Families across the country are knee-deep in figuring out the best way to pay for college for their now-seniors, and the GI Bill is part of many of those conversations. Being able to transfer the Post 9/11 GI Bill to a spouse or child is a huge benefit. But how do you divide those months? It might seem to make sense to divide the months evenly. But if you want to make the most of your benefits, that’s not the best plan. You want to do some thinking about how to use the GI Bill to get the maximum benefit for your family as a whole. Just splitting it up evenly between the people doesn’t always make the most sense. In fact, it rarely does. You need a GI Bill strategy.
While there are lots of individual tactics to consider, the general idea is that a family has a pool of resources to get everyone to their desired educational goals. You have to look at the resources as part of the family plan and not divide them up into individual plans without all the information available. These resources might include:
- Post 9/11 GI Bill benefits
- state educational benefits
- 529 education plan funds
- Coverdell educational savings
- cash-flow from the immediate family
- student employment
- employer-sponsored tuition benefits
- support from extended family
- Chapter 35 benefits
- anything else!
Some of these benefits might be tied to an individual, like scholarships, but many can be allocated creatively to get the most bang for your buck.
Here are some things that need to be factored into your big picture college funding strategy:
Who might use the Post 9/11 GI Bill?
While many people immediately think about their kids when it comes to Post 9/11 GI Bill benefits, don’t forget that the service member and the spouse can also use these benefits.
Would the spouse improving their education create a better boost for the whole family? Wil the service member want training or networking after leaving the military? A lot of people think that the best way to use their GI Bill resources is to save them for their kids. That’s not always true!
Keep in mind that there are different timelines of eligibility for different beneficiaries.
What resources do you have to pay for everyone’s college?
Unless you have just one child who only plans to do undergraduate education at an in-state school, you are probably going to need other resources to pay for everyone’s college. Some of these resources may be tied to the individual student, but some may be flexible in their use. It’s important to identify which benefits fall into which category.
Depending on the nature of your other college funds and your overall financial picture, there may be some strategy to using other funds earlier, later, or not at all. For example, depending on how the plan is held, distributions from a 529 plan may count as the student’s non-taxable income, and may impact their need-based aid. With some strategy, you can minimize the impact by using 529 money in a later school year. Depending on which college funds you have available, the strategy may be different.
Is your child eligible for other federal or state educational benefits?
Is your child eligible for Department of Veterans Affairs (VA) Survivors’ and Dependents’ Educational Assistance (Chapter 35) benefits, Texas state Hazelwood benefits, Florida Bright Futures, or other benefits? This often requires coordination, as different programs have different requirements. Do a ton of research and ask a lot of questions!
What is the age difference between your kids?
If your children are close in age, you have different considerations from those with a gap between children.
Under the current federal formula, your family’s Expected Family Contribution (EFC) changes depending on the number of students you have in college at once. But that is changing starting with the 2024-2025 school year. No one has seen how it will actually play out, but the new formula is supposed to treat families equally regardless of the spacing of their kids.
Month-to-month finances are also impacted by the number of kids you have in school at once. A family who might be able to cash-flow one kid at a time could very easily struggle to cash-flow two or three kids. Savings and/or loans will probably have to come into play.
Where is your child going to school?
This is a little bit of a chicken-and-egg situation.
On one hand, if money is an issue, then finding the right financial fit is just as important as finding the right academic and emotional fit. On the other hand, you don’t want your kid picking to a college solely based on money. There are so many other considerations: location, academic environment, housing situation, access to necessary amenities, etc. One of my children smartly made the argument that the slightly more expensive school would have a lower net cost because the “cheaper” school’s location would require that she get a car. There are a lot of things to consider.
It makes more sense to use the GI Bill for more expensive schools, and for schools that participate in the Yellow Ribbon program. It also makes more sense to use the GI Bill for schools located in higher cost-of-living areas, because the housing allowance portion will be higher.
