Montgomery GI Bill Education Benefits: Analysis of College Prices and Federal Student Aid Under the Higher Education Act

Montgomery GI Bill Education Benefits: Analysis of College Prices and Federal Student Aid Under the Higher Education Act

Order Code RL33281
Montgomery GI Bill Education Benefits: Analysis
of College Prices and Federal Student Aid
Under the Higher Education Act
Updated January 19, 2007
Charmaine Mercer
Analyst in Social Legislation
Domestic Social Policy Division
Rebecca R. Skinner
Specialist in Social Legislation
Domestic Social Policy Division

Montgomery GI Bill Education Benefits:
Analysis of College Prices and Federal Student Aid
Under the Higher Education Act
Summary
Educational assistance programs have been authorized for veterans of the
Armed Forces since 1944. The Servicemen’s Readjustment Act of 1944 (P.L. 78-
346), or the GI Bill of Rights, provided support, including education benefits, to
veterans of World War II. Subsequently, other programs were implemented for
similar purposes (e.g., the Korean GI Bill and the Vietnam Era GI Bill). These new
programs were primarily, if not exclusively, funded by the federal government and
were intended to support veterans returning from war. The implementation of the
Post-Vietnam Era Veterans’ Educational Assistance Program (VEAP) marked the
first time that an educational benefit had been established for an all-volunteer force,
serving during a period of peace; the first time that education benefits were viewed
as a recruiting tool for the military; and the first time that program participants were
required to contribute to the education benefit fund while in the military. Many of
the principles of VEAP were carried over during the creation of the Montgomery GI
Bill (MGIB), the current military education benefit that was implemented in 1985.
Military education benefits have evolved significantly over the last 60-plus
years. For example, military education benefits initially were completely subsidized
by the federal government; they were issued to institutions of higher education
(IHEs) on behalf of the veteran; and the benefits included subsistence payments and
could be used for numerous training and educational programs. Conversely, the
current benefits are partially subsidized, paid directly to the student as a subsistence
payment, and are limited to specific training and education programs. College prices
have substantially changed during this period. For example, in a recent 20-year
period (academic years 1985-1986 to 2005-2006), the average tuition, fees, room,
and board at a four-year public institution increased by 214% (current dollars).
Moreover, the manner in which federal student financial aid is calculated and
awarded has shifted several times during the evolution of the military education
benefits program. At present, federal student assistance is calculated according to the
federal need analysis system, which considers the receipt of military education
benefits when determining eligibility for some student aid programs. These policy
and program changes have altered the role that military benefits play in providing
access to postsecondary education for veterans.
This report provides information about the various military education benefits
provided to members of the Armed Forces and how these benefits have changed over
time. More specifically, it includes a historical overview of education benefits for
military veterans, an analysis of the estimated value of these benefits with respect to
the average college price, and a discussion of the interaction between military
education benefits and federal student aid benefits authorized by Title IV of the
Higher Education Act of 1965 (HEA), as amended.
This report will be updated as needed.

Key Staff for Military Education Benefits and Postsecondary Education
Area of Expertise
Name
Telephone
Military Education Benefits, General
Charmaine Mercer
7-4894
Federal Student Aid
Charmaine Mercer
7-4894
Rebecca R. Skinner
7-6600
Federal Student Aid Need Analysis
Charmaine Mercer
7-4894
College Prices
Rebecca R. Skinner
7-6600

