By Anonymous Guest Writer
Military docs in The White Coat Investor community hopefully already know that the VA allows active-duty service members to transfer the post-9/11 GI Bill to a child or dependent. In case this is news to you, read this first. If you have completed at least six years of service on the date of the benefits transfer request AND you agree to add four more years of service (this can be concurrent with existing active-duty service obligation (ADSO)) AND the qualified dependent getting the benefit is enrolled in the Defense Enrollment Eligibility Reporting System (DEERS), then this is a great opportunity to help defray the cost of college.
If you are eligible and haven’t already done this, strongly consider it. Many military doctors are past the point of needing the GI Bill for themselves. Giving your GI Bill benefit to a child, spouse, or another dependent can significantly help to lower the cost of higher learning. But would the GI Bill by itself be enough to pay for a child's college education?
Your Child Can Use Your GI Bill
Years ago, when I completed the transfer of my GI bill benefit to our first child (“Kid #1”), I remember the Army education counselor congratulating me on securing 36 months of guaranteed cost coverage for Kid #1’s future college attendance. I was feeling great when I went home to my wife that night and shared the news that our newborn’s college was already covered. Two years later, we had a second child (“Kid #2”) and opened a 529 for Kid #2 when they arrived. We had not yet opened a 529 for Kid #1 because we planned to utilize the GI Bill for them.
When you transfer your GI bill benefit to a child or children, you complete a form in which you assign months to the individual(s) to whom you are giving the benefit. For example, we could have elected to split the 36 months equally between children. We chose to assign 34 months to Kid #1 and one month each to my spouse and Kid #2. The number of months of benefits can be modified later. The important part in this step of transferring the benefit is to list all the people who MIGHT need to use the benefit in the future.
Relying solely on the GI Bill for Kid #1 was NOT a satisfactory strategy. If you only take away one idea from this post, it is this: High or dual-income earning military families planning to use a parent’s GI Bill for a child’s college will likely require significant additional dollars beyond the GI Bill benefit. That means you might have to use a 529 plan or other savings strategies to meet the expected overall costs of a college education.
During a recent review of our family finances and accounts, I looked at the VA GI bill website in more detail because I wanted to answer the following question: Will the GI bill really cover 100% of my child’s college-related costs? My mind then went on a deeper dive of anxiety-provoking hypotheticals. What if Kid #1 gets into and loves a fabulous private college in an expensive part of the country? We reside in the District of Columbia with fewer public university options than other states. I’d heard of programs like Yellow Ribbon, but how will that affect us? We are a dual-income family unlikely to qualify for any financial aid. Are there income considerations from the college or the VA’s perspective in determining the size of the benefit? Is there a maximum payout from the VA under this benefit? What is the order of priority and tax consequences? Do I need a separate 529 plan? Can I even use a 529 plan in addition to the GI Bill?
More information here:
10 Things I Loved About Being a Military Doctor
Post-9/11 GI Bill Benefits
The post-9/11 GI Bill offers a lot of help in the way of up to 36 months of benefits including tuition and fees, housing, books, supplies, computer expenses, and even a stipend. This is truly an amazing example of the government helping support military families, but it is not a carte blanche all-access pass to the college or university of your or your child’s choice. There is a maximum size to the benefit and limitations that military families in this scenario must address with other payment strategies.
The maximum benefit changes over time (up to all tuition and fee payments for an in-state student at a public university, or $26,381.37 per academic year for private or foreign schools for the 2022 academic year). Different colleges have varied policies regarding how they will treat the GI bill and children from military families that seek to utilize the GI bill to help reduce the cost of college.
If you want to see for yourself, I encourage you to google “insert name here of any college” and “GI bill.” Do this exercise for at least two or three private colleges and some public institutions from various states. Or, for a shortcut, use collegefactual.com to get an estimated out-of-pocket cost for virtually any college AFTER using the GI Bill. (NOTE: I did not verify these estimates with any individual schools, but they look reasonably close based on comparing overall school tuition prices at college websites.)
Some private colleges offer additional discounts to students coming from military families. Some schools’ websites state they reserve the right to cap the number of students in any given year who are eligible to attend under the GI Bill. Under the Yellow Ribbon Program, which can help defray the costs of college that the GI Bill doesn't cover, children using a parent’s GI Bill and seeking to attend a public college from out of state may have their bill reduced to the level of an in-state attendee.
As I see it, the GI Bill is likely to meet all or close to all the costs of college IF (and only if) your child will be attending a public institution within the state where your family resides. This may be an excellent option for your child, and, if so, I congratulate you.
For the rest of the WCI followers with incomes too high to qualify for financial aid and whose children may want to explore college options in another state or at private colleges or universities, the tax-advantaged 529 plan is an important additional strategy to use in conjunction with the GI Bill. I’d encourage anyone tacking along the path I described above to make the relevant inquiries regarding potential tax implications and other issues as early as possible to minimize any potential pain down the road. For example, people using an Ohio 529 plan and the GI Bill can find a useful resource here. Don’t count on the GI Bill alone to pay all the bills.
More information here:
Should You Apply for the HPSP to Pay for Medical School?
Here is what we did. We opened a 529 for Kid #1 this year and, fortunately, we still have 10 years to fund that. Now, with 529 plans for both children receiving automatic monthly payments—we’re maxing those out ($16,000 per donor in 2022)—as well as the post-9/11 GI Bill as a supplement to help both kids, we are in good shape. I kept the GI Bill with that 34-1-1 split since Kid #2 has a headstart on the 529, but I could adjust that anytime in the future.
