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.

39 Comments on "GI Bill Wrinkle Could Cost Vets Thousands"

  1. 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.

  2. 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.

  3. 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.

  4. dont pell grants fall under 401(b)

  5. 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.

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

  7. 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?

  8. 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.

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

  10. 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.

  11. 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?

  12. 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.

  13. 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?

  14. 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.

  15. 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.

  16. 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!!!

  17. 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.

  18. retired w/ 37 yrs | September 29, 2011 at 8:02 pm |

    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.

  19. 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.

  20. @ 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~

  21. 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.

  22. 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.

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

  24. 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.

  25. 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.

  26. FRUSTRADED RETIREE | September 30, 2011 at 2:35 pm |

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

  27. 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.

  28. 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.

  29. Drew; US Army; Ret | October 4, 2011 at 8:14 pm |

    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.

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


  31. 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.

  32. 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?

  33. 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?

  34. Terminal Lance | October 10, 2011 at 10:04 pm |

    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.

  35. 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

  36. 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.

  37. 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?

  38. 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!

  39. 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.

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