Contents
Historical Overview of Benefits Provided Through the GI Bill . . . . . . . . . . 2
GI Bill of Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Korean GI Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
Post-Korea and Vietnam-Era GI Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Post-Vietnam Era Veterans’ Educational Assistance Program
(VEAP) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Montgomery GI Bill . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Data Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7
Comparison of Education Benefits Over Time . . . . . . . . . . . . . . . . . . . . . . . 7
Value of Education Benefits Provided Through the GI Bill:
1944-2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8
Value of Education Benefits Provided Through the Montgomery GI Bill:
1985-2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Purchasing Power of the Montgomery GI Bill . . . . . . . . . . . . . . . . . . . 11
GI Bill Benefits and Purchasing Power: A Historical View . . . . . . . . 14
Possible Changes to GI Education Benefits with Respect to College
Price . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Use of Education Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Title IV Federal Student Aid Program Descriptions . . . . . . . . . . . . . . . . . . 20
Federal Pell Grants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Student Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Campus-Based Programs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Leveraging Educational Assistance Partnership . . . . . . . . . . . . . . . . . 22
Federal Need Analysis . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Military Education Benefits and Need Analysis . . . . . . . . . . . . . . . . . . . . . 23
Military Education Benefits and Pell Grants . . . . . . . . . . . . . . . . . . . . 24
Military Education Benefits and Federal Student Loans . . . . . . . . . . . 24
Military Education Benefits and Campus-Based Programs . . . . . . . . . 25
Student Eligibility Requirements for Title IV Programs and Military
Education Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
List of Figures
Figure 1. GI Monthly Education Benefits in Current and Constant Dollars:
1944-2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Figure 2. Percentage of Average Tuition, Fees, Room and Board (TFRB) of
Four-Year Public Institutions Covered by GI Bill Education Benefit: 1964-1965
through 2005-2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Figure 3. Percentage of Average Tuition, Fees, Room and Board (TFRB) of
Four-Year Private Institutions Covered by GI Bill Education Benefit:
1964-1965 through 2005-2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Figure 4. Percent of Average Tuition, Fees, Room and Board (TFRB) of Two-Year
Public Institutions Covered by GI Bill Education Benefit:
1964-1965 through 2003-2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Figure 5. Percentage of Education Beneficiaries by Program: FY2004 . . . . . . . 19
Figure 6. Education and Training Pursued by Beneficiaries by
Military Education Program: FY2004 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20

List of Tables
Table 1. Program Eligibility Requirements for Military Education Benefits . . . . 5
Table 2. GI Bill Monthly Education Benefits in Current Dollars and Constant 2005
Dollars: 1985-2005 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Table 3. Percent of Average Price of Four-Year Public and Private Institutions and
Two-Year Public Institutions Covered by the GI Education Benefit: 1985-1986
through 2005-2006 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Table 4. Student Eligibility Requirements for Participation in the Federal
Student Aid Programs Under Title IV of the Higher Education Act and GI Bill
Education Benefits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26

Montgomery GI Bill Education Benefits:
Analysis of College Prices and Federal
Student Aid Under the Higher Education Act
Congress has demonstrated an interest since 1944 in providing education
benefits to members of the Armed Forces. The Servicemen’s Readjustment Act of
1944 (P.L. 78-346), or the GI Bill of Rights, provided support, including education
benefits, to veterans of World War II. Following the expiration of the original GI
Bill, other programs were implemented for similar purposes including the Korean GI
Bill, Vietnam Era GI Bill, the Post-Vietnam Era Veterans’ Educational Assistance
Program (VEAP), and the current GI Bill, the Montgomery GI Bill (MGIB). These
new programs were primarily, if not exclusively, funded by the federal government
and were intended to support veterans returning from war. While various differences
exist between the programs, the two more recent programs, VEAP and MGIB, have
required participants to make contributions toward their education benefits while in
the military, whereas previous programs did not include this requirement. Given the
ongoing military conflicts in Iraq and Afghanistan and the substantial number of
military personnel and reservists that have been called to active duty, there is
renewed congressional interest in the education benefits available to members of the
Armed Forces through the MGIB.
Military education benefits have evolved significantly over the last 60-plus
years. For example, military education benefits initially were completely subsidized
by the federal government; they were issued to institutions of higher education
(IHEs) on behalf of the veteran; and the benefits included subsistence payments and
could be used for numerous training and educational programs. Conversely, the
current benefits are partially subsidized, paid directly to the student as a subsistence
payment, and are limited to specific training and education programs. College prices
have substantially changed during this period. For example, in a recent 20-year
period (academic year 1985-1986 to 2005-2006), the average tuition, fees, room, and
board at a four-year public institution increased by 214% (current dollars). Over the
same time period, MGIB-Active Duty (discussed in this report) monthly benefits
increased by 175%. Moreover, the manner in which federal student financial aid is
calculated and awarded has shifted several times during the evolution of the military
education benefits program. At present, federal student assistance is calculated
according to the federal need analysis system, which considers the receipt of military
education benefits when determining eligibility for some student aid programs
(discussed in this report). These policy and program changes made by Congress have
altered the role that military benefits play in providing access to postsecondary
education for veterans.
This report provides information about the various military education benefits
provided to members of the Armed Forces and how these benefits have changed over

