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. Previously, 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 benefits aren’t eligible. My question is, can they do that?
A: Great question. To be honest, I am not aware of any laws preventing a company from doing this, since companies provide educational benefits at their discretion. I don’t agree with it. I believe companies should treat all of their employees the same way and offer them the same benefits. On the other hand, I understand that educational benefits are a bonus and not a right, and companies often put limits on them. For example, they may limit tuition assistance benefits to certain degree programs or require the benefits only be used for a higher-level degree than you currently have.
So where does that leave you?
If you use the MGIB, the GI Bill benefits are sent directly to you. You may be tempted to double dip since there is no way for the company to know whether you are using the GI Bill.
However, that’s dishonest, and it goes against company policy. It could be grounds for dismissal, and the company could make you repay the cost of the benefits you used.
I wouldn’t take the risk.
So you’ll have to decide which benefit to use. In some cases, you may receive more from the company benefits, especially if you are only going to school part-time and are only receiving partial MGIB benefits. Using your company benefits would also preserve your GI Bill to use when you exhaust your company benefits or leave your current job.
Other factors to consider are tax implications, employment obligations and GI Bill benefits expiration.
GI Bill benefits are not taxable, but employer education benefits may be. You can receive up to $5,250 in tax-free educational benefits from your employer. You must report any employer-sponsored tuition assistance above that amount as income, according to the Internal Revenue Service.
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, while you may not use employer educational benefits at the same time as the GI Bill, it may be possible to use employer benefits up to the taxable limit and 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 lower benefits overall.
Finally, keep in mind that the MGIB expires 10 years after you leave active-duty service. If you are approaching the expiration date for the MGIB, consider transferring to the Post-9/11 GI Bill, which gives you more time. If you separated from the military before Jan. 1, 2013, your Post-9/11 GI Bill benefits expire 15 years after you left active-duty service, and never expire if you separated on or after that date. You can get an MGIB refund under certain circumstances, but you will have to transfer to the Post-9/11 GI Bill and exhaust those benefits.