GI Bill Wrinkle Could Cost Vets Thousands

[Editors Note: A correction has been made to the following article. The so-called “last payer” clause does not incude Federal Pell Grants, SOG, or Direct Student Loans (known as Title IV funds). Funds from these sources can be applied to the student’s tuition and fee balance after the GI Bill portion is determined. ]

One small and seemingly insignificant change to the Post 9/11 GI Bill could actually cost unsuspecting veterans thousands in out-of-pocket tuition and fees. Known as the “last payer” clause, the change states that the VA will only pay the remaining tuition and fee balance after all other scholarships,  waivers, federal and state aid — except Federal Title IV (Pell Grants, SOG, and Federal Direct Loans).

Here is the clause in the new law:

The VA will pay the actual net cost for in-State tuition and fees assessed by the institution for the program of education after the application of—

— any waiver of, or reduction in, tuition and fees; and

—  any scholarship, or other Federal, State, institutional, or employer-based aid or assistance (other than loans and any funds provided under section 401(b) of the Higher Education Act of 1965 (20 U.S.C. 1070a) [Federal Title IV]) that is provided directly to the institution and specifically designated for the sole purpose of defraying tuition and fees;

For a student veteran who has 36 months of qualifying post 9/11 active service — making him or her eligible for 100 percent of the P911 GI Bill benefit — this is no big deal. But, this could result in thousands of dollars in unexpected tuition costs for a veteran with less than 36 months .

The following is a synopsis of a case in which a veteran has earned only 70 percent of the Post-9/11 GI Bill:

Let’s say a particular school’s tuition is $12,500.00 per semester ($25,000.00 per year), once the student’s state and institutional aid is applied, the “actual” semester tuition rate reported to the VA is $4,025.00 (plus an additional $134.00 in mandatory fees).

In this case the VA made a payment of only $2,911.30 for the fall semester since that is 70 percent of $4,159.00. The student is experiencing a shortfall each semester.

The VA told the student that he should take out federal loans to help cover the out-of-pocket expenses.

Note: Title IV funds like Pell Grants and Federal Direct Loans can be used to pay the remainder after the VA has paid the prorated amount based on time in service.

So a word to the wise for all Post-9/11 vets, be sure you check with your school certifying official and financial aid department before you commit to enroll. Don’t let the last payer clause catch you by surprise.

Learn more about the latest changes to the Post-9/11 GI Bill.

Take Action — Let your elected officials know how you feel about this issue.

About the Author

Terry Howell
Before becoming the Managing Editor for, Terry served 20 years in the U.S. Coast Guard as an Aviation Electrician’s Mate and aircrewman. In his final role in the Coast Guard, Terry served as a Career Development Advisor, where he provided career, finance, education, and benefits counseling to servicemembers and their families. Since retiring from the Coast Guard, Terry has authored the book, The Military Advantage, managed the content for TurboTap, the DoD's online transition program and VAforVets, the VA's transition assistance website. Terry earned both his Bachelor's and MBA at Corban University using Military Tuition Assistance and his GI Bill benefits to help cover the cost.
  • Gus

    Finally someone reported on this issue. I have been hounding the VA and Military. com to report on this. Would have been nice to hear about this months ago. I feel bad for you veterans using TRADACT, WIA, NAFTA, or Scholarship dollars.

  • Agree with Gus, we are really glad to see someone reporting about this and showing what it equates to in the real world. Loans of the $ amount in your example are the last thing vets should have to deal with.

    • Stone07

      Yes, I agree with all of you. This has caused me to hate my country. When, I first essentially enlisted I knew I was going to use my GI bill. Instead of getting a bonus I agreed to take fifty thousand for college. Now that I have recoverd enough from war as a 100% disable veteran to go to school and get in. They applied this cap after the effect that I’m in then I got hit with this. I love going to school. Two semesters down I have a 4.0 GPA . Now that I have got in and got my feet wet the rug has been pull from up under me from my very own country after I gave my all to them. Pretty much goes to show you how the government can **** on their vets. No wonder vets go on rampages. I’m so upset I want to leave and not be apart of this country anymore. I’m a 100% American from N.C.