It is an honor to take care of our military service members and their families as a military physician. Docs that have raised their hand to volunteer and serve in uniform sacrifice a lot in the process and have earned the GI Bill. I encourage everyone eligible to utilize this fantastic benefit while being mindful of the rules and limitations. Make sure you pay attention to the details and timing of the benefit transfer and the size of the benefit in comparison to the real cost of a college education.
Have you used the GI Bill to fully fund your child's education? Did you have to mix in a 529 for additional help? What if you have more than one child? Comment below!
[Editor's Note: The author of this post is a former Army Pediatric Subspecialist residing in the Washington DC area. This article was submitted and approved according to our Guest Post Policy. We have no financial relationship.]
We have 4 kids and I split mine evenly across the four of them, hoping to have approximately “one academic year” per kid.
Biggest thing to me is the timing piece. If you’re a standard HPSP doing a short residency and planning on getting out, this doesn’t help you. I did a 2 year fellowship, so owed 6 years on top of 5 in training, and didn’t remember to do the transfer until midway through my 7th year on active duty. The obligation didn’t wind up extending me, but it was very close (2 months).
On the other hand, the point of this is to retain people, so maybe also consider value of a GI bill transfer into your ‘stay past initial ADSO” calculations.
Retired military doc here. We used the GI bill to help put three of our children through college. Based on our experience, I would recommend you use some of your GI bill benefits for each child. The reason being that many schools will offer in state tuition to GI bill students for the remainder of their undergrad years if they exhaust their GI bill benefits. This allowed two of our children to go to a high quality, expensive out of state school (University of Michigan) that they would not have otherwise been able to attend.
Another thing for parents to consider as their children approach college is to frequently discuss their realistic options for college well before the application process begins. My spouse and I did not go along with the notion they could go to “any college they get in to”. As a physician family we knew we were not going to get any need based financial aid. We discussed the concept of debt and that they would be far better off focusing and applying only on schools they could attend without incurring debt. We were continually amazed at watching our children’s friend’s parents bend on this and mortgage their own homes and borrow from retirement accounts to send their child to a “dream” school, this being in addition to the debt the child incurred as well. We were and still very much are believers in that it matters far more what you do while you are there than what school you go to. Graduating with no debt (theirs or ours) was a key accomplishment of each of our 4 children who have graduated from college.
Thanks for writing this post for the military docs out there!
Important note: GI Bill can be used for grad school. Until kid 1 hit 26 (end of benefits from Dad’s GI Bill) we offered her 1-2 years GI Bill toward any grad school tuition- but hers was free with stipend (sciences) anyway- and have urged kid 2 to decide early if she wants JD or MD and we’d cover Jr/Sr years out of pocket then use GI Bill for a few years of the grad school.
Glad to see my military service- 7 after med school- would not have gotten me the GI Bill. Certainly no one counseled me about it or used it to try to retain me (though I’m old- different GI bill anyway- might not have been eligible in any case). Luckily spouse signed up for it, and did the one month per kid and spouse and rest for himself until we saw what the kids had going on. Kid 1 got tuition and fees scholarship at State and we didn’t want to waste GI Bill on ‘room and board’ only so that came from our pocket, or directly from her and Kid 2’s transferred 529 funds- since we expected similar scholarship options for Kid 2 we wanted to empty the 529s fully and have done so. Tougher emptying the EIRAs and Kid 2 still needs to buy about 3 high end computers for school to empty hers- might end up paying the penalties to not use it for education!
However despite similar in state options (and we would’ve been stymied about whether to save GI Bill then- only spent $10K/ year on kid 1’s dorm/ board/ pocket money) kid 2 wanted out of state and opted (despite me promising to not care about extra expense, only that acting was not the best career choice and is even possible outside of California) for another state’s flagship which gave in state fees to GI Bill students with some legalese (letter stating intent to become in state resident) over the other flagship which would take our GI Bill and then tack on out of state tuition as well. Since we consider the GI Bill my spouse’s property (and would have divided it if kid 1 using it was optimal) we pocket the stipend and give kid 2 an allowance covering or above room and board, about what kid 1 had inflation adjusted, plus pay all her book and med/dental expenses from our pocket. I feel a bit guilty that she is shorted some, but we also give it to her all summer when the checks aren’t landing in our account, and can’t have given kid 1 a smaller amount- parity, parity.
Great subject to feature for those of us in the military. Encouraging people to sign up for this program as soon as possible is one of the things I am constantly stressing to the residents at my program. (Navy radiology residency so most of the residents become eligible during residency because of the historical need to do a gmo tour before residency) always make sure you follow up on the website to make sure the transfer was approved because I’ve known a few people get their first attempt rejected and weren’t notified till they logged back in on the site. (Myself included! There was some confusion about whether USUHS time counted toward the six years)
I think it is important to stress a couple of points brought up above. That it can be used for graduate school (to include medical school) and that kids have to be under 26 to use the benefit. (The 26 year old cutoff is not flexible)
Does California still have the program with free tuition for UC’s or Cal State’s for children of a veteran with a disability rating? And with regard to post 9/11 GI bill dont forget to get your page 13.
Yes, California still has that program for the children of service disabled veterans. Covers tuition and fees at UC, CSU, and California community colleges.