This article is not intended to provide all the resources and information about the Post-9/11 GI Bill. It’s my story about how I set up my children for the GI Bill to provide an example of how it can be done. For a more comprehensive view of the GI Bill program, I’ve included links to some resources.
My GI Bill Story
When the Post-9/11 GI Bill was signed into law in 2008, I reviewed the Navy’s instructions for transferring my GI Bill benefits to my children. At the time, I had to agree to an additional four years of service and sign a Page 13 (Administrative Remarks) to start the clock. I was planning to retire, so I wanted to start the clock as soon as possible so that I didn’t have that hanging over my head.
This turned out to be a stroke of fortune, as several of my colleagues at other commands were burned because the paperwork wasn’t routed properly. In one case, a shipmate had to postpone his retirement because he reached the 20-year mark before he realized that his paperwork got lost, and the time he was tracking did not count.
Note: If you do not plan to use all of the benefits yourself, you should apply for transferability as soon as possible, even if you haven’t decided which of your beneficiaries will receive the GI Bill benefit. Also, monitor your status at milConnect, and use this as the reference to keep on top of your responsible administration office. Starting the clock is the most important thing, especially if the benefits change in the future.
Once we took care of the service obligation, Tania and I thought about how we would use the benefit. She was planning to go back to school, so we had to decide whether to use some of the benefit for her or to use it all for the children. In the end, we decided not to use the GI Bill for her coursework. We determined that we would get more bang for the buck by waiting to transfer to the children because:
- Tania’s coursework was at a community college. We could budget the cost of her coursework and save the tuition payment for our children, who would likely use it for a four-year college.
- Since I was still on active duty, as my dependent, she would not be entitled to the housing stipend. Our children would benefit more if they end up going to a college where they need to pay for housing on their own.
Note: Try to determine how much value you will get from each option, and then choose the one that gives you the best bang for the buck.
Since our children are 7, 7 (twins) and 11 making these decisions in advance meant we didn’t have much to about the GI Bill in the near future. However, we will keep an eye on changes and have frank discussions with our children about college planning so they have realistic expectations. My grandmother did a great job of setting me up for college success, which is captured in this video interview with financial planner Holly Thomas here. Below, I’ve outlined how the GI Bill complements the rest of our college savings, and how that would play out if our children chose to go to community college, and then transfer to a Florida public school.
Coordinating the GI Bill with 529 Plans
Outside of the GI Bill, after each child was born, Tania and I established College 529 plans through T. Rowe Price. This gives us the flexibility to combine college savings with the GI Bill to pay for our children’s college. Since each child represents a $1,000 child tax credit each year, we take that right off the top of each year’s tax return and sock $1,000 away directly into each child’s 529 plan. In addition, we contribute $50 per month to each kid’s account.
If we contribute the same amount each year until they turn 18, I conservatively estimate each child will have about $40,000 available, as well as 12 months of the GI bill. Each school year is considered to be nine months, so this means each child receives a full year and roughly one-third of another year.
Let’s take a look at each year of college to see how far that $40,000 would take Nicholas, our oldest child, when he starts college in 2023. This assumes that he goes to Hillsborough Community College (HCC), then transfers to the University of Florida (Go Gators!). Let’s also assume that he stays home during his HCC years and does not pay for room and board — a concession his mother and I would be more than happy to make if he’s productive.
For this, there are a couple of assumptions on HCC and University of Florida costs:
- HCC’s tuition, books and registration costs for 2014-2015 were approximately $4,000 per year, according to the HCC website.
- From 2000 to 2010, the average inflation rate for HCC’s tuition costs were about 6%. Based on this rate, Nicholas’s first year of tuition would be approximately $6,000.
- University of Florida in-state tuition for 2015-2016 was approximately $20,600.
- The five-year inflation rate for Florida school tuition is approximately 18%, so Nicholas’s senior year tuition (in 10 years) should be about $29,000.
Freshman (community college) costs: $6,000 (assuming he stays at home, so no room and board)
Sophomore (community college) costs: $6,400
Junior: (GI Bill): 0
Senior: (one-third GI Bill and two-thirds self-funded): $19,333
Difference: $40,000-$31,733=$8,277 left over
There are a lot of assumptions here, which may or may not be accurate, and could lead to a funding shortfall. Our children may not go this route. They also know that if they go for a more expensive education, paying for it is their responsibility. (Note: some of the more expensive colleges and universities offer the Yellow Ribbon Program to help defray costs.) Obviously, rising college costs are a concern, as are living expenses, books, lab fees, extra-curricular programs, meal plans and a lot of other things that are not taken into consideration, or where my assumptions might be faulty.
Also not taken into consideration are: AP courses, dual enrollment, financial aid, scholarships, grants, work programs and just good old-fashioned working a side job while going to school. Also, if our children choose to find a college closer to home for the full four years, they would save money on the cost of room and board.
Our goal is not to fully fund our children’s educations, but to close the gap so that they can make smart decisions and they can combine the GI bill with other financial aid options, which Tania and I believe should be a fundamental part of college planning. If this is not compatible with your personal philosophy, it is still a decent baseline from which you can make adjustments.