  • Renee

    That is horrible! I count on the refund from my pell grant to actually live while i’m going to school. $900 a month is not enough to cover all bills and living expenses and being a full time student means you can only work part time. I don’t know who decided to make these changes but obviously they haven’t spoken to the individuals that use the GI bill to see how the changes they are making are effecting their standard of living. Of course we have no option of switching back to the old g.i. bill now that they are making the post 9/11 so hard to to actually use and not starve to death and the same time. Thank you veterans affairs for looking out for your veterans.

    • Suckitup

      They didn’t guarantee you a “standard of living” or not starving, they guaranteed you education benefits.
      A veteran getting by on 9/11 GI bill.

      • Jon

        Regardless we signed up for something and were promised it so I expect to get all of the benefits that I was promised unconditionally. I would have stayed enlisted active duty if I would have known it would be such a pain in the ass

      • Stix

        Let me ask you a question: If you can’t use it , is it a benefit ?
        Perhaps you have heard of the mllion dollar benefit – you can receive this benefit for your own personal use you must show up in person and sign for the money – you must do this after you have died.
        It is a benefit to you – cheers. :-)

    • RMC

      Pell Grants fall under 401(b) funds, which are excluded from the last payer. Wish someone at Military Advantage had done 3 minutes of actual research before scaring everyone to death.

    • stix

      Welcome to the world of how our Government REALLY works! I am a vet, experienced in NAFTA, after being certified and approved it took me 8 months to get the local paper work signed off -after going through the local managers, the State managers of the responsible workforce agencies in two states, the department of labor, my State Representative, and then My U.S. Congressman – that is an awful lot of wasted time on $250 a week UI, and trying to SIMPLY goto school! CHEERS…

  • anon

    dont pell grants fall under 401(b)

    • CO@college


    • Lee

      Yes, 401b stuff is all online. This article contradicts itself. First it says that loans and grants will reduce payment, then in the actual clause, it says that they will not. Good job scaring people for no reason,!

    • RMC

      Yes, Pell Grants fall under 401(b) and therefore are not included in the last payer clause. Do your research, Military Advantage, before you needlessly scare thousands of GI Bill recipients to death!

  • chris

    Should I keep my Chapter 30 GI bill then? I was planning on switching to the Post 9/11 on October 1st since I am taking all online classes. I would probably receive only 90% under the Post 9/11 but my yearly expenses from school would not exceed the $17,000.

    • becca

      with your post 9/11 you are going to recieve about 650 for housing allowance starting oct 01. 2011. call v.a. and ask them about it

  • Dave

    Pell grants fall under Section 401b so you should still be able to get a Pell grant AND your Post 9/11 entitlements

    • tdhowell

      Correct –
      error corrected

  • joe

    Confused: “VA made a pay­ment of only $2,911.30 for the fall semes­ter since that is 70 per­cent of $4,159.00. The stu­dent is expe­ri­enc­ing a short­fall of $3,213.70 per semes­ter”

    My calculator says $4,159 minus $2,911 equals $1,248. Where does $3,213 come from?

    • tdhowell

      Not sure either – the scenario came directly from a school oficial who got it from the VA.

  • Jason

    Complete BS! If a person qualifies for Financial Aid, there’s usually a pretty damn good reason. What’s the motive to apply for or work toward any type of scholarship if its only going to benefit the government? I’m contacting my financial aid office to cancel all forms of financial aid and scholarships I have coming my way. My own small and personal way of telling the VA to piss off and pay 100 percent of my tuition and fees.

    • becca

      woohoo way to go

    • Gina

      What does this prove exactly? Sounds like a plan to waste public funds to me. This would result in the benefits costing the government more than it can handle and ultimately bring about the possibility that the gov’t would reduce or cut the overly-expensive program, which I assume not what you want.

  • anon

    this article should have been researched more, before going to scare veterans.

  • Stephen

    Is it true in order to use the P9/11 bill for flight training you must pay to receive a private pilots license at the cost of 8 to $10,000 out of pocket first? I’m 100% P9/11 myself and it seems to defeat the purpose of flying lessons if it’s going to cost me 10 grand.