CRS-2
time. The report is organized into three major sections. Section One provides a
historical overview of education benefits for military veterans. The overview begins
with the Servicemen’s Readjustment Act of 1944 (GI Bill of Rights) and continues
through the current Montgomery GI Bill. The second section is an analysis of the
estimated value of these benefits with respect to the average college price. This
section focuses on the estimated value of veterans’ education benefits and college
prices at four-year public and private institutions and two-year public institutions.
The final section examines the interaction between military education benefits and
federal student aid benefits authorized by Title IV of the Higher Education Act of
1965 (HEA), as amended. It includes short descriptions of the Title IV student aid
programs, an overview of the federal student aid need analysis formula that is used
to determine the amount a family is expected to contribute to the costs of higher
education, and an examination of how the formula treats military education benefits.
Historical Overview of Benefits Provided Through the GI Bill1
GI Bill of Rights. The original GI Bill, the Servicemen’s Readjustment Act
of 1944, was intended to help veterans readjust to civilian life, avoid high levels of
unemployment, and afford returning veterans an opportunity to receive the education
and training that they missed while serving in the military. Under the GI Bill, the
Veterans Administration, now the Department of Veterans Affairs (VA), paid up to
$500 a year directly to an educational institution for tuition, books, fees, and other
training costs.2 The VA also paid as much as $50 a month (increased to $65 in 1946
and $75 in 1948) as a subsistence allowance to single veterans and a greater monthly
amount to veterans with one or more dependents. This program ended on July 25,
1956.
Korean GI Bill. The Veterans’ Readjustment Assistance Act of 1952, the
Korean GI Bill (P.L. 82-550), was authorized to help veterans returning from the
Korean war to adjust to civilian life. The benefit provided up to $100 a month for
educational expenses and education-related expenses. Unlike the GI Bill of Rights,
which paid both educational expenses and a subsistence allowance, the monthly
benefit for the Korean GI Bill was intended to cover both. It was believed that
requiring the veteran to contribute to the costs of his/her education would encourage
more careful spending. In addition, partially in response to alleged incidents of fraud
and abuse by for-profit (proprietary) IHEs, each veteran received a lump-sum
payment from the VA instead of the VA making direct payments to IHEs.
Post-Korea and Vietnam-Era GI Bill. The Veterans’ Readjustment
Benefits Act, the Post-Korea and Vietnam-Era GI Bill (P.L.89-358), was enacted in
1 Some of the historical information about the GI Bill was adapted from CRS Report 94-221,
Veterans’ Educational Assistance Programs, by Mary F. Smith and William J. Krouse. This
report is available from the authors of the current report.
2 Reliable, comprehensive data on the price of college attendance during the 1940s are not
available. Based on data obtained on individual institutions, it seems likely that $500
annually would have been sufficient to cover educational costs at most institutions. For
example, based on anecdotal evidence tuition and fees at Harvard University and the
Massachusetts Institute of Technology were $450 and $500, respectively, in the 1940s.

