I love the GI Bill. It’s a great program, and one that I have used to help achieve my degree, as well as take additional courses. If you are eligible for GI Bill benefits, I highly recommend using them to help you achieve your personal, professional, or educational goals.
The Montgomery GI Bill can be especially valuable if your employer offers education benefits since the MGIB is paid to you, and not the school. I have a friend whose company paid for his MBA while he pocketed his MGIB benefits, earning over $1,300 a month in the process. His company didn’t have any policies against this, and neither did the GI Bill. What he did in this instance was both allowed, and ethical.
But some companies are tightening their purse strings, and removing this loophole in order to cut down on their expenses. And that brings us to today’s situation, which is a reader question we received.
Should You Use Employer Education Benefits or the GI Bill?
Q: I am currently employed by a company that offers educational assistance. Typically we could use our Montgomery GI Bill and still receive this corporate benefit. Since the new GI Bill was introduced, they have updated the corporate policy to state that those using GI Bill aren’t eligible. My question is, can they really do that? I can understand making that stipulation for people using the Post 9/11 GI Bill, but the Montgomery GI Bill is a whole different animal. Any input is greatly appreciated.
A: Great question, and to be honest, I am not aware of any laws that would prevent a company from doing this, since company educational benefits are voluntary. Personally, I don’t agree with it – I believe companies should treat all of their employees the same way and offer them the same benefits. But on the other hand, I understand that companies offer educational benefits as a bonus, and not a right. For example, many companies limit tuition assistance benefits to certain degree programs, or require the benefits only be used for a higher level degree than you have (for a master’s when you already have a bachelor’s, or a doctorate when you already have a master’s).
So where does that leave you? Well, you need to make a decision regarding which benefits to use.
If you are using the Montgomery GI Bill it’s possible you could double dip since the GI Bill benefits are sent to you and not to the school or the company. Quite frankly, there is no way for the company to know whether or not you are using the GI Bill. But the problem with that is it is dishonest if it goes against company policy and it could be grounds for dismissal from your job, or the requirement that you reimburse the company for the cost of the benefits you used. And even if you don’t get fired, chances are high that you would be on the short list from there on out.
In other words, I wouldn’t chance it.
My recommendation is to look at both your GI Bill benefits and your company’s benefits, and see which one is more valuable to you. In some cases, the company benefits will be more valuable, especially if you are only going to school on a part time basis and receiving partial MGIB benefits. Using your company benefits would also allow you to preserve more of your GI Bill to use in the event you exhaust your company benefits or if you leave your current job.
There are a few other considerations to account for before deciding which benefits to use: taxes, employment obligations, and GI Bill benefits expiration.
GI Bil benefits are not taxable, but employer education benefits can be taxable once you reach a certain point. Employers are allowed to provide up to $5,250 in tax-free educational benefits to their employees. Any employer sponsored tuition assistance above that amount is considered income by the IRS. So you may consider using partial GI Bill benefits and partial employer tuition assistance if you can find a way to use both and stay within your company regulations. For example, you didn’t state you couldn’t use employer educational benefits if you eligible for the GI Bill, just that you couldn’t use them both at the same time. So it may be possible to use employer benefits up to the taxable limit, then switch over.
Additionally, you may incur an employment obligation with your company if you use their tuition assistance benefits. So if you believe you may be ready to move on to a new company after you finish your current degree plan, you may wish to use your GI Bill instead, even if it offers slightly less benefits overall.
Finally, keep in mind that the Montgomery GI Bill expires 10 years after you leave active duty service. You can get a Montgomery GI Bill refund under certain circumstances, but it requires you to transfer to the Post-9/11 GI Bill and exhaust those benefits. If you are running up on your expiration date for the Montgomery GI Bill, then consider transferring to the Post 9/11 GI Bill if you are eligible. These benefits expire 15 years after you leave active duty service.