The Post-9/11 GI Bill

In 2008, Congress passed and President George W. Bush signed the largest expansion of federal education aid to veterans since the original GI Bill at the end of World War II. Under the Post-9/11 Veterans' Educational Assistance Act of 2008, commonly known as the Post-9/11 GI Bill, service members who served at least 90 days on active duty after Sept. 10, 2001, or their dependents, are entitled to up to 36 months of educational assistance to pursue higher education. Depending on the program, they can receive education or job training tuition, books, and fees, as well as a monthly housing stipend that is paid fully or in part by the federal government.

The program drew wide support from both veterans' advocates and the higher education community, and within two years of its implementation in 2009, over half a million veterans were using the benefit. Participants include veterans with their DD-214 honorable discharge certificates, active-duty service members, and their spouses. Research from both academics and the veterans' advocacy community has shown that since that time it has yielded positive effects, including an increase in postsecondary enrollment among veterans, as well as increased graduation rates.

One of those veterans is Hallie Oxley, a Marine who served from 2000 to 2005 in various roles, including in logistics and as a marksmanship instructor. He now works in National IT at the Richmond Fed after getting his bachelor's degree in cloud computing. He credits the Post-9/11 GI Bill with giving him the ability to get a degree that would enable him to advance his career. "An education does pay off," says Oxley. "There was a point in time in the Fed where you could come in out of high school, but those days are long gone."

Thanks in large part to the significant military presence in Maryland, Virginia, and the Carolinas, three of the 10 most popular institutions or systems in the country for veterans pursuing higher education under the program are in the Fifth District. According to a 2019 Congressional Budget Office (CBO) report, in 2017 the University of Maryland Global Campus (previously known as University College) was the third most popular, with almost 17,000 veterans enrolled, while the Virginia Community College System was seventh with 8,800 student veterans and the North Carolina Community College System was ninth with 7,900.

Despite the initial popularity of the Post-9/11 GI Bill and its success in increasing the number of veterans with college degrees, two puzzling trends have recently emerged that are potential sources of concern. First, economists have found that increases in overall degree attainment among Army veterans have not translated into increased wages after graduation; average salaries among benefit recipients are lower than those of their counterparts who did not use the benefit. Second, the number of veterans using the Post-9/11 GI educational benefit has decreased dramatically in recent years. According to the Congressional Research Service, over 790,000 veterans participated in the program each year from 2014 to 2016 — but this number has declined almost every year since. (See chart below.)

March of the GI Bills

The original GI Bill, known as the Serviceman's Readjustment Act of 1944, was created to avoid a repeat of the high levels of unemployment among veterans that occurred following World War I. Nearly 8 million veterans out of about 16 million who served during World War II would go on to pursue higher education through the program, which provided $500 a year for tuition, books, and counseling services, as well as a housing allowance. The program cost the federal government $14.5 billion, or about $139.6 billion in 2020 dollars.

In important respects, the program was successful, as the number of college graduates in the United States doubled between 1940 and 1950. Yet these gains were largely inaccessible to Black veterans, many of whom were excluded from using the benefit for college by state higher education segregation laws or by local Veterans Administration authorities who disbursed the money. In addition, policymakers discovered that the practice of the government paying tuition and fees directly to the academic program was problematic, as a large number of programs and institutions were created with the purpose of taking that money and not holding classes, leaving enrolled veterans with no program to attend.

The wars in Korea and Vietnam would have fewer veterans returning home looking for work, but Congress enacted legislation authorizing similar education benefits for those who served. After the Vietnam War ended, and with a sustained period of peacetime, however, policymakers recognized that the armed forces could use education benefits as a recruitment tool. In 1985, Congress passed the Montgomery GI Bill, which created separate benefits systems for reservists and active-duty personnel and is still active today. Under the legislation, active-duty personnel who choose to receive the benefit buy into it for $1,200, and in exchange, they currently receive up to $2,150 per month for up to 36 months (the standard number of enrolled months it takes to complete an undergraduate degree) for tuition, books, supplies, and housing, depending on how long they served. Reservists, on the other hand, do not have to buy into the program, but their benefit is limited to $407 per month, again for up to 36 months depending on length of service. To alleviate the problem that plagued the original GI Bill of illegitimate programs being set up only to collect money from the government, both programs, like all previous GI education benefit programs following the 1944 program, provide the money directly to the student veteran each month.