CRS-3
1966. This program was originally intended for veterans of the post-Korean war era,
and was not intended to be as generous as some of the earlier programs for veterans.3
Under this act, veterans who had been on active duty for more than 180 consecutive
days were entitled to one month of educational assistance for each month of service.
This was the first GI Bill that provided benefits to members of the Armed Forces
while they served on active duty, as opposed to providing benefits only after the
completion of active duty.
Post-Vietnam Era Veterans’ Educational Assistance Program
(VEAP). The Post-Vietnam Era Veterans’ Educational Assistance Program (VEAP),
which was established by Title IV of the Veterans’ Education and Employment
Assistance Act of 1976 (P.L. 94-502), was considered an effective recruitment
incentive for the Armed Forces during peacetime. Because the benefit was
established for an all-volunteer force serving during peacetime, it was deemed
appropriate to require participants, for the first time, to contribute to an education
fund while in the military. Program participants had to agree to monthly pay
reductions of at least $25 but not more than $100. The maximum education benefit
could not exceed the amount contributed by the participant and the matching federal
contribution (see Table 1 for details).4
Montgomery GI Bill. The Montgomery GI Bill (MGIB), originally called the
All-Volunteer Force Educational Assistance Program, was initially enacted as part
of the Department of Defense Authorization Act, 1985 (P.L. 98-525), as a three-year
pilot program.5 Similar to its predecessors and incorporating many of the principles
of the VEAP program, the MGIB is intended to provide educational assistance to
individuals who have served in the Armed Forces and are attempting to readjust to
civilian life. In addition, the benefit is intended to aid in the recruitment and
retention of qualified personnel for the Armed Forces.
3 In 1976, at the end of the Vietnam hostilities, benefits were extended from 36 months to
45 months, and the time period in which benefits could be used was extended from eight
years to 10 years following discharge.
4 The Department of Defense could also make additional contributions, known as “kickers,”
to individuals in critical military fields to encourage enlistment or reenlistment in the Armed
Forces.
5 The New GI Bill Continuation Act (P.L. 100-48) permanently authorized the All-Volunteer
Force Educational Assistance Program and the Selected Reserve Component. It also
changed the name of the program to the Montgomery GI Bill.

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The MGIB consists of two major programs: MGIB-Active Duty (MGIB-AD)
for individuals who are on active duty or after separation from active duty and
MGIB-Selected Reserves (MGIB-SR) for members of the selected reserves. Another
program, the Reserve Educational Assistance Program (REAP),6 provides benefits
for members of reserve components who are called or ordered to active duty in
response to a war or national emergency as declared by the President or Congress.
Each of these programs shares the common purpose of providing education benefits
to members of the Armed Services, but there are distinct differences in the eligibility
criteria, benefits provided, and contribution amounts (see Table 1).
6 This program was authorized by the Ronald W. Reagan National Defense Authorization
Act for FY2005 (P.L. 108-375). Given the recent implementation of this program, this
program is not discussed or examined in detail in this report.

CRS-5
Table 1. Program Eligibility Requirements for Military Education Benefits
Criteria
GI Bill of Rights
Korean GI Bill
Vietnam- Era
Post-Vietnam Era
Montgomery GI
Montgomery GI
Reserve
GI Bill
Veterans’ Educational
Bill — Active Duty
Bill — Selected
Educational
Assistance Program
Reserves
Assistance
(VEAP)
Program (REAP)
Year enacted
1944
1952
1966
1976
1984
1984
2004
Initial
P.L. 78-346
P.L. 82-550
P.L. 89-358
P.L. 94-502
P.L. 98-525
P.L. 98-525
P.L. 108-375
authorization
Highest benefit
$500 per year
$110 per month
$376 per month
Maximum benefit:
$1,034 per month
$297 per month
$827.20 per month
amount (current
maximum; and
maximum
$8,100a
(FY2006)b
(FY2006)b
(FY2006)c
dollars)
$75 monthly
subsistence
Duration of
One year full-time
1.5 times the
One month of
Lesser of 36 months or
Lesser of 36 months
36 months
36 months
benefits
training plus a
duration of
education
number of months of
or number of months
period equal to
active service;
benefits for
contributions
of active duty
time in service; 48
36 months
every month of
months maximum
maximum
active duty
service; 45
months
maximum
Contribution
None
None
None
$25 to $100 per month;
Pay reduction of
None
None
$2,700 maximum
$100 per month for
the first 12 months of
pay
Length of service
Minimum 90 days
Minimum 90
More than 180
Minimum 181
Minimum 181
Accepted 6-year
90 days of
days
days of active
continuous days of
continuous days of
reserve obligation
consecutive
duty service
active duty service, if
active duty service;
after June 30, 1985
service in a
entered before October
24 months of active
contingency
16, 1981; 24 months
duty if enlisted after
operation
of continuous active
September 7, 1980
duty service if entered
after October 16, 1981

