You will hear a lot of folks say, yes, education is important—it is important. (Laughter.) But it requires not just words but deeds. And the fact is, that since most of you were born, tuition, and fees at America’s colleges have more than doubled. And that forces students like you to take out a lot more loans. There are fewer grants. You rack up more debt. Can I get an “amen”?1 -President Barrack Obama, Remarks at the University of North Carolina, April 24, 2012
It’s well known that college can be quite expensive. High tuition increases have become an annual tradition at nearly every American university. Despite this, it is entirely possible for two of your children to earn Bachelor’s degrees from top-tier private universities for less than $10,000. That’s right, less than $10,000. No witchcraft, sorcery, or long nights of driving for Uber required. Through thoughtful planning and creative thinking, service members can parlay transferred Post-9/11 GI Bill benefits into a remarkably powerful tool that can combat the rising tuition costs our children will encounter.
While no one would dispute the many advantages of attending college (namely the significant increase in lifetime earning potential), the rate at which college tuition has risen is enough to alarm college students and parents alike.
In a recent Princeton Review survey, the top concern of both parents and students is now paying for college, supplanting the top concern from only a decade ago—getting admitted to a student’s top choice.2 For 2017 graduates, the average student debt per borrower reached $37,172.3 If that is not enough to scare you, by 2030, the total expense to attend a public university for four years will be $170,000 and closer to $350,000 for private universities.4 Because of these rising costs, we should examine the ways in which career-minded judge advocates can leverage one of their most value assets, the Post-9/11 GI Bill, and position their children for success.
1. The Post-9/11 GI Bill. I could spend hours talking about what an amazing benefit the Post-9/11 GI Bill is to service members. I suspect I would only be preaching to the choir. Rather, I will start by saying that anyone intending to transfer benefits to their dependents should do so immediately upon hitting six years of service. This will then start the clock on the four-year active duty service obligation. Transferring is accomplished by using the Veteran’s Affairs (VA) Transfer of Education Benefits website.5 Remember, your family member must be enrolled in the Defense Eligibility Enrollment Reporting System before benefits can be transferred to them.
On 16 August 2017, President Trump signed into law the Harry W. Colmery Veterans Educational Act of 2017, commonly referred to as the Forever GI Bill.6 Among the many improvements, the most significant was the elimination of the fifteen-year limitation on using the Post-9/11 GI Bill.7 Beneficiaries no longer have to start using transferred benefits within fifteen years of the service member’s separation or retirement, a win for young dependents of—shall we say—more “seasoned” service members.
2. Yellow Ribbon Program. Though the Post-9/11 GI Bill is very well known, the Yellow Ribbon Program is its less popular, yet equally valuable sibling. Individuals qualified for the Post-9/11 GI Bill at the one hundred percent rate and their child transferees (but not spouses) are eligible for the Yellow Ribbon Program.8 While the Post-9/11 GI Bill will cover resident public tuition or up to the “national maximum” for private tuition ($23,671.94 in 20189), the Yellow Ribbon Program results in even more money being available for out-of-state students of public universities or students of high-priced private universities. In essence, universities enter into agreements with the VA to contribute money towards a student’s tuition, which the VA then matches—dollar for dollar.
This results in some fantastic opportunities for child dependents. Through the Yellow Ribbon Program, many highly-ranked private institutions will cover nearly all tuition for Post-9/11 GI Bill recipients (e.g., Rice University, University of Notre Dame, Vanderbilt University, Stanford University) while others will cover the entirety of their tuition (e.g., Northwestern University, University of Chicago, University of Pennsylvania, University of Southern California, Cornell University, Dartmouth College).10 The VA also provides an online comparison tool, allowing parents and prospective students to review expenses at different institutions after accounting for that school’s Yellow Ribbon Program contributions.11
3. Community College can be Cool. Thus far, I probably haven’t said anything you find even remotely controversial. Encouraging you to send your precious young child to—gasp—community college probably is. Before you dismiss the idea entirely, consider that many remarkably intelligent people have attended community college. Eileen Collins, the first female to command a space shuttle mission, earned an Associate’s degree from Corning Community College before matriculating at Syracuse University and Stanford University.12 Other successful individuals who have attended community colleges include George Lucas, Amy Tan, Tom Hanks, and Jim Lehrer.13 Recent studies have shown that transfer students from community college have performed just as well as native students at four-year universities, despite the fear of “transfer shock.”14 Also, a recent study conducted at Columbia University found that the economic benefit of obtaining an Associate’s degree before going to a four-year university can add up to nearly $50,000 over the span of twenty years.15