"One of the Largest Policy Shocks"

Like its predecessors, the Post-9/11 GI Bill was intended to benefit both the service member and the military. With respect to service members, the goals were to ensure the availability of comprehensive education benefits and to provide reservists, who had been serving on sustained periods of active duty in the wars in Iraq and Afghanistan, with the same benefits afforded to full-time service members. The military anticipated that such an attractive benefit would help it meet its recruiting goals and improve retention rates, specifically because the legislation allowed for the benefits to be transferred to service members' dependents and did not have to be used by the service members themselves.

The legislation was written by then-Sen. Jim Webb (D-Va.) and passed the Senate as part of the 2008 Supplemental Appropriations Act by a vote of 92-6; it passed the House of Representatives by a 416-12 margin. As the votes suggest, the program had strong bipartisan support. The transferability of benefits to spouses and children, which was not included in the original proposed legislation, was imperative for some policymakers concerned about its effect on retention, including President Bush. He and others were concerned that restricting such a substantial benefit to service members would encourage them to leave the military. If the benefit could be passed to family members, however, they believed service members would be more inclined to stay. Once this provision was added, only a small number of legislators remained opposed.

Andrew Barr, an economist at Texas A&M University studying veterans' educational and labor market participation, recently co-authored a working paper that described the Post-9/11 GI Bill as "one of the largest policy shocks in college subsidies in U.S. history." Unlike previous GI benefit programs, which paid out a fixed dollar amount per month, the Post-9/11 Bill would pay up to the full cost of in-state tuition and fees for veterans enrolled in public universities, or up to a predetermined amount for those enrolling in private institutions. If these totals aren't enough to cover the costs of attendance, many schools participate in the Yellow Ribbon Program, in which they split with the Department of Veterans Affairs anywhere from a small portion to all the remaining cost difference for an agreed upon number of veterans. The percentage of the tuition and fees covered by the benefit is determined by the length of the veteran's service on active duty. As with the first GI Bill, funds are sent directly by the government on behalf of the student veterans to the institutions, which policymakers decided is more feasible from an administrative standpoint when dealing with the large sums of money that are being transferred.

The Post-9/11 GI Bill doesn't just pay for college or graduate school. Veterans can use the benefit for vocational or correspondence schools, business or other professional programs, technical schools, teacher certifications, licensure programs, and flight school. All these programs generally fall under three categories of institutions: public nonprofit, private nonprofit, and private for-profit. To meet veterans where they are and to maximize flexibility, many programs are available online. Student veterans enrolled in such programs receive a housing allowance based on the national cost of living average, while those who attend classes in-person receive an allowance that is determined by the cost of living where the program or school is located.

Is the Program Succeeding?

In 2016, about 50 percent of student veterans using the benefit attended public colleges or universities, while about 20 percent went to private nonprofit institutions and 30 percent enrolled in for-profit ones. In terms of tuition and fees, however, eight of the top 10 recipient institutions in 2017, as well as from 2009-2017 overall, were for-profit. The Senate Health, Education, Labor, and Pensions Committee found that in the program's first year, for-profit colleges enrolled only 23.3 percent of beneficiaries but received 36.5 percent of all the funds distributed. By 2017, however, public schools received the most tuition and fee dollars, $1.9 billion, followed by for-profit institutions with $1.7 billion and private nonprofit institutions with $1.5 billion.

In their working paper, Barr and his colleagues examined the effect of the Post-9/11 GI Bill on veterans' decisions whether to enroll in college, their degree completion rates, and their long-run earnings. On the positive side, they found that the benefit had positive, albeit modest, effects on enrollment, increasing the number of years enrolled by 0.17 and increasing the rate of completion of bachelor's degrees by 1.2 percentage points. By way of comparison, among World War II veterans, the GI Bill raised years of schooling by 0.28 years and college completion rates by 5 to 6 percentage points.

The researchers also found, however, that veterans who used the benefit received wages that were on average $900 lower annually than they otherwise would have been nine years after separating from the military. Barr believes this is being driven primarily by the opportunity costs that come with continuing education. "Perhaps they're missing out on work experience that would have been useful," suggests Barr. "Perhaps they're letting their useful skills that they had in the military that would have translated into the labor market depreciate."

The Role of For-Profit Colleges

In addition to the lost labor market experience, Barr and his colleagues identified a second potential reason for the wage deficit: Some veterans are making "low-return marginal investments." The 2019 CBO report noted that "some programs may not prepare beneficiaries for jobs that pay enough for a service member to buy a home, raise children, or pursue other common aims" because the standards for Veterans Benefits Administration program approval are made at the state level and may be misunderstood by veterans who may enroll in unaccredited programs.