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Most pay for GI Bill they could get for free

Sep. 10, 2012 - 07:01AM   |   Last Updated: Sep. 10, 2012 - 07:01AM  |  
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How to get your $1,200 back

Montgomery GI Bill refunds have escalated annually since the first were doled out in 2010, from nearly $60,000 that year to nearly $500,000 in 2011 and close to $790,000 in just the first three months of 2012.
But getting back that $1,200 enrollment fee is not simple. There’s only way to do it: You must first use up all your Post-9/11 GI Bill benefits, which typically cover 36 months of schooling.
And if you use any of your Montgomery GI Bill benefits before applying to the Veterans Affairs Department to switch to the Post-9/11 GI Bill, your refund will be less than the full $1,200 you paid.
Such refunds are added to the final monthly housing allowance payment under the Post-9/11 GI Bill.
Ways to get your money back:
* If you have no college credits: With no or very few credits under your belt, going to college full-time and completing a bachelor’s degree under the Post-9/11 GI Bill likely will get you close to exhausting your benefits and triggering the automatic $1,200 refund.
* If you’ve earned some credits while in uniform: If your credits add up to a year or more and you won’t use up all of your months of Post-9/11 GI Bill benefits completing a four-year degree, you could plan to finish your bachelor’s and then pursue a master’s degree with your remaining months. Alternatively, if you’ve served at least six years and plan to commit to four more, you can elect to share some or all of your Post-9/11 GI Bill benefits with your spouse, or with your children if you’ve served at least 10 years.
* If you already have a degree: You could pursue an advanced degree — these often translate to higher salaries and better civilian job prospects — and still transfer a portion of your benefits to a spouse or child if you meet the service requirements.
* If you want a vocational or technical degree: These degrees, which typically take two years or less to complete, could leave you with benefits to spare, meaning you wouldn’t trigger the $1,200 refund. In this case, think about earning multiple credentials: Pair welding with aircraft manufacturing and avionics, for example.

Did Uncle Sam charge you $1,200 for a benefit you can get for free? Probably.

This year, 90 percent of recruits across the armed services — more than 100,000 people and counting — have enrolled in the old Montgomery GI Bill, which requires recruits to pay a buy-in fee of $100 a month over their first 12 months of service.

More than three years after Congress created the new, free Post-9/11 GI Bill, and almost a year after lawmakers enhanced it with changes that largely made the old bill irrelevant, recruits continue to be automatically enrolled in the old GI Bill because the law still states that all troops must be enrolled in the Montgomery GI Bill unless they specifically request to opt out.

The Pentagon and military officials defended the old GI Bill, saying there are still cases in which it is the better benefit.

The Post-9/11 GI Bill requires no contribution from troops and provides a far more generous benefits package than the Montgomery GI Bill, including full tuition at in-state public schools or at private schools up to $17,500 a semester; housing allowance at married E-5 rates; money for books, tutors and testing; and even the ability to transfer benefits to spouses or children if you serve at least six years and agree to serve a total of 10. It also offers vets a longer window in which to use their benefits: 15 years versus 10 for the Montgomery GI Bill.

Troops who buy into the Montgomery GI Bill —those who did so before the new bill's creation and those who did so after — can switch programs, but there's only one way to get your money back: You have to exhaust every bit of your Post-9/11 GI Bill benefits. Otherwise, consider it a donation to the federal treasury.

Military officials said they believe there are still some situations in which the Montgomery GI Bill would be better than the Post-9/11 plan.

Students attending low-cost schools in low-rent areas could pocket some money under the old program, and they would also have the possibility of qualifying for an extra year of benefits.

"If you want your most options available — that doesn't paint you into a box — Montgomery GI Bill is the best way to start," said Master Sgt. John Haley, an Air Force education benefits instructor supervisor.

The Montgomery GI Bill pays up to $1,473 per month directly to the student, unlike the Post-9/11 GI Bill, which is tied to actual tuition and fee rates and paid to the school. Rates increase each year; on Oct. 1, the maximum monthly MGIB payment will increase to $1,564.

So in some cases, such as students enrolled at low-cost community colleges in rural areas where housing costs are low, it's possible to pocket a little cash with the MGIB.

But the biggest gap between the programs vanished last year when Congress expanded the Post-9/11 GI Bill to cover vocational and technical training, which previously had been covered by the MGIB only.

With that, veterans advocates say, the Post-9/11 GI Bill is the clearly superior benefit in all but the rarest of circumstances.

"There's no need for [recruits] to have their pay reduced $1,200 the first year that they put on the uniform of the United States," said Robert Norton of the Military Officers Association of America. "All of them should be encouraged to opt out of the old GI Bill."

Opt out or pay up

Opting out is not so easy.

The law and Pentagon policy dictate that recruits can opt out of the Montgomery GI Bill only within their first two weeks of basic training.

But given the stresses of those first days of training, these mostly 18-, 19- and 20-year-olds may be unlikely to say or do anything that might bring them undue attention.

Nor are they likely to understand the nuanced differences between the benefits or to make wise financial decisions when their heads are spinning from the shock of their sudden immersion into military life.

"It really doesn't make much sense," said Michael Dakduk, a former Marine who used tuition assistance and the GI Bill to get his degree and is now executive director of Student Veterans of America. "That's just mind-boggling."

Once a service member is enrolled in the old program, the paycheck deductions continue for the entire first year and can't be stopped.

To complicate the decision just a bit more, troops are also informed of their option to pay an additional (nonrefundable) $600 into the Montgomery GI Bill — known as a "kicker" — to get $5,400 in additional benefits. It sounds like a great deal — but even that extra money is unlikely to make the Montgomery GI Bill more valuable than the Post-9/11 GI Bill.

Different branches, same story

Throughout the services, about nine in 10 recruits have been enrolled in the Montgomery GI Bill — except for those at Marine Corps Recruit Depot Parris Island, S.C.

In 2010 and 2011, the number of recruits at Parris Island opting out of the Montgomery GI Bill barely hit double digits. But this year, more than 6,200 recruits— 60 percent of Parris Island's graduates through August — have declined the old program.

In contrast, only 10 new Marines at Marine Corps Recruit Depot San Diego declined the Montgomery GI Bill over the same period.

According to descriptions provided by a Marine Corps official, the discrepancy may be a result of different education benefit briefings at each depot.

Parris Island provides a chart comparing the benefits of the two GI Bill programs, and recruits have time to consider the options and decide on the spot. San Diego provides "brief descriptions" of the programs but doesn't ask recruits to choose until days later.

Every other place that trains recruits is signing them up for the Montgomery GI Bill by the thousands.

Both the Navy and the Air Force enrolled 88 percent of 2012 recruits in the old program, more than 35,000 in all. And the Army was even worse, enrolling 99 percent, or nearly 61,000 recruits, in the Montgomery GI Bill during this fiscal year, according to Army data.

In fact, the percentage of Army recruits enrolled in the Montgomery GI Bill has steadily increased since 2010. Army officials would not speculate on the reason.

‘Following the money'

Navy and Air Force officials who help explain GI Bill benefits said they can't recommend that troops sign up for either program and must leave it to individuals to decide on their best fit.

"We're not allowed to sell one or the other," said Navy Petty Officer 1st Class Carl Latorre, who advises recruits at Naval Station Great Lakes, Ill. "We can't even tell [recruits] which one we have."

But an Army master sergeant who briefs recruits on GI Bill benefits expressed no such reservations. He said signing up for the Montgomery GI Bill is a "no brainer" and he "absolutely" recommends that recruits do so.

But the master sergeant expressed the incorrect belief that recruits must pay into the Montgomery GI Bill to become eligible later for the Post-9/11 GI Bill.

In fact, Post-9/11 GI Bill eligibility is based solely on cumulative active-duty time since Sept. 11, 2001. Anyone who completes three years of active duty after that date qualifies for full Post-9/11 GI Bill benefits, even if they never paid into the Montgomery GI Bill.

The master sergeant might have been confused by another wrinkle in the law, one that allows troops who use up all their Montgomery GI Bill benefits to qualify for an additional 12 months of Post-9/11 GI Bill benefits.

But even that extra year won't make up the difference in the programs, notes MOAA's Norton.

Norton acknowledged that the Montgomery GI Bill may be a slightly better deal in areas with very low living costs, but he characterized that as a rare exception.

Troops and vets, meanwhile, seem to figure that out on their own pretty quickly. The number of people actually using Post-9/11 GI Bill benefits has soared since that program began, while the number using the Montgomery GI Bill is plummeting.

"What are veterans doing?" Norton asked. "They're following the money."

Capitol Hill mum

The services point out that they follow current law in continuing to make the Montgomery GI Bill the default choice for recruits and that any changes would have to come from Congress.

Both the MOAA's Norton and SVA's Dakduk said Congress should simply eliminate the Montgomery GI Bill.

Norton speculated that Congress may be reluctant to give up all those $1,200 buy-in fees.

"For all those troops who don't opt out, that is a cost-avoidance for the [government]," he said. "That's 90,000 [per year] times $1,200. That's a chunk of change."

In fact, legislation drafted in late 2010 that led to major improvements in the Post-9/11 Bill originally included a proposal to kill the Montgomery GI Bill.

But that proposal was one of only a few dropped from the final legislation, probably because an overarching goal was to ensure that improvements to the new program did not add to the government's overall costs to provide GI Bill benefits.

A spokesman for Sen. Jim Webb, the Virginia Democrat and former Navy secretary who was the driving force behind the creation of the Post-9/11 GI Bill, declined repeated requests for comment.

Rep. Jeff Miller, R-Fla., chairman of the House Veterans' Affairs Committee, and his staff also declined to directly respond to questions about the matter.

Instead, Miller emailed a brief statement to Military Times lauding the GI Bill and saying that troops "need to be informed about their educational benefits" and should have "flexibility" in their pursuit of higher education.

For too many, the necessary understanding comes well after they have already ponied up $1,200 for a benefit widely advertised by recruiters and Congress as free.

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