What Are the Benefits of the GI Bill?

It’s no secret college is out-of-this-world expensive. Students (and parents) go into debt all the time for that sought-after piece of paper—aka the college degree. The good news is, if you served our country in the military, you (or even your kids) can go to college for free! Yep, it’s one small way to thank you for your service, but one that can make a big difference in your life and the things you have to pay for. So, let’s dive into everything you need to know about the GI Bill.

What Is the GI Bill? 

The GI Bill gives military veterans the opportunity to have a paid-for college education—or on-the-job training or apprenticeship. Veterans can pass on this benefit to their family members instead of using it for themselves too.¹ It’s an amazing thing offered to our service members in America, and a wonderful benefit to put to use. If you have access to the GI Bill, don’t let it go to waste!

How Does the GI Bill Work?

First, you need to apply for the benefits of the GI Bill. This whole process usually takes about 30 days or so, so be patient. Once a confirmation letter hits your mailbox (they call this a Certificate of Eligibility), all you have to do is take that letter to the VA advisor at the school you’re enrolling at. They should take it from there and be in touch with you if there’s any further steps.

How Much Money Is the GI Bill?

The national maximum for the GI Bill for the 2020–2021 academic school year is $25,162.14, and it increases little by little each year.² Now, how much money you’ll actually see depends on a couple of things. They look at things like how long you were on active-duty status, what your current status is, which specific GI Bill you’re wanting to use, and what school, on-the-job training, or apprenticeship you’re wanting to put it toward. Check out the handy GI Bill Comparison Tool to help you with all of this.

How Did the GI Bill Change After September 11? 

The GI Bill has been around since 1944, but it changed a lot back in 2009.³ The Post-9/11 GI Bill now benefits those who served for at least 90 days of active duty since September 11, 2001.⁴ The amount of money you see depends on your length of time in the service, but you’re eligible for 50% benefits if you’ve served at least 90 days since September 11.⁵

How to Use the GI Bill 

A huge benefit of the GI Bill is that you can either use it for yourself, your spouse or one of your dependents. Talk about an awesome gift to give your kids! But whether you use it, or your kids do, there are a couple of things to keep in mind. Let’s break them down:

Using the GI Bill for Yourself: 

If you’re using the GI Bill for your own education, then things are pretty simple. Don’t take out a lick of student loan debt, apply for the GI Bill, and then let the benefits pay for your education at a public school, on-the-job training, or apprenticeship. There might be some things that the GI Bill won’t cover depending on your situation, so if that’s the case, be prepared to cash flow what you need too. But at the end of the day, go get yourself a degree debt-free!

Using the GI Bill For Your Children:

Maybe you’ve already gone the college route (or aren’t planning on going), and you want to use your GI Bill benefits toward your children’s college costs—that’s great! One of the biggest blessings of the GI Bill is that you don’t have to use it yourself, but your kids can. Talk about a legacy!

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Here’s the thing, though. It can be really tempting to just say, “We have the GI Bill,” and not save another penny for your kids’ future. When you get to Baby Step 5 (saving for your kids’ college fund), go ahead and save some money for your kids’ college anyway.

Why? Well, plain and simple—it’s never a good idea to put all your hope in the government. You could save absolutely zilch for college over the next 15 years, only to find out that one day they pass a law to cut the GI Bill altogether. Will that actually happen? Probably not. But why take the chance?

Plus, there will likely be some things that the GI Bill won’t cover when your kid gets to college (extra-long twin sheets, anyone?). So, go ahead and put away some cash for them. It doesn’t need to be a full four years’ tuition or anything—just make sure you’re saving something.

But heads up, don’t save it in a 529 college savings fund or an Education Savings Account. If you use that money for anything else other than education, you’re going to get taxed on it big time, and that penalty is huge. You can set up a UTMA account (that’s Uniform Transfers to Minors Act), but make sure you keep it in your child’s name. You can use that for anything—it’s just a mutual fund in your kid's name with you as trustee.

Or if you want to keep stuff even simpler here, just set up a regular mutual fund that you call your “kid fund.” Then you’ll have the money at hand to put toward education if there’s ever a problem or there are things the GI Bill doesn't cover. And let’s say you never have to use that money for college—well then you can give your kids an extra nice wedding gift one day down the road. The point is, saving will never steer you wrong. So, go ahead and save away. Having that pile of money stashed will help you rest easy!

Okay, so we know we just gave you a lot of information. And it’s enough to make your head spin. But don’t let that stop you from preparing for your future. If you plan on using your GI Bill benefits for your kids, connect with one of our SmartVestor pros. The peace of mind alone is worth it! They’ll walk you through everything and make sure your financial planning is in great shape.