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 kid is a huge benefit. When you have more than one child (we have four!), 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 kids doesn’t always make the most sense. In fact, it rarely does.
Here are some things to consider:
What is the age difference between your kids?
If you’ll have multiple kids in school at one time, your chances of need-based aid increase in those years. In this situation you may want to consider using the GI Bill in the years when there is just a single child in college. Then, you can take advantage of need-based aid during the years when you have more than one child in college.
Where is your child going to school?
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 is going to a relatively inexpensive school, but our fourth child is vaguely interested in very expensive schools. Worst case scenario, we save the GI Bill for Kid #4 and she goes somewhere less expensive. We haven’t LOST any money by waiting (unless the program changes – we’re getting to that.)
What is the child’s potential for merit aid, and what are the siblings’ potential for merit aid?
Whether by luck, hard work, or random ability, some kids are going to receive merit aid 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. Once again, there’s some guessing going on here.
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 thing.
Does using the GI Bill give you in-state tuition?
Despite what you may have heard, there is no law that requires schools to give you in-state tuition solely because you are using the Post 9/11 GI Bill. However, may schools do have that policy, and details may vary from school to school. Some schools will grant you in-state tuition for the entire degree simply by using the GI Bill for one month. Others will grant you in-state tuition during the terms in which you use the GI Bill.
Do you have other college funds to use?
Depending on the nature of your other college funds and your overall financial picture, there may be some strategy to using other funds earlier or later. 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 educational benefits?
Is your child eligible for Department of Veterans Affairs (VA) Survivors’ and Dependents’ Educational Assistance (Chapter 35) benefits, Texas state Hazelwood benefits, 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 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.
We now have one college graduate, contemplating grad school, two in college, and one graduating high school senior starting in the fall. I have a complex matrix of factors to decide when and where to best deploy these GI Bill benefits for the most good for the whole family. It’s a lot of thinking and math and digging around and getting obscure questions answered, but it’s worth it.
Or maybe no one will use any of it and we can spend our retirement at cheese making school in Italy.
That’s be nice.
As you can see, there’s no single best way to divvy up the GI Bill if you have multiple kids. Please don’t just say, “You each get two years,” without considering the variables that might make it more valuable used in a different way. Might as well make the most of that awesome benefit!
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