How Veterans Can Finance Graduate School

As veterans transition out of military service, many decide to pursue a graduate degree. But, this education can be expensive, leading to the question of how veterans can finance graduate school. As such, we’ll use this article to outline different options veterans have to finance their graduate degrees.

Specifically, we’ll cover the following:

• Post-9/11 GI Bill
• Yellow Ribbon Program
• Veteran Readiness and Employment (formerly “Voc Rehab”)
• Scholarship Options
• Federal Student Loans
• Private Student Loans
• Future Earnings?
• Final Thoughts

Post-9/11 GI Bill

For veterans looking to attend graduate school, the Post-9/11 GI Bill remains the absolute best financing option.

While the GI Bill began with the Servicemen’s Readjustment Act of 1944, the current, Post-9/11 version offers particularly outstanding education benefits for veterans. Of note, eligible veterans can receive up to 36 months of the following:

• Tuition and fees: The GI Bill will cover up to the in-state, public school maximum for graduate school tuition and fees.
• Monthly housing allowance: In addition to tuition and fees, the VA will pay eligible veterans a cost-of-living-adjusted, tax-free housing stipend while they are enrolled in classes. For veterans with families, this stipend can make a huge difference in the decision to attend graduate school full-time, as it allows you to focus on your education while still knowing you’ll have housing expenses largely covered.
• Book stipend: Graduate school books are expensive. Fortunately, the GI Bill provides veterans up to $1,000 in tax-free book stipends to help offset these costs.

To use this benefit, veterans first need to confirm their eligibility by applying directly with the Department of Veterans Affairs (VA). Once the VA confirms eligibility, it will issue veterans a Certificate of Eligibility, which outlines the percentage of benefits available and time remaining. Certifying officials at your graduate school of choice can help you navigate applying these benefits to your tuition.

Yellow Ribbon Program

If you’re considering attending a private graduate school, you likely noticed in the above section that the GI Bill covers the in-state tuition and fees for public schools. Does this mean that you’ll need to pay the difference out-of-pocket if you attend a more expensive private school?

Not necessarily.

If you qualify for 100% Post-9/11 GI Bill benefits and your school participates in the Yellow Ribbon program, you may not need to pay anything. Yellow Ribbon acts as a financing mechanism meant to bridge the gap between what the GI Bill will cover and the actual cost of tuition for more expensive private graduate schools.

If your target graduate school participates in the program, you can apply directly with the school for one of its Yellow Ribbon spots. Then, the school will pay a certain amount towards your tuition (up to the GI Bill maximum), and the VA will match that amount!

For example, if your graduate school decides to contribute $20,000 in Yellow Ribbon benefits, you’ll receive: A) your Post-9/11 GI Bill tuition and fees up to the in-state, public maximum; B) the $20,000 directly from the school; and C) another $20,000 from the VA matching the school’s Yellow Ribbon contribution.

While the specific graduate school will dictate whether or not these Yellow Ribbon proceeds cover all tuition and fees, they certainly go a long way to offsetting out-of-pocket costs for private graduate schools.

NOTE: If you’re interested in a particular private graduate school, the best option for determining out-of-pocket expenses is reaching out to a currently enrolled veteran at that school. Most US graduate schools have some version of a veterans’ club, and these are great places to find veteran points of contact.

Veteran Readiness and Employment (formerly “Voc Rehab”)

Formerly known as “Voc Rehab,” Veteran Readiness and Employment (VR&E) offers another potential option for veterans with a service-related disability to finance graduate school. Per the VA, this program is meant to assist veterans with service-connected disabilities to obtain suitable employment. And, within this mission, some eligible veterans will qualify for graduate school tuition assistance through VR&E.

However, it’s important to note that, unlike the GI Bill, VR&E does not guarantee all veterans education benefits. Rather, for service members with disabilities that limit their ability to work in some capacity, VR&E may provide employment support services, to include graduate school tuition.

In other words, VR&E represents more of an it depends option for financing graduate school. Each veteran’s unique situation will determine whether he or she qualifies for graduate school benefits through this program. Fortunately, though, the VA makes applying for the program fairly straightforward, meaning you don’t lose anything by applying.

To apply for VR&E benefits and determine whether the program will cover graduate school tuition, take the following steps:

1. Sign into eBenefits.
2. Select “apply.”
3. Select “Veteran Readiness and Employment Program.”
4. Apply for “Education and Career Counseling.”
5. If deemed eligible, the VA will invite you to an orientation session where you can discuss specific benefit options.

Scholarship Options

Unfortunately, many veterans decide to use their GI Bill benefits for graduate school and therefore don’t consider pursuing other scholarship options. The thought process goes like this: The GI Bill’s covering my tuition, so why would I need a scholarship?

Because you may be able to use any scholarship dollars you receive beyond tuition and fees for other expenses!

During a year or two of graduate school, you’re going to have far more expenses than solely tuition: housing, food, and travel, just to name a few. While your GI Bill monthly housing allowance will certainly help with some of these, it may not cover everything. As such, you don’t have anything to lose applying for scholarships (except the time and effort to apply), but you potentially have thousands of dollars to gain.

Here’s a basic example. If you attend a public graduate school, the GI Bill will cover your tuition and fees. If you also receive a $10,000/year scholarship, that means you could use that $10,000 for other expenses, as your tuition and fees are already covered by the GI Bill.

Broadly speaking, graduate school scholarships fall into one of the following two categories:

• School-specific: These are scholarships unique to a particular graduate school. And, many schools include scholarships solely for veteran students. Ask your target graduate schools for any such scholarships they may offer.
• Private: These are veteran-specific scholarships provided by private foundations or charities that can be used at any graduate school. A cursory online search will show you the dozens of private scholarship options available to veterans.

NOTE: For tax purposes, veterans need to understand that any scholarship funds received beyond qualified education expenses qualify as taxable income.

Federal Student Loans

If, after looking at all of the above options, financing your graduate school program still seems out of reach, you can take out federal student loans.

For graduate school students, your primary federal loan option will be federal direct unsubsidized loans (as opposed to subsidized loans, which have slightly better terms but are only available to undergraduate students).

According to Federal Student Aid (an office of the US Department of Education), direct unsubsidized loans are available to graduate students, and you are not required to demonstrate financial need.

Your actual graduate program will determine the amount you can borrow, which is based on cost of attendance and any other financial aid you receive.

Private Student Loans

As a final option, veterans can consider private student loans to finance graduate school. If you’re not sure what you want to do after graduate school (and therefore can’t accurately forecast future earnings), private, income-driven student loans may be a good option.

With these loans, lenders put a ceiling on repayments between 10% and 20% of your discretionary income. Put simply, instead of needing to pay a set amount every month, your payments will be based on how much money you’re making, which provides far more financial flexibility.

Future Earnings? We’ve intentionally made this section heading a question.

Statistically speaking, a veteran with a graduate degree will make more money than one without a graduate degree. As such, many veterans (and people, in general), rationalize going into debt for expensive degrees by looking to future increases in income.

But, don’t you have better uses for this future income than paying graduate school tuition?

Bottom line, rather than justifying massive student loans to finance graduate school with a future increase in earnings, veterans are better off A) pursuing every benefit and scholarship option above to attend graduate school without going into debt; and B) putting their increased earnings to better uses (e.g. investing, buying a home, starting a business, etc.).

Final Thoughts

Transitioning out of military service, graduate school represents an outstanding option for many veterans. And, armed with the above information, you can pursue a plan to finance graduate school that best fits your unique situation and goals

Maurice “Chipp” Naylon spent nine years as an infantry officer in the Marine Corps. He is currently a licensed CPA specializing in real estate development and accounting.