CRS-6
Criteria
GI Bill of Rights
Korean GI Bill
Vietnam- Era
Post-Vietnam Era
Montgomery GI
Montgomery GI
Reserve
GI Bill
Veterans’ Educational
Bill — Active Duty
Bill — Selected
Educational
Assistance Program
Reserves
Assistance
(VEAP)
Program (REAP)
Period of service
September 16,
June 27, 1950,
February 1,
December 31, 1976,
Entered active duty
July 1, 1985, to
After September
1940, through July
through
1955 through
through July 1, 1985
after June 30, 1985
present
11, 2001, to
25, 1947
January 31,
August 4, 1964
present
1955
(Post-Korean
War);
August 5, 1964,
through May 7,
1975 (Vietnam-
Era veterans)
Discharge status
Other than
Other than
Other than
Other than
Fully honorable
Must remain with
Must remain with
dishonorable
dishonorable
dishonorable
dishonorable
discharge
Reserve unit
Reserve unit
Time limitation on
Initiated by later of
Initiated by
Within 8 years
Within 10 years of
Within 10 years of
Within 14 years of
Benefits can be
use of benefits
end of war or two
three years and
after discharge;
discharge or release
discharge or release
initial eligibility, if
used after 90-day
years after
completed by
10 years for
from active duty
from active duty
eligible on or after
minimum service
discharge
eight years
Vietnam
October 1, 1992 —
period completed
after discharge
veterans
prior to October 1,
— no fixed
1992, benefits must
delimited date;
be used within 10
must remain with
years of initial
Reserve
eligibility
component
Period of Use
June 22, 1944, to
August 20,
June 1, 1966, to
January 1, 1977, to
July 1, 1985, to
July 1, 1985, to
December 9, 2001,
July 25, 1956
1952, to
December 31,
present
present
present
to present
January 31,
1989
1965
Source: Table prepared by CRS based on data available from the U.S. Department of Veterans Affairs.
a. Government matches every $1 the service person contributes with $2. The maximum benefit available under the program is $8,100 ($5,400 federal contribution and $2,700 individual
contribution). The total contribution (service person contribution plus government share) is then divided by the number of months the service person contributed to VEAP.
b. Amounts shown are for full-time institutional training, and are for individuals who completed a minimum of three years of service. The amounts are less for individuals who served
less than three years and who attend less than full-time. The education benefits payment rate schedule is available at [http://www.gibill.va.gov/GI_Bill_Info/rates.htm].
c. The monthly amount is a percentage of the MGIB-Active Duty and is based on the number of continuous days of active duty service. The amount shown is for full-time institutional
training, and is for individuals who completed at least two years or more of active duty service. The amount is less for individuals who served less than two years, and who attend less
than full-time.

CRS-7
Data Analysis
The data for military education benefits presented in this report are derived
primarily from the U.S. Department of Veterans Affairs. It is important to note that
these benefits are generally awarded for a specific number of months, depending
upon the program, when the recipient enrolled, and the duration of service. For
example, a recipient can receive MGIB benefits for 36 months, which could be
disbursed over the course of three years (one payment times 12 months) or over the
course of four years [one payment times nine months (the number of months in an
academic year)].7 The analyses presented in this report assume that the benefits will
be disbursed over a four-year period.
Most of the college price data are from the Digest of Education Statistics, 2004
(Digest), produced by the Department of Education (ED). The analyses using college
prices are limited because the Digest only provides college price data for the
academic years 1964-1965 through 2003-2004. Further, the format for collecting
data changed in the academic year 1975-1976; prior to this, the average tuition, fees,
room, and board values reported were for four-year universities, not all four-year
institutions.8 In addition, data for 2004-2005 and 2005-2006 are from the College
Board because these data are not currently available from ED. It should be noted that
the College Board bases its college price data on a sample of institutions, whereas ED
includes the universe of IHEs in its price data.
Comparison of Education Benefits Over Time
The education benefits available through the GI Bill have changed since the
inception of the GI Bill program. By adjusting benefits for inflation (price increases),
it is possible to compare the actual (real) value of these different benefits over time.
This analysis only considers available benefits for education and living expenses. It
does not factor in any contributions toward those education benefits that veterans
began making with the passage of the VEAP in 1976 or “kickers” provided to
encourage enrollment in the Armed Forces. In addition, it only considers benefits
available to full-time students with no dependents.9 This section examines the value
of the education benefits provided through the GI Bill (collectively referred to
hereafter as the GI Bill) and subsequent programs from 1944 through 2005 in
inflation-adjusted (constant) 2005 dollars. For the MGIB, only education benefits
provided through the MGIB-AD program are included. It also considers the
purchasing power of these education benefits with respect to attending a four-year
public or private institution, or a two-year public institution.
7 Other payment distribution arrangements are possible.
8 This report uses data on four-year public universities and private universities prior to the
1975-1976 academic year, and data from all four-year public institutions and all four-year
private institutions for subsequent years.
9 Veterans with dependents have historically received additional funding to acknowledge
this added responsibility under programs prior to VEAP.

