Jeff over at The Midnight Hour has analyzed the new rules involving the Post-9/11 GI Bill and helps you determine how best to use your tuition benefits:

Quick background for non-veterans: The Montgomery G.I. Bill is a benefit that subsidizes education costs for veterans. While on active duty service members can elect to pay $1200 one time and in return they receive 36 months of payments towards full-time education after they leave active duty.  Thirty-six months is the equivalent of the time required for a 4-year degree based on a 9-month academic year. Yes, it’s the best $1200 investment you could ever make, as the full-time benefit is currently $1321 per month.

Congress recently passed the Post-9/11 G.I. Bill. Veterans that served after 9/11 are eligible. Service members also now receive the benefit automatically and do not have to pay $1200 as before. Veterans that originally had the Montgomery G.I. Bill but are eligible for the Post-9/11 G.I. Bill may elect to change their MGIB (known as Chapter 30) to the Post-9/11 G.I. Bill (known as Chapter 33). This is an irrevocable decision. This is also not financially advisable for all veterans. As a matter of fact, unless you attend school at least 3/4 time and pay all your expenses (no scholarships, tuition reimbursement, etc.) it’s probably not a good idea. This post aims to educate veterans on the basics of the two programs and why they should weigh all factors carefully before electing for the Post-9/11 G.I. Bill. It’s a decision that cannot be changed and might cost them thousands of dollars. Here’s why:

The Chapter 30 MGIB pays you monthly simply based on whether you are enrolled in a qualifying degree program. Enrolled full time? You get $1321 per month. No other factors are involved. Did you get a scholarship and you don’t owe any tuition? Good for you. The VA doesn’t care; you still get your $1321/month. Did you pick an inexpensive school where tuition is relatively cheap? Good for you. The VA doesn’t care; you still get your $1321/month.  If you are taking classes at 1/2 time or better then you simply receive a flat rate payment, scaled appropriately for 1/2 and 3/4 time students. However, students taking less than a 1/2 time load just get reimbursed for expenses.

(Note: To the non-veteran this may seem like the veteran is scamming the system, but he is not. The VA is well aware of how the program works. The Chapter 30 MGIB just cares that you are enrolled in a qualifying degree program. That is the requirement to draw the money associated with the benefit. If the veteran meets the requirement, then the VA is unconcerned whether the money exactly meets the veteran’s education expenses or whether it’s going towards pizza and beer.)

The Post-9/11 G.I. Bill is a little more complex. First, it pays your tuition and fees directly to your school, up to a maximum limit determined for each state. Did you pick an expensive college that consumed all of your Chapter 30 MGIB? Good for you, now the VA will pick up more of the tab (up to the limit for your state). Did you get a scholarship and you don’t owe any tuition? The VA thanks you wholeheartedly, because now they don’t have to pay the school for your tuition. See the subtle difference? Next, if you attend more than 1/2 time, then you get a housing allowance. The allowance is calculated as the BAH for an E-5 with dependents in the zip code of your school. Use this site to look it up for your zip code. If you attend at 1/2 time or less then you don’t get the housing allowance–not even a scaled one. Finally, you get a stipend for books equal to $500/semester or $1000/year for full-time. Those three payments comprise the Post-9/11 G.I. Bill: tuition paid to the school, housing allowance paid to you (if you qualify), and book stipend paid to you.

Crunch the numbers and you’ll find that you may want to stick with your Chapter 30 MGIB. The Post-9/11 G.I. Bill is lucrative for full-time students receiving no other type of assistance, and those attending expensive universities that don’t participate in the Yellow Ribbon Program. All other cases should perform a careful comparison before switching. The VA has actually done something really superb and posted several different example comparisons on their web sitehere. Note their assumptions at the top and plug in the numbers for your own scenario. Don’t include the MGIB $600 buy-up unless you purchased it before leaving active duty. Scale all the payments correctly based on how many hours you are taking and whether your school considers it full-time or less. Payment scales are linked below. Remember, 1/2-time and less means no housing allowance under Chapter 33 while 1/2-time and more begins your entitlement to flat-rate payments under Chapter 30.

Finally, the VA has indicated that veterans eligible for the Chapter 30 MGIB that exhaust all of their benefits under Chapter 30 may then change to the Chapter 33 Post-9/11 G.I. Bill for an additional 12 months of benefits under Chapter 33. I do not fully understand this, but it appears like it might sweeten the deal even more for veterans using Chapter 30. The blurb appears here on the VA website. I suggest talking with a VA representative personally about this plan, as it doesn’t seem to be as well-documented as all other facets of the change.

Visit Jeff’s original post to see additional resources to help in your planning>>