The Helping Our Veterans To Keep Their Homes Act, pushed by Filner, would raise the maximum VA loan from today’s $417,000 to $730,000; eliminate a requirement that veterans have 10 percent equity in a home to be able to refinance through a VA loan; and lower VA fees by moving to a flat fee of one percent.
Sen. Daniel K. Akaka (D-Hawaii), chairman of the Senate Veterans’ Affairs Committee, also is moving a bill to raise the loan ceiling to $730,000. He noted that veterans in February were left out of the Economic Stimulus Act of 2008, which raised ceilings identically for other federal home loan programs. Akaka proposes only lowering the equity requirement for a veteran to refinance a mortgage with a VA loan, from 10 percent down to five.
In 2004, when the VA loan maximum was $240,000, Congress indexed that amount to rise automatically with the single family home loan limits used by Freddie Mac and Fannie Mae to fuel the broader mortgage market. Congress, however, failed to index VA loan guarantees for refinancing of non-VA-backed loans. This has left many veterans unable to use VA refinancing to retire subprime non-VA-backed mortgages larger than $144,000.
Rep. Steve Buyer (R-Ind.), the top Republican on the Veterans Affairs’ Committee, has a bill (HR 4539) to raise the ceiling for VA-backed loans for refinancing to $417,000.
Until that becomes law, most veterans with shaky subprime loans aren’t able to use VA refinancing. A $144,000 loan ceiling, a 10 percent equity requirement, and falling home values, explained Judith A. Caden, director of the VA Loan Guaranty Service, means “we really can’t help very many veterans in that position.”
VA has a toll-free number (1-877-827-3702) that automatically directs callers to the nearest of nine VA regional loan centers for counseling.