A frequent criticism of attending community college before transferring to a four-year institution is the fear of losing credit hours. Luckily, slumping enrollment numbers at private universities and legislative prodding of public universities has forced universities to accept a greater percentage of transfer hours.16 Community college is also remarkably inexpensive when compared to tuition at four-year institutions. In fact, Tennessee, Oregon, and Rhode Island now offer community college free to their residents, regardless of need or income.17 Even my hometown of Dallas is getting in on the action, offering free tuition at every community college in the county for graduates of thirty-one area high schools.18
Just as you would research a four-year university, parents and students should also review a community college’s articulation agreements. These agreements are increasing in number, exponentially, and outline a curriculum of study at a community college that automatically transfer, credit-for-credit, to the four-year institution.19 Websites exist that have aggregated information about existing articulation agreements in each state.20 States have also begun adopting standardized numbering systems for courses at both community colleges and public four-year institutions, making it even easier for students to forecast which classes will transfer.21
4. 529 Plans. Before contributing to a qualified tuition plan (commonly referred to as a 529 plan), service members should ensure they are appropriately saving money for their own retirement. Assuming that is occurring, they should also consider opening a tax-advantaged savings plans for their children’s education. These plans offer federal and state tax benefits to account holders while minimizing the impact on a student’s financial aid award.22 Even if your child’s tuition, fees, books, and housing expenses are fully covered by the Post-9/11 GI Bill, a college meal plan and any necessary technology expenses (laptops, software, and internet access) would count as “qualified expenses” under a 529 plan.23
Assuming your named beneficiary in a 529 plan decides not to go to college, or receives a full scholarship, you can easily name a new beneficiary of the plan, such as a grandchild, and let compound interest take care of the rest.24 The owner of the 529 plan maintains all control over the account, and ownership of a 529 plan passes at death to a successor-in-interest, making them a wonderful vehicle for creating generational family wealth.25 Finally, it should be noted that you can also withdraw funds from your Roth IRA penalty free in order to pay for your children’s qualified education expenses. There are pros and cons for each savings method.26 Generally speaking, I would encourage individuals to use 529 plans and leave the retirement funds for, well, retirement.
5. Other Means. Depending on your state of residence, and your child’s desires regarding college, growing college tuition can be mitigated in other ways. For example, if you claimed Texas as your state of residence when you joined the military, are honorably discharged after serving at least 181 days on active duty, return to Texas, and have no remaining GI Bill benefits, you qualify for benefits under the Hazlewood Act.27 The Hazlewood Act provides an education benefit worth up to 150 credit hours of tuition exemption to Texas public universities and can be transferred to children similarly as Post-9/11 GI Bill benefits can be transferred.28 Sending your sweet second or third born child to a public university in the state of Texas may sound frightening, but I can assure you that Texas Tech University learned me pretty good.
No other state offers a veteran’s incentive as financially advantageous as the Hazlewood Act in Texas, but you should still research programs available to your children as a result of your service. Seeking a Reserve Officer Training Corps (ROTC) scholarship is an entirely separate discussion, but if your child does apply for one, they should carefully weigh which schools offer additional incentives to ROTC scholarship recipients. Many will offer free room and board along with additional tuition assistance or book stipends, akin to the Yellow Ribbon Program supplementing the Post-9/11 GI Bill.29
College is obviously vital to long-term financial stability. For every Steve Jobs or Michael Dell dropout success story, there are millions of others living paycheck-to-paycheck, or worse. On average, obtaining a Bachelor’s degree alone results in seventy-four percent greater lifetime earnings than those who only graduated from high school.30 On the other hand, between 2004 and 2017, the total student loan debt in the United States has increased from $260 billion to $1.4 trillion.31
Given this dichotomy, it is vital that all of us begin planning a course of action for our children. Lucky for us, leveraging the Post-9/11 GI Bill and Yellow Ribbon Program can help our children avoid a debt-laden future while still reaping the benefits of a college degree. In addition to these programs, I would highly encourage you and your children to look beyond the stigma associated with community college, and consider it as a viable means of keeping college expenses down.
If you have two children, sending each to community college before attending a four-year university will cost a minimal amount of money (or may be entirely free). By doing so, you can turn one Post-9/11 GI Bill into a Bachelor’s degree for two children. Assuming they make the grades, and you help them research schools participating in the Yellow Ribbon Program, these degrees could even come from prestigious universities for practically nothing. TAL
MAJ Burgamy is currently an Associate Professor in the Administrative and Civil Law Department at The Judge Advocate General’s Legal Center and School at Charlottesville, Virginia.
4. http://www.saveretiretravel.com/how-much-will-college-cost-in-2030/. These figures are adjusted for inflation and assume an average increase in tuition of 4.5% annually, the average figure at which tuition has increased for public universities from 2000 to 2016. Id.