For example, our first daughter started at the local community college. It would make no sense for us to use GI Bill benefits there. The tuition is inexpensive and the cost of living in our area is moderately high, but not as high as Boston or New York.
What about the sibling(s)?
This is where some guesswork comes into play. Is it likely that a subsequent child will go to a more expensive school than the first child? In most cases, we don’t know where a younger child will go to college when we’re making this decision, but we may have some inkling.
For example, our second child went to a relatively inexpensive school, but our third kid went somewhere expensive. Our fourth child ended up at a ridiculously expensive school, but with amazing financial aid.
When making decisions for the first child, you want to consider the other kids. What does their college path look like? Will they likely be eligible for merit aid? Are they a big name, big price tag student, or a local state school kid?
What is the child’s potential for merit aid, and what is the siblings’ potential for merit aid?
Whether by luck, hard work, or random ability, some kids are going to receive merit aid more than other kids. If you have one child that is more likely to receive significant merit aid, then you probably don’t want to save your GI Bill for that kid. Or you at least want to factor that into your decision-making process. Once again, there’s some guessing going on here for any kids that aren’t already in college, or don’t already have financial aid packages for a school that they will be starting in the fall.
How does your child’s school apply the aid they’ve earned?
How money is applied to a college balance can depend on a wide variety of factors. In some situations, merit money is only available to be used for tuition. In that case, the amount paid by the GI Bill is reduced by the amount of the tuition-only aid. If you have one kid who has tuition only financial aid, and one kid that has financial aid that can be used for room and board, it is more beneficial to use the GI Bill for the child whose financial aid can be used for other things.
How does in-state tuition play into the question?
There are a variety of laws related to in-state tuition and military kids, and a separate chunk of laws about the Post 9/11 GI Bill and in-state tuition. Maximizing your options can result in huge savings.
What is your income situation?
Do you anticipate having a change of income during the school years? Maybe you’re facing retirement, or your spouse is going to start working. How will this impact your ability to pay for college during different years?
Are you eligible for education tax credits? How does the GI Bill factor into that?
Depending on your income level, you may be eligible for education tax credits, but you have to have actual qualifying expenses. Using the GI Bill will change whether you have qualifying expenses in a certain year. If you know that your income is going to change mid-college, and you would be eligible for the tax credits in some years but not in other years, it might make sense to use the GI Bill during the years where you couldn’t get that credit anyway.
This is some seriously higher level tax planning. You probably want help with it.
Do you expect the GI Bill to be different during a different year of college, or when a different child is in school?
GI Bill benefits are constantly changing. I think there has been some change every single year since the Post 9/11 GI Bill was introduced in 2009. As the military looks at ways to reduce the cost of this unsustainable benefit, changes that reduce benefits are almost inevitable. So far, there have been suggestions to eliminate or reduce the housing allowance portion for transferred benefits. So far, none of the big changes have stuck, but you may feel it smarter to use the benefits now and not worry about future changes.
How Our GI Bill Strategy Is Working
We now have two college graduates, and two still in college. I have used a complex matrix of factors to decide when to use these GI Bill benefits. It’s a lot of thinking and math and digging around and getting obscure questions answered, but it’s worth it.
And maybe there will be a few months leftover and we can spend our retirement at cheese-making school in Italy. (Note: you can’t actually use Post 9/11 GI Bill benefits for cheese-making school in Italy unless it’s part of a degree program. I checked. It is sad.)
I don’t claim that we’ve made every right decision along the way, but we have made many decisions that have increased the value we’re getting from that GI Bill.
As you can see, there’s no single best way to divvy up the GI Bill if you have multiple potential users. Please don’t just say, “You each get two years,” without considering the variables. Might as well make the most of that awesome benefit!
If you want some help with your college financial strategy, including making the most of your Post 9/11 GI Bill benefits, hire me to help. You can schedule a free 30-minute call to discuss your family’s specific concerns by using this link to my Calendly schedule.
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