How Veterans Can Finance Graduate School

As Veterans transition out of military service, many decide to pursue a graduate degree. However, this education can be expensive, leading to the question of how Veterans can finance graduate school. Options include:

• Post-9/11 GI Bill benefits.
• Special programs for service members at universities.
• Job training options.
• Scholarships.
• Federal and private loans.

Let’s break down what those options look like and what they mean to you.

Post-9/11 GI Bill

The Post-9/11 GI Bill remains the best financing option for Veterans seeking graduate school. 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 the in-state, public school maximum for graduate school tuition and fees.
• Monthly housing allowance: Besides tuition and fees, the VA will pay eligible Veterans a cost-of-living-adjusted, tax-free housing stipend while 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 primarily 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.

Veterans must first confirm their eligibility by applying directly with the Department of Veterans Affairs (VA) to use this benefit. 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 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 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:

1. Your Post-9/11 GI Bill tuition and fees are up to the in-state, public maximum.
2. The $20,000 is directly from the school.
3. 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 offset out-of-pocket costs for private graduate schools.

Note: If you’re interested in a private graduate school, contacting a currently enrolled Veteran is the best option for determining out-of-pocket expenses. Most U.S. 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 aims to assist Veterans with service-connected disabilities in obtaining suitable employment. Some eligible Veterans will qualify for graduate school tuition assistance through VR&E within this mission.

However, it’s important to note that, unlike the GI Bill, VR&E does not guarantee all Veterans education benefits. Instead, for service members with disabilities that limit their ability to work in some capacity, VR&E may provide employment support services, including 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 they qualify for graduate school benefits through this program. Fortunately, the VA makes applying for the program reasonably 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 in to 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 don’t consider pursuing other scholarship options. The thought process goes like this: The GI Bill covers my tuition, so why would I need a scholarship?

Well, during a year or two of graduate school, you will have far more expenses than solely tuition: housing, food, and travel, to name a few. While your GI Bill monthly housing allowance will help with some of these, it may only cover some things. That’s where scholarship dollars you receive beyond tuition and fees can go toward other expenses. Also, many Veterans may not realize that military service puts you in a strong position when applying for scholarships.

“Veterans also need to emphasize the skills that they have acquired from their military service when applying for scholarships and grants,” said Paul Dillon, an adjunct Instructor at the Sanford School of Public Policy at Duke University. He followed up by listing specific skills every service member is required to learn, and that explaining those skills may separate them from others applying for scholarships. They include:

• Following through with a specific mission.
• Committing to work.
• Adapting to different cultures and customs to be accomplish goals as a team.
• Making difficult decisions quickly in a high-pressure or stressful environment.

Dillon mentioned any service member who is a commissioned officer has an added benefit, “the best leadership training in the world is the training that is given to commissioned officers.” Adding, “The United States Army has more than 200 years of experience in training leaders, and some of us got to test out that training on the battlefields—and carry those lessons with us into our business careers.”

So from a financial perspective, you have nothing to lose applying for scholarships (except the time and effort to apply), but you potentially have thousands of dollars to gain.

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, you could use that $10,000 for other expenses, as the GI Bill already covers your tuition and fees.

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

• School-specific: These are scholarships unique to a particular graduate school. Also, 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 someone can use at any graduate school. A cursory online search will show you the dozens of private scholarships 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 graduate program will determine the amount you can borrow based on the cost of attendance and any other financial aid you receive. 

Private Student Loans

Veterans can consider private student loans to finance graduate school as a final option. Private, income-driven student loans may be a good option if you’re still determining what you want to do after graduate school (and therefore can’t accurately forecast future earnings).

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 and graduate school represents an outstanding option for many Veterans. 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.