CRS-8
Value of Education Benefits Provided Through the GI Bill: 1944-
2005. As previously discussed, the original GI Bill provided up to $500 annually for
education expenses. This is the equivalent of an estimated $5,548 in 2005 dollars.10
An additional $50 was provided monthly for living expenses in 1944, which is
equivalent to $555 monthly, or $4,995 annually in 2005 dollars.11 Thus, the total
education benefit, including the living allowance, in 1944 would have been worth
$10,543 annually, or $1,176 monthly in 2005 dollars.12 Subsequent GI Bills provided
benefits on a monthly basis.13 In 1952, the year the Korean GI Bill was enacted, the
education benefit was $131 per month, which is equal to $965 per month in real-
dollar 2005 terms. When the Vietnam-Era GI bill was enacted in 1966, the monthly
benefit dropped in both current dollars and constant dollars. With the inception of
the program, the monthly benefit dropped from $110 in 1965 to $100 in 1966.14 The
latter is equivalent to $603 in constant 2005 dollars. As previously discussed, the
Vietnam-Era education benefit was not intended to be as generous as its
predecessors. In 1985, the year the MGIB was implemented, the monthly benefit was
$376, or $682 in constant 2005 dollars.
Although the nominal value of the monthly benefits has significantly increased
since the inception of the GI Bill, rising from $106 per month in 1944 to $1,034 per
month in 2005, the period was marked by substantial fluctuations in the benefit’s
purchasing power (see Figure 1). As illustrated in Figure 1, the value of the benefits
in constant dollars dropped during the 1950s and 1980s, but greatly increased during
the early to mid 1970s and late 1990s.
10 All constant dollar calculations were performed using an inflation calculator available
from the U.S. Bureau of Labor Statistics (BLS). The inflation calculator uses the average
Consumer Price Index-All Urban Consumers (CPI-U) for each year. The calculator is
available at [http://data.bls.gov/cgi-bin/cpicalc.pl].
11 This assumes that living expenses were provided for nine months each year, the length of
a traditional academic year. P.L. 78-346 specifically refers to an “ordinary school year”
when discussing education benefits. The monthly allowance for living expenses increased
to $65 in 1946 and $75 in 1948.
12 Details may not add to totals due to rounding.
13 Benefits provided through the original GI Bill were converted to monthly amounts for
comparison purposes.
14 In 1967, the monthly benefit increased to $130.

CRS-9
Figure 1. GI Monthly Education Benefits
in Current and Constant Dollars: 1944-2005
Source: Table prepared by CRS based on data from the U.S. Department of Veterans Affairs and
U.S. Bureau of Labor Statistics.
Note: All constant dollar calculations are based on the average Consumer Price Index-All Urban
Consumers (CPI-U) for each year. Monthly education benefits include any funds available for living
expenses. All dollar amounts have been rounded.
Value of Education Benefits Provided Through the Montgomery GI
Bill: 1985-2005. Table 2 illustrates the education benefit provided by the
Montgomery GI Bill from the program’s inception in 1985 to 2005, and calculates
its value in constant 2005 dollars. All benefits include any allowances for living
expenses. For each year the amount shown is the highest basic benefit payable to a
single veteran for any month and under any program in effect during that year. Any
additional payments or “kickers” provided by DOD are excluded.15 Based on the
benefit amounts in Table 2, it is clear that the value of the Montgomery GI Bill has
changed over the last 20 years. Until recently, the constant-dollar education benefit
provided under the MGIB was not as generous as those provided in the 1970s (as
shown in Figure 1). Even at its most generous benefit levels in 2003-2005, the
15 No monthly benefit is included for VEAP because benefits were based on the amount
contributed. Some programs overlap because eligibility was established according to the
period of service rather than the date of separation from service.

