Sunday, February 1, 2009

Fiscal Crisis Wrinkles New GI Bill's 'Yellow Ribbon'

The worldwide financial crisis has hit private colleges hard enough that relatively few are likely to participate in the Post-9/11 GI Bill's "Yellow Ribbon" initiative when it begins this fall, says Keith M. Wilson, director of education service for the Veterans Benefits Administration.

Under the Yellow Ribbon program, private colleges and universities can enter into agreements with the Department of Veterans Affairs to waive up to half of tuition and fees charged above the most costly state-run school. The VA, in turn, will match the waived amount, thereby enhancing school reimbursements and the value of the new GI Bill.

Wilson said he hopes he is wrong about near term prospects for the Yellow Ribbon feature which is intended to allow academically qualified veterans to attend some of the most prestigious schools in the country.

"Most schools aren't going to want to do a Yellow Ribbon program… because their finances have been hit too hard in the last couple of months," Wilson said in phone interview on draft GI Bill regulations.

That, he added, is his personal opinion from informal talks with some private school officials and not official responses returned to VA.

Get answers to the frequently asked questions about the New GI Bill.

Sen. John Warner (R-Va.), who retired this month, insisted last year that the Yellow Ribbon be part of the new GI Bill as a condition for winning his support. Warner said he wanted to be sure that qualified veterans could afford to attend the best schools just as veterans did following World War II.

VA officials in December mailed letters explaining the Yellow Ribbon program to private colleges and universities. VA is following up this month with another letter, this one asking schools if they will participate, what percentage of tuition and fees they might waive, and for how many veterans.

To date, Wilson said, he hasn't detected much enthusiasm for offering Yellow Ribbon discounts.

"Schools are really struggling right now, especially the high-end schools," he said. "Their endowments have just been crucified. That's [the] gut feeling I get from talking with these folks. They are just not in a position to be able to contribute."

Wilson suggested that some costly private schools "may do something token" so as not to seem "anti-veteran." But "not what we would have expected had we asked the question six months ago," he said, before stock markets and student loan markets "went south."

Many schools, he said, still are weighing the Yellow Ribbon option but there have been few positive signals.

"I really haven't had a real strong, iron clad, by-God-we're-going-to-do-this from any school," Wilson said.

The new GI Bill will pay tuition and fees at any college, up to the cost of attending the most expensive state-run school. Students also will get a monthly living allowance, set to equal basic allowance for housing locally for pay grade E-5, plus up to $1000 a year for books and school supplies.

Get the BAH rates for 2009.

Veterans attending degree-granting schools where tuition exceeds the state-run school ceiling will have to pay the higher costs themselves unless the schools offer further discounts through a Yellow Ribbon agreement.

Schools can waive whatever portion of the tuition disparity they choose, from 50 percent down the difference down to one percent. The government will raise GI Bill reimbursements by an equal amount.

VA rules will mandate that waivers be offered on a first-come, first-served basis, and they cannot be offered only to students in select fields of study. Yellow Ribbon colleges, for example, will not be able to target tuition waivers, for example, only at students who major in math.

GI BILL TRANSFERABILITY – The Department of Defense has responsibility for implementing the new GI Bill's transferability feature, which allows some service members to transfer unused benefits to spouses or children. This month DoD has moved to relax the transfer feature's eligibility requirement for servicemembers who are retirement-eligible or near so.

The new GI Bill law allows transfer of benefits to a spouse or to children only if service members are on active duty or in the Selected Reserve (drill status) as of Aug. 1, 2009, and agrees to serve an additional four years. The member must have served at least six years already to elect to transfer benefits to a spouse. They must have served 10 years already transfer benefits to children.

The law is silent on whether transferability is barred if members can't serve an additional four years because of DoD or service policy such as high-year tenure rules for enlisted and up-or-out promotion demands for officers.

Fortunately, the law also gives Defense officials broad authority to reshape transferability requirement as needed. This month, after consulting with the services, Defense officials tentatively have decided to relax the four-year service rule when it bumps up against other policies.

The four-year service requirement would be removed for members eligible to retiree now and those who become eligible on or before Aug. 1, 2009, the day the new GI Bill begins. (Retirement eligibility means completing at least 20 years of active service or 20 years of reserve service.)

Those eligible for retirement after Aug. 1, 2009, and before July 1, 2010, would have to serve only one additional year to qualify for GI Bill transferability. Those eligible for retirement after Aug. 1, 2010, and before July 1, 2011, would have to serve two additional years. Those eligible for retirement after Aug. 1, 2011 and before July 1, 2012, would have to serve three additional years to be able to transfer GI Bill benefits to family.

Use your GI Bill before time runs out!

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Copyright 2009 Tom Philpott. All opinions expressed in this article are the author's and do not necessarily reflect those of

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