    • Adam

      If you intend on using your GI Bill for flight training you must have your Private Pilots certificate. The GI bill will then reimbursed for the cost of additional training. It is designed for those pursuing additional rating and certificates towards a possible career as a pilot or flight engineer.

      • Adam

        Per the VA website regarding traing under the post 9/11 gi bill. “If you are enrolled in any type of vocational flight training you can be reimbursed up to the full cost of training or $10,000 per academic year, whichever is less, you WILL NOT receive the housing allowance or books & supplies stipend.”

  • Geral

    So, I receive 100% benefits under the Post 9/11. I usually get the Pell Grant and this year I also took the subsidized loan since it’s my last year and I wouldn’t be able to work. However, the loan and part of my Pell Grant was applied directly to the school. Is this the Last Payer clause this article was talking about?

  • Tim

    The law says “other than loans and any funds pro­vided under sec­tion 401(b) of the Higher Edu­ca­tion Act of 1965 (20 U.S.C. 1070a)” So doesn’t that mean that student loans and federal pell grants (which are funds provided under section 401b) are not considered in this. That’s the answer I got from my school’s VA counselor. Really confusing as usually.

    • tdhowell

      Correct – I made the needed corrections to the article.

  • Geral

    Yeah, I’m confused. Lol. So Pell Grants and federal loans are applied to my tuition and the VA picks up whatever is left right?

    • tdhowell

      Pell and FAFSA Title IV do not count against the student when determining the net.

  • Geral

    Ok, from what I read, Pell Grants and loans are not applied to tuition. That is my understanding. Correct me if I’m wrong, please.

    • CO@college

      you are absolutely correct! They are NOT applied.

  • Joe

    This article is so very wrong. The “last payer” clause does NOT affect Pell Grants and Student Loans. It does however affect other grants and scholarships. If you awarded a scholarship then it will be used toward your tuition first, then the VA will pay the remaining percentage that you are entitled to. They really need to do more research before getting people all upset.

    • tdhowell

      You are correct – the article has been corrected. The scenario however came through the VA.

  • Beatrice

    I think this GI Bill sucks. My husband transferred his benefits to me to use for school, well I’m not entitled to the BHA. I don’t think this is fair if the benefits are transferred then all that goes with that should also be given. I have to wait for him to retire to receive the full benefits. Bull!!!

    • John

      Beatrice, your husband wouldn’t get the BAH anyways until he retires. If you are active duty and receive a housing allowance, you are not entitled to receive it under the P 9/11. Therefore, you are receiving the same benefit as any active duty service member using the P 9/11.

  • Artem mccall

    When did the GI Bill become transferable? My father did 23 yrs and retired in 91 I was hoping to use his and hold onto mine.

    • FMP

      Your fathers GI Bill will not apply to you, as he only had 10 years after retirement to use his GI Bill. It only applies to members still on Active duty with a year or more remaining to transfer their GI Bill. I don’t recall the exact year, but I know that it was in the last couple of years. I retired in ’08 and could not transfer mine to my children as it was not in effect at that time.

    • David

      You had to be on active duty as of 1 August 2009 in order to transfer your Post 9/11 GI Bill. Then, if you were not eligible for retirement as of that date, you incurred a further service commitment in order to transfer the GI Bill benefits.

  • retired w/ 37 yrs

    If you think this “clarification is taking money from us, check a bill the admin is planning to take effect Jan 2012. It is HR4646. It will require banks to chargew a 1% tax on ALL bank transactions. That means if you have a retirement, SSN or other check deposited (a transaction) the bank wiwll take 1% for Uncle Sammy. A retirement check of $2000.00 would be reduced to $1980. A SSN check of $1400.00 would get you $1386.00. Your deposits, withdrawals, checks, bills paid via computer all get taxed.

  • anon

    How do financial aid and the GI Bill work together? Will taking one affect the other?

    Veterans’ education benefits are not considered in determining eligibility for federal financial aid (they even took it off the FAFSA form). However, every state/school sets its own policies for determining how veterans’ education benefits affect state/local aid. We strongly encourage all veterans to apply for federal financial because many veterans qualify for additional educational funds like Pell Grants, worth over $5,500/yr.