CRS-10
MGIB has not provided the same level of inflation-adjusted benefits as provided
under the original GI Bill.16
Table 2. GI Bill Monthly Education Benefits in Current Dollars
and Constant 2005 Dollars: 1985-2005
Monthly benefit in
Monthly benefit in constant
Year
current dollars
2005 dollars
1985
$376
$682
1986
$376
$670
1987
$376
$646
1988
$376
$621
1989
$376
$592
1990
$300
$448
1991
$350
$502
1992
$350
$487
1993
$400
$541
1994
$405
$534
1995
$417
$534
1996
$428
$533
1997
$440
$535
1998
$528
$633
1999
$536
$628
2000
$650
$737
2001
$672
$741
2002
$900
$977
2003
$985
$1,045
2004
$1,004
$1,038
2005
$1,034
$1,034
Source: Table created by CRS based on data provided by the U.S. Department of Veterans Affairs
and the U.S. Bureau of Labor Statistics.
Note: All constant dollar calculations are based on the average Consumer Price Index-All Urban
Consumers (CPI-U) for each year. Monthly education benefits include any funds available for living
expenses. All dollar amounts have been rounded.
16 The original legislation is often referred to as having the most generous provisions. This
could be because the original legislation established for the first time not only education
benefits for veterans but also such individual assistance as unemployment benefits; loan
guarantees for a home, farm, or business; and job-finding assistance. When all these
benefits are considered collectively, it may be that the 1944 bill was the most generous.
With respect to the amount of money provided for education benefits (in constant dollars),
the benefits provided from 1944 through 1950 were among the most generous.

CRS-11
Purchasing Power of the Montgomery GI Bill. It is also useful to
consider how much education the current benefit, the Montgomery GI Bill, has
“bought” since the program began. That is, looking at the average price of attending
a four-year public or private institution, or a two-year public institution, how much
did the MGIB cover? The following analysis examines the purchasing power of the
GI Bill from the academic years 1985-1986 through 2005-2006. The analysis
considers what percentage of tuition, fees, room, and board the MGIB benefit
covered on an annual basis at four-year public and private institutions, as well as at
two-year public institutions.17
As shown in Table 3, since the inception of the MGIB program in 1985, the
benefits have covered less than 100% of the average tuition, fees, room, and board
at four-year public institutions. In academic year 1985-1986, the benefit covered
approximately 88% of these expenses at a four-year public institution, and about 77%
of the average price during the 2005-2006 academic year despite increases in the
monthly benefit over this time period. From 1985-1986 to 2005-2006, monthly
education benefits increased by 175%, while the price of attendance increased by
214%. For the 2005-2006 academic year, recipients would have needed an additional
$2,821 to pay for their average annual tuition, fees, room, and board at a public four-
year institution.
The MGIB benefits have covered even less of these expenses at four-year
private institutions. The education benefits peaked at 37% of the average tuition,
fees, room, and board at a four-year private institution in 1985-1986 and did not
again exceed 30% until 2002-2003 (Table 3). In addition, because the rate of
increase in the average price of attendance was comparable to that at public four-year
institutions, individuals who attended a four-year private institution would have
needed an additional $19,720 to cover the costs of the average tuition, fees, room,
and board during the 2005-2006 academic year.
Historically the benefits have been most generous at two-year public
institutions, which, on average, tend to have a lower price of attendance and a smaller
increase in prices (Table 3). With the exception of the 1990s, the MGIB benefits
have covered more than 100% of the average tuition, fees, room, and board at two-
year public institutions. In addition, the increase in the average price of attendance
at these institutions from 1985-1986 to 2005-2006 was 101%, substantially below the
17 For both analyses, prices are based on in-state tuition and fees and room and board rates
paid by full-time-equivalent students enrolled in degree-granting institutions. While GI Bill
recipients may choose not to live on campus, room and board for on-campus residency were
used in the calculations because these prices are comparable to or higher than room and
board expenses for students living off-campus (The College Board, Trends in College
Pricing: 2004 and the College Board, Trends in College Pricing: 2005. Available online
at [http://www.collegeboard.com].) Therefore, analyzing how much the GI Bill contributed
toward tuition, fees, room, and board for students living on campus provides a good
indicator of whether the benefit was generous enough to cover room and board expenses for
students living off campus.

