How to Use the GI Bill to Pay for Your Kid’s College

Ingrid Bruns admits that she and her husband, Arch, probably didn’t save as much for their two daughters’ college educations as they should have. Though the couple is careful with their money (Ingrid became an Accredited Financial Counselor while living overseas as a military spouse, and now serves as director of Military Life Advice at USAA), college savings took a back seat to other savings goals, including the “forever home” they recently purchased.

“We both used personal savings and worked our way through college, so we assumed our kids would do the same,” she says. But college costs have increased dramatically since she and her husband earned their degrees, and their approach simply isn’t feasible for their daughters, one of whom is a college freshman and the other a junior.

But the Bruns family doesn’t have to scramble as much as some, because they have one ace in the hole: the Post 9/11 GI Bill. Arch’s career in the Air Force earned him benefits through this valuable program, and because he hasn’t used them himself, he was able to transfer them to his daughters.

The Post 9/11 GI Bill benefits include up to 36 months of tuition and fees, a monthly housing allowance and a books and supplies stipend of up to $1,000 a year. For servicemembers to be eligible to use these benefits for themselves, they must have served at least 90 aggregate days on active duty after September 10, 2001, or have been honorably discharged from active duty for a service-connected disability after serving 30 consecutive days after September 10, 2001. (Thirty-six months of service on active duty is generally required to earn full benefits.)

Benefits pay full in-state tuition and fees, and recent changes to the law mean many state schools offer in-state tuition to veterans, even if they otherwise wouldn’t qualify as residents. In addition, benefits may pay up to just more than $21,000 for private schools, and The Yellow Ribbon Program provides additional support for those in college.

The requirements for transferring benefits to a dependent (spouse or child) are different, though, and require planning. Generally, a servicemember must have six years of service, apply to transfer benefits, and agree to serve an additional four years after the transfer is approved. That means parents serving in the military who have children and aren’t sure they will use the benefits themselves are wise to explore their options sooner rather than later.

Joseph Montanaro, a Certified Financial Planner with USAA, offers these tips to military families interested in using the Post 9/11 GI Bill benefits for their children’s educations:

“Use it yourself first,” he says. “The program was designed to help vets, so take advantage.” The additional training or degree you get may help boost your earning power, which could improve your quality of life and, in turn, allow you to save more for your children’s educations.
“Transfer early,” he recommends. Because you must commit to an additional four years of service, you want to make sure you elect the transfer as soon as you are eligible. There’s no penalty if you later decide to use the benefits for your own education.
“Transfer to all,” he suggests. You can divvy up benefits among your spouse and/or children ahead of time, and then change the allocation later, but you can’t add a transferee after you separate from service. “I typically suggest that folks transfer a month to all their potential users (for example, one month to all kids/spouse),” Montanaro says.

With college costs rising, military tuition benefits can be a lifesaver for families trying to pay for college without debt. These benefits, while valuable, are not retroactive. So whether you come from a military family or not, if you already have student loan debt, make sure you explore all your options for student loan repayment. Often the first kind of credit many young Americans have access to, student loans can wreak havoc on your credit if they’re mishandled. (You can see how your student loans are impacting your credit scores for free on Credit.com.) This guide has some helpful info on student loan forgiveness programs that can ease or eliminate your debt load as well.