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FATW: Transferring Post 9/11 GI Bill Benefits to Your Children

GI Bill, College Tuition

Found Around the Web: The Military Wallet Discusses Post 911 GI Bill Benefits, and Paying for College Tuition and Expenses

Yes, that child is adorable, and no, it isn't a random stock photo.  That's my nephew, Weston Scott Swaleh.  I found him a fitting choice to represent this material because his daddy, my brother Shaun, is an example of someone that is benefitting from the Post 9/11 GI Bill by going to school full-time (and looking after this handsome little patriot between classes).  Shaun is working on getting his bachelor's degree, and the VA is covering the costs of tuition.  Now that Weston has come along, the question has come up as to how much of this benefit he can/should save for future education expenses.

#FATW Snapshot

  • SOURCE:                 The Military Wallet
  • TAGS:                      College Savings, Military Benefits
  • ORIGINALITY:         High--Combines Multiple Topics

FAVORITE QUOTE: "You're no good to anyone else if you can't take care of yourself"

COMMENTS:  Guina goes into a topic that I find interesting, and in full disclosure, I go off into the same tangent below.  This isn't just about "how to pay" for your children's college, it's about "should you?"

Right on queue, Ryan Guina from Military Wallet has posted this podcast entitled "How I Plan to Pay for My Children’s College with the GI Bill and 529 Plans" which I will tell you about here.  You can also follow the title-link for the original post on his website.

To recap some of the details of the 2009 Post 9/11 GI Bill, Guina reminds us:

  • Serving active duty for 30 days on or after 9/11 qualifies you for a portion of the benefit, serving 6 months gets you half, and a full 3 years of service gets you 100% access to GI Bill benefits.
  • In order to be eligible to transfer, you had to already have 6 years of service, and then elect to extend for another 4 years.  This was done primarily as a retention bonus to get soldiers to reenlist.  
  • Spouses can always access transferred benefits, but children must use it by age 26.
  • The Bill covers college tuition up to the highest "in-state" tuition for colleges in the state in which it's used.  Therefore, it varies by state.  It also gives you a MHA equal to BAH for an E5 with dependents and a $1000 stipend to pay for books.
  • Transferring benefits is revocable, and you can transfer all or part of it, or spread it amongst multiple children.

Now, I haven't made a habit as of yet of posting content from other sites on VAFinances, but this podcast hit home with me for a number of reasons.  The first is that it was clear that there was some confusion in my family as to the options they had with their GI Bill benefits, and it was good to clear that up.  My brother is not eligible to transfer his benefits to Weston since he doesn't meet the reenlistment criteria.  My other brother Joe also was not sure what ability he might have to gift benefits for his two boys.  Bottom line, it is not a well-understood topic of discussion.  

I also completely agree with a what came through as his philosophy on supporting your children financially.  I think it's a must-read for Veteran parents--or any parent of college age kids for that matter.

Guina argues for a "save for your own retirement first" mentality when it comes to allocating savings dollars, as evidenced by his quote above: "You're no good to anyone else if you can't take care of yourself".  

Being the "financial expert" of my family means I'm privy to more of my family's financial information than any man would want to be.  So, again, this statement hits home to me as I watch my parents approach retirement age with less than ideal retirement savings.  Honestly, I'm realizing that my family is a helluva case study for this issue.

I paid my own way through college and grad school, mostly.  The total cost of my education was $260,000, and my parents paid about $15,000 of that (in addition to covering insurance costs, housing me during the summers, etc.).  Bottom line, I was on the hook for $245,000 worth of college expenses.  How the hell did I pay that much toward my own education as a teenager and young adult?

This is where most of the parents I talk to now need a wake up call.  I didn't pay for it as a college student.  Here's what I did:

  • As a high school student, I knew I wanted to be a successful adult, and I knew getting there was my responsibility, because that was the expectation my parents set.  I'm sure they would have loved to be able to foot the bill, but they were middle class parents with 7 children.  Good luck.  I was the oldest, the way-paver, so I thought.  So you know what I did?  I worked my ass of to get good grades.  Some kids loved school.  I wasn't one of those kids.  For me, it was a means to an end.  This taught me that sometimes you have to do things that are not fun in order to get somewhere I wanted to go; i.e. it gave me a work ethic.  Due to this effort, I got into a great college, and earned a total of $120,000 in scholarships over my 4 years of college.
  • During the 4 years of college I always had a job. Now, these were typically minimum-wage jobs that allowed me the opportunity to do my homework during downtime. That was a strategic decision that I made that put learning above nominal pay increases. My goal was to earn enough to have some fun while I was at school, not necessarily “pay for college” while going to college. 
  • After all, that's what student loans were for. As you might guess this gap of $125,000 was made up almost entirely of student loans that were cosigned by the parents. That’s right, cosigned by my parents. They were in my name, and the expectation was always that I would pay for these when I was done school and found a job. Which I did. During my four years of college, even though my primary objective was not to pay for school while in school, I was still able to contribute about $5000 total. Therefore, by the time I finished my MBA I was left with $120,000 in student loan debt.

  • It took me 10 years, but today that number is zero. With no help from anybody, I paid every cent of those $120,000 in student loan debt off myself.  Did I wish that my parents had won the lottery somewhere along the way and helped me pay these loans off? Hell yeah. But that’s not reality, and I understood that my parents have other obligations.  They had raised a self-sufficient, motivated, hard-working and willing to hustle young man that now has the ability to say “I did it myself”.

But that was just me, and remember they had 6 other kids.  Sarrah, my youngest sister, just turned 18 is attending Baylor this fall. I think they plan to contribute heavily to their own detriment, and I wish I could talk them out of it, but it's not really my call.

What about the other five? Well, they were a mix of my parents dumping money into their education and finding their own way as well. As you know by now, three of them ended up joining the Army and therefore covering the remaining cost of their education themselves. One of them did ROTC and entered as an officer and the other two wasted a bit of parent provided tuition money before enlisting. My step-brother is now a lawyer, and he was fortunate enough to have my step-grandparents completely cover the cost of law school.

Back to my parents, where does that leave them? Well, because they've spent the last 33 straight years taking care of children in one form or another, they have a lots of work to do over the next decade to have any chance at retiring with any sort of comfort and enough gas left in the tank to enjoy it. They'll be okay, my brothers and I will make sure of that. But if there is one thing I can teach you from this experience it is that Guina is right: make sure your own finances are in order before you decide that covering the entire cost of your children's education fits squarely on your own shoulders.

Should you pay for your kids college at all?  I can't answer that question for you, and you wouldn't listen if I did.  It's not just a financial decision, it's an emotional one and as a parent I can sympathize with wanting to do everything you can for your children.  However, I can tell you this from experience, and Guina touches on this subject as well: There are valuable lessons to be learned from having to figure things out on your own with some guidance. You learn to take care of yourself, you learn problem solving, you learn how to prioritize your time and makes you a better adult.

Guina's stance is that you should absolutely transfer benefits to your children if you meet the criteria to do so, as their is no risk.  He also teaches you how to use a 529 savings plan to help as well, a subject I plan to write about soon.  Whether doing this is in your plans or not, it's worth the time to learn how.  Enjoy!

This discussion is worthless in a vacuum, and I don't feel my own opinion is the only one that matters.  So, chime in!  Comment here, share this post, or reach out to us.  We're here for you.




1 Comment

  1. […] the alternative of investing in 529 Plans to supplement college expenses.  We also discussed whether or not you should even pay for your children's education at all.   Today, you likely ended up here because you're wondering if using a College Savings or […]