CRS-12
rate of increase at four-year public and private institutions. For the most recent
academic year for which data are available (2003-2004), MGIB recipients who
attended two-year public institutions would have had $2,879 remaining after paying
tuition, fees, room, and board.

CRS-13
Table 3. Percent of Average Price of Four-Year Public and Private Institutions and Two-Year Public Institutions
Covered by the GI Education Benefit: 1985-1986 through 2005-2006
(in current dollars)
Four-year public institutions
Four-year private institutions
Two-year public institutions
Academic Year
Monthly
Annual MGIB
MGIB
benefit (nine-
Average tuition,
Percent of price
Average tuition,
Percent of
Average tuition,
Percent of
benefit
month academic
fees, room, and
covered by benefit
fees, room, and
price covered
fees, room, and price covered
year)
board
board
by benefit
board
by benefit
1985-1986
$376 $3,384
$3,859
87.7%
$9,228
36.7%
$2,981
113.5%
1986-1987
$376 $3,384
$4,138
81.8%
$10,039
33.7%
$2,989
113.2%
1987-1988
$376 $3,384
$4,403
76.9%
$10,659
31.7%
$3,066
110.4%
1988-1989
$376 $3,384
$4,678
72.3%
$11,474
29.5%
$3,183
106.3%
1989-1990
$376 $3,384
$4,975
68.0%
$12,284
27.5%
$3,299
102.6%
1990-1991
$300 $2,700
$5,243
51.5%
$13,237
20.4%
$3,467
77.9%
1991-1992
$350 $3,150
$5,693
55.3%
$14,258
22.1%
$3,623
87.0%
1992-1993
$350 $3,150
$6,020
52.3%
$15,009
21.0%
$3,799
82.9%
1993-1994
$400 $3,600
$6,365
56.6%
$15,904
22.6%
$3,996
90.1%
1994-1995
$405 $3,645
$6,670
54.6%
$16,602
22.0%
$4,137
88.1%
1995-1996
$417 $3,753
$7,014
53.5%
$17,612
21.3%
$4,217
89.0%
1996-1997
$428 $3,852
$7,334
52.5%
$18,442
20.9%
$4,404
87.5%
1997-1998
$440 $3,960
$7,673
51.6%
$19,070
20.8%
$4,509
87.8%
1998-1999
$528 $4,752
$8,027
59.2%
$19,929
23.8%
$4,604
103.2%
1999-2000
$536 $4,824
$8,275
58.3%
$20,706
23.3%
$4,720
102.2%
2000-2001
$650 $5,850
$8,653
67.6%
$21,856
26.8%
$4,839
120.9%
2001-2002
$672 $6,048
$9,196
65.8%
$22,896
26.4%
$5,137
117.7%
2002-2003
$900 $8,100
$9,787
82.8%
$23,787
34.1%
$5,601
144.6%
2003-2004
$985 $8,865
$10,720
82.7%
$25,204
35.2%
$5,986
148.1%
2004-2005
$1,004 $9,036
$11,376
79.6%
$27,465
32.9%
na
na
2005-2006
$1,034
$9,306
$12,127
76.7%
$29,026
32.1%
na
na
Source: Table prepared by CRS based on data provided by the Department of Veterans Affairs, data available from the U.S. Department of Education, National Center for Education
Statistics (NCES), Digest of Education Statistics: 2004, table 313, