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GI Bill Changes Await President’s Signature

January 3, 2011

Widely varying state maximums for tuition and fee benefits under the Post-9/11 GI Bill will be eliminated under legislation passed in the waning days of the 111th Congress. In a surprise to some who had been following its progress, the Post-9/11 Veterans Educational Assistance Improvements Act of 2010 (S 3447) moved rapidly through both houses in mid-December. The bill passed in the Senate by unanimous consent on December 13, and in the House by a vote of 409 - 3 on December 16. President Obama is expected to sign it in early January. Most of the changes are scheduled to take effect on August 1 or October 1, 2011.

In addition to the establishment of a nationwide cap on tuition and fee benefits at $17,500 for veterans attending nonprofit and for-profit institutions, the legislation makes a number of other changes to eligibility criteria for veterans, covered programs, and payment of benefits. Notably, changes to housing benefits will help some veterans but reduce payments to others. A summary of changes is provided below. NACUBO has also prepared a compilation showing the amendments in context of the existing statutory language.

Even before the bill was signed, there was talk in Washington of a subsequent "corrections" bill. In the rush to move the bill along during the lame duck session, the Senate bill was passed "as is" by the House, but many stakeholders--including representatives of colleges and universities--preferred certain provisions in the House bill. Two provisions are of particular concern:  the lack of a hold-harmless provision for veterans already pursuing an educational program who will find their tuition and fee benefit decreased, and the "last payer" provision (described below) which will add complexity to the determination of benefit payments. The American Council on Education sent a letter to the House detailing these concerns.

Tuition and Fee Benefits

The original Post-9/11 GI Bill, also known as Chapter 33, capped tuition and fee benefits on a state-by-state basis tied to the highest in-state undergraduate tuition and fees charged by a public institution in each state. While this covered tuition and fees for an eligible veteran at any public institution (if he or she qualified for in-state rates), it resulted in widely disparate amounts of assistance for veterans attending private institutions. Due to the inclusion of unusually expensive programs of study in some states, along with variations in tuition and fee levels between states, the tuition caps for 2010-11 range from more than $1,500 per credit hour in Texas to less than $100 per credit hour in three states. Fees, which are capped separately under Department of Veterans Affairs (VA) regulations, range from an astounding $85,255 per term in Utah to $310 per term in the District of Columbia.

The new legislation makes some important changes in how the maximum tuition and fee benefit is determined.

  • Eligible veterans attending public institutions may receive up to the actual net cost for in-state tuition and fees charged for their educational program. Note that the current restriction tying the cap to the rate for undergraduates is removed.
  • Veterans enrolled at nonprofit or for-profit institutions may receive the lesser of actual net tuition and fee charges or $17,500 per academic year. The dollar cap will be adjusted in future years based on the change to average cost of undergraduate tuition nationally.
  • Active duty service members utilizing their Chapter 33 benefits will now have their tuition and fee benefits capped at the same levels as veterans. Their benefits are not subject to a cap currently. This change will apply to amounts payable for educational assistance after the provision takes effect (60 days after enactment).

The amendments also introduce a new wrinkle to this determination-actual net cost. Actual net cost is defined as the cost after the application of any waiver of, or reduction in, tuition and fees, and any scholarships, grants, or other assistance that is "provided directly to the institution and specifically designated for the sole purpose of defraying tuition and fees." Federal Pell Grants are specifically excluded. This is commonly referred to as a "last payer provision."

Living Allowances

Changes to monthly housing benefits under the new bill will help some veterans but reduce payments to others. On the plus side, veterans who are enrolled more than half-time in educational programs taught exclusively through distance education will now be eligible for up to 50 percent of the housing allowance provided to students attending traditional classes. For both distance education students and those attending foreign institutions, the law specifies that the living stipend will be based on a national average allowance rather than tied to the specific location of either the student or the school.

Veterans carrying less than full-time loads may see their housing allowances decline, however. Under current law, a veteran attending school on a greater than half-time basis is eligible for the same monthly living allowance that he would be eligible for if he were attending full time. Under the new bill, the living allowance will be prorated based on the number of credit hours the veteran is taking at the time as a percentage of a full-time load, rounded to the nearest percentage evenly divisible by ten.

In another change that will serve to lower the living allowance received by many student veterans, breaks between terms will no longer count in determining the monthly allowance. Currently, breaks of less than eight weeks are included. Under the new rules, periods when classes are not in session will only be allowable if schools are temporarily closed by an emergency situation or an executive order of the President. The Committee on Veterans Affairs attributed this change to concerns that, because veterans are limited to a maximum of 36 months of eligibility, paying a housing allowance for time when the veteran is not actually attending uses up some of the veteran's available months, leaving them short of time to get a four-year degree.

Calculation of monthly housing stipends will be simplified by not making adjustments in January when military allowances are reset for the calendar year. Rates in effect at the August 1 start of the academic year will be used for the whole year.

Program Eligibility

The bill expands the types of educational programs that are eligible for the Post-9/11 GI Bill to cover nondegree programs offered by institutions that are not considered "institutions of higher learning" under VA rules, flight training, and apprenticeships and on-the-job training. This brings eligibility under Chapter 33 more in line with that for the earlier (and still existing) Montgomery GI Bill under Chapter 30. Benefits for nondegree programs track those for currently eligible programs. Flight training is capped at $10,000 for tuition and fees. Veterans are only eligible for a housing stipend which decreases in value over a 24-month period for apprenticeships or on-the-job training.

Qualifying Service

The amendments fix some anomalies in the original Post-9/11 GI Bill concerning qualifying service in the Armed Services. The most important is to credit full-time service in the National Guard in the same manner that Reserve active duty is counted, correcting an inadvertent oversight in the original legislation. This change is retroactive to August 1, 2009, when Chapter 33 benefits were first available, but no benefits under the provision may be paid prior to October 1, 2011.

Testing

Veterans would be allowed to use their benefits to cover the costs of more than one certification or licensing test, but would be charged against their entitlements for doing so. Under current law, coverage is limited to a maximum of $2,000 for only one such test, but no charge is made against entitlements. The new provision keeps the $2,000 cap on the cost of any one test and charges one month of entitlement for each $1,460 paid.
A new provision adds coverage for the cost of taking certain national tests used for admission to an institution of higher learning or providing an opportunity for course credit. There is no cap on the cost of such tests, other than the veteran's remaining entitlement, and the benefits will be charged against months of entitlement in the manner noted above.

Reporting Fees

The bill raises the reporting fee paid to educational institutions for reports and certifications required by the VA from $7 to $12 per eligible veterans or other persons receiving VA education benefits. Fees paid to institutions which receive and pass through educational assistance checks to veterans will increase from $11 to $15. These fees have not been increased in more than 30 years. Currently there are no restrictions on how an institution uses these funds. The new law, however, requires institutions to use the fee revenues solely for providing certifications or otherwise supporting programs for veterans.

Other Changes

The bill also makes other amendments to the current program, clarifying treatment of so-called "kickers," transfer of benefits to dependents, and prohibiting concurrent use of overlapping benefits.

The bill does not make any changes to the Yellow Ribbon program, which splits funding between VA and the institution to cover the gap between allowed tuition benefits and actual costs. The changes to tuition and fee benefits will impact the cost of Yellow Ribbon participants, however.

Contact

Anne Gross
Vice President, Regulatory Affairs
202.861.2544
E-mail

Bryan Dickson
Policy Analyst
202.861.2505
E-mail


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