    Recent legislative modifications to the Post-9/11 GI Bill (Chapter 33) have changed what tuition/fees the VA will reimburse. The VA is now considered a “payer of last resort”, meaning that they will only pay for tuition/fees that are not already paid for by other financial aid. For example if a veteran is receiving an ROTC scholarship that will cover the full cost of tuition/fee, the VA will not pay anything toward tuition/fees. Prior to August 2011 they would have paid tuition/fees regardless of any scholarships received by the veteran.

    There are several exceptions to the “payer of last resort” rule. The following types of financial aid are excluded from consideration when determining a student’s GI Bill benefits:

    * Title IV Federal Financial Aid: Benefits a student would be eligible for by filling out the FAFSA form (e.g., Pell Grants) do not count against your Post-9/11 GI Bill benefits.
    * General Scholarships: General scholarships given directly to the veteran or intended to cover any type of expenses are also excluded. Only scholarships given directly to the university to cover specifically tuition/fees and nothing affect GI Bill benefits.
    * Yellow Ribbon Program Contributions: Yellow Ribbon contributions can still be used to pay for the full cost of tuition/fees that are not covered by other sources.

  • Robert

    @ Artem Mccall… I retired in 06 and was seeking to transfer my GI Bill (I have the option to use Montgomery or post9/11) to my daughter. I have learned that it can only be transfered to dependant while the service member is active duty! Food for thought for my brothers and sisters still in the uniform! If you want to give that benifit to your dependants… DO IT WHILE STILL ACTIVE DUTY!!! The 10 year use or lose time clock starts the day youo leave active duty. Im not sure of how that clock is set for Active Reservists, but I would imagine is starts as soon as you goto inactive reserve status (or fleet reserve for us retirees). Fair winds and following seas~

  • tx_ggirl

    I have education benefits, so I really shouldn’t complain, but having to come up with an extra $3575 in two weeks notice was difficult. It would have been appropriate to communicate ALL of the changes to the bill instead of just some. Some of us living paycheck-to-paycheck can’t come up with that much money that quickly. It was only after I called the school to complain about the amount due being incorrect that I was notified that it wasn’t paid as I thought.

  • Joe

    Retired 2008 under 9/11, will this affect my monthly pay. I was getting 100% pay. I’m doing 7 semester hrs this fall will I still get 100% or this has nothing to do with our monthly pay.

  • sas

    So whats the problem? You expect 100% but youve either used or havent earned the extra….

  • gitnmobizy

    I hope that you are getting your 100%. I was getting my 40% for the fall and spring of 2010 but this semester that portion of my tuition was paid yet I have not received any book or stipend and the semester started 22 Aug 2011.

  • mikej

    The problem is it acts as a prorated payment. The VA should pay up to 70% of the total semester cost, not 70% of the remainder! If a semester costs $10,000 and I get $5,000 in grants and loans for the semester, if I am eligible for benefits the VA should pay up to (but not over) the full percentage of my entitlement against the cost of the semester. I don’t have a problem with the last payer idea, so long as the tuition considered is before grants and loans are applied.


    I’m Sorry, this whole thing is one cluster!!!

  • I ggot screwed out of my GI Bill long ago. Because I was determined to be service connected disabled by the VA not the navy even though it was caused by the navy I only got 10 months at 50% instead of the full benefit it allows for people with service connected. I hate loop holes.

  • Joe

    Yet another Government promise taken away or changed. My Daughter who is on the post 911 GI bill was caught unaware and has had to come up with more than she can afford….in her senior yr of private college……and isn’t it convienient that almost all student loans….have to go through the Gov’t now…..hmmmmmm.

  • Drew; US Army; Ret

    I paid my dues like every other vet. We have a President blaming congress and congress blaming the President for not working with each other. So, lets take it out on all us retiree’s that served so proudly. The whole reason I served 20 years was for the medical. Can beat it! Now the powers above want to return to the retirees and increase our annual premiums over a period of how long. When will they stop the increase, in 2013, 2014 2025? When the country is in need of help and congress needs to make a decision, you can rest assure that all them ya who’s in DC will take vacation. I’m sick of people make decision which benefit themselves while others struggle.

  • GAgirl

    I am still unsure why retirees getting the post 9/11 GI Bill get housing allowance. Please explain.


    • tdhowell

      Why wouldn’t they? Retirees do not get any form of BAH (which is the reason active duty do not get the stipend) and they’ve earned the benefit just like any other veteran. Is it because they get a monthly retirement check? Then tell me, should disabled vets not get the housing stipend since they get a monthly compensation check?

      • GAGirl

        Thanks for the reply. Didn’t mean to offend you in anyway. Just know people that are using the system.

        • tdhowell

          Sorry if my response was terse. You didn’t offend me. There is abuse on all sides of the GI Bill.

  • Gina

    Thanks for updating your article based on my comment pointing out the inconsistencies and oversights in the original article. However, you should not have erased the comment; you should have responded to the comment and noted the changes that you made as a result. Also, you did not remove the comments that people left prior to the changes, and some of those comments no longer make sense.

    The comment I left did not have slander, personal attacks, threats, discrimination, phone numbers, or email addresses, as is your policy for deletion. The only option left is that you found it to be “beyond acceptable.” I am not sure why correcting a math error or the misreading of the quoted legislation would not be considered acceptable. A writer who cannot acknowledge constructive criticism from the American public should not be posting on a site sponsored by the US Military and indirectly by public funds.

    • tdhowell

      Thank you for the “Constructive criticism.”

    • Rob

      Hell yeah.

  • Okay I am seeing that loans and Pell grants, all awarded through FAFSA are supposed to be left untouched right? Well I received a letter today from my school stating that my unsubsidized and subsidized loans, awarded through FAFSA, were both applied to my tuition. This is even after the GI Bill paid for this semesters tuition. So is the mistake in this article, in my school, or are we just getting robbed?

    • USA RET

      I think you just got robbed. your grant is yours thats why its called a Grant you need to investigate on that one. The GI bill should of taken care of that unless your GI Bill didn’t suffice.

    • Gina

      No, loans do not count. GI Bill is based on the total tuition after grants, before loans. It sounds from what you describe that it is applied correctly.

  • My Pell grant has been applied for the next 2 semesters at my college. I just recently received my payment of the 80% for one of the semesters that the post 9/11 will cover, and I had to come out of pocket to pay the rest.

    According to what you are all saying, the GI bill should have covered its portion 1st, then the Pell?

    That was what happened before, but now I ether have to take out loans or find a part-time job somewhere.

    Can someone clear this up for me? What is going on with this? Am I getting screwed over?

    • Gina

      The GI Bill is applied after the grant and you owe the remainder. If you were at 100% benefit level, you would not owe anything, but since you are only at 80% you are responsible for the remaining 20%.

  • Terminal Lance

    Working and going to school have not been a problem for me. In fact, I also support my wife and pay a mortgage.

    I have little sympathy for somebody who is discharged from the service after 18 to 24 months without a service-related injury if they’re “only” making 70% of tuition. Twenty four months is hardly enough to go through basic, do a workup, and get deployed.

    If a servicemember applies the discipline they were supposed to learn in the military, they should have no problem working part-time and making ends meet– even at 70%.

    Think about it. Twenty-five hours per week at ten bucks an hour will net you a little over $200 each week after tax. Don’t give me that “minimum wage” crap either; a produce counter guy at Publix could make ten dollars per hour. This is over $850 per month PLUS 70% of BAH valued at $1500+. Added, these figures put over $1,900 in your wallet every month.

    Living by yourself in a nice, 1BR apartment, riding the bus, getting a daily Coke and Snickers from the machine, paying for a Droid and data, eating $15 per day, and putting a Hamilton in the church plate, you’re _STILL_ gonna have enough to either (1) pay your tuition, you cheap one-pump-chump; or (2) defer a federal loan and buy beer.

    So, like “Suckitup” said, get over your “standard of living” nonsense and accept the military will give you a sizable sum for your paltry < 2 years of service.

    • The hard part is finding a job. Living in Miami, not so easy for me, especially when I tried to do the one bedroom thing…now I’m in a room sleeping on a sofabed. Cost of living here is ridiculous, so I’m thinking of moving back to my home state after I’m done with the semester. I did 4 1/2 years and I didn’t touch my GI bill until now, almost 8 years later. At the time I thought having military experience would land me any job I wanted, not the case.

    • Itsnotsosimple

      That’s the military mentality for you. You can’t have problems because I can forsee everything. You couldn’t possibly have kids, pre-existing debt, medical expenses or anything else that I don’t have. Your service means less than mine because I was in longer! Now get yourself into the round hole you square peg!

    • Amanda

      My husband only receives 70% not because he got out early but because his service time was split before and after 9/11. He served 7 yrs but only a portion of that was after 9/11.

    • nuna

      Mr. perfect over here, working and going to school and getting the 70% wasn’t enought to help support me and my two kids on my own, so i would shut your mouth

    • Moe

      Even 100% can fail to be enough for those of us not in the liberal arts side of college. As someone who can only afford 1 meal of Ramen per day with 4yrs service and 100% entitlement, you can take that attitude and stow it.

      Just because you might have taken the ‘la-de-da’ courses and never tried legitimately applying yourself (I’d imagine much like your time in service hiding in an office counting the hours away) doesn’t mean the rest of us aren’t pushing as far as we can get in the academic world. It costs a lot of money and a lot of time to take college seriously. I wonder how well you would do in an ODE course stacked with 5 other courses and still try to have a part time job.

      If we want any reasonable degree like a BA then we have to do it less time than the average person because we only have 36 mo. That leaves less time to work. It’s just logic.

    • Jordan

      I’m in the National Guard. I’ve had two combat tours to Iraq so far, which has been enough to earn me 70%. More than likely I’ll have another coming up soon which will put me closer to 100%. Believe it or not, though, some of us have these things called “lives”, which can come with “kids”, and “mortgages”, and “bills”. So, just “sucking it up” isn’t as easy for those of us who aren’t considered radioactive waste by everyone we encounter.

      Fortunately, you clearly are in that latter category, so I’m sure it worked out fine for you.

  • Keith

    Okay someone might have said this already but I got the post gi and I am starting UTI on the 24th and they told me I only get 17500$ per school year and I might have to pay 6000 of my own money but the gi bill is 54200$ right now j think and my school is only 27850$ so I don’t see why they can’t pay it all. Can anyone help me out on here or email me please thank u

    • Gina

      There is now a cap on tuition at the amount of $17500 based on the new legislation that was just passed.

      • Gina

        That is per year by the way, not per semester. Google GI Bill 2.0 for some information.

  • Ryan D

    Ok I am enrolled at Cal State San Marcos; here is the issue the SOG grants aren’t outlined in the sec 401 b so what my certifying official is trying to do is apply that amount first. Then have GI bill cover the fees. Pell grants and loans are not subject to this as outlined in the section above. I am curious what provision you have seen that excludes state grants because it’s about to cost my family $5000 which we can’t afford so any help would be appreciated.

  • John

    I am a graduate student who has been using the GI-Bill. Because I work for the university as a TA, my department pays my tuition and I have been receiving the VA benefits for that tuition as a refund. I was counting on the $4000 from the VA for the tuition for this Spring semester. However, just a few weeks before it began, my VA office here notified me that this policy changed back in August (though they didn’t realize until January) and said I wasn’t going to receive it. I then had to quickly take out a student loan so that I could pay rent.

    Can anyone tell me why I have to take out a student loan for the VA’s mistake? Why do they make these covert policy changes? Why would it apply to graduate students who work for their departments to pay their tuition and also worked for their VA benefits?

  • Ryan

    I joined the National Guard after active duty solely because the recruiter said I could use Nasty Girl TA in conjunction with the Post 911. Without the TA it would actually cost me roughly 75% of my pay just for gas since the mileage is roughly 500miles round trip. I did get to use both for 1 semester until this August 2011 decision, so I cant COMPLETELY complain…I mean I have signed Army contracts enough to know that they will straight lie to your face about many things. However, now that I am moving to a 4 year university with my AA completed, the University I want to attend is extending academic based scholarships to me. I find it disgusting that we lose our benefits that we earned, and that were built into our low pay while we were active, when we EARN civilian rewards for continuing to exceed!

  • Tim S

    These are the things our government tells us veterans not to worry about,why should our pell grants be used for tuition when the government says we are covered, now i have to get a part time job so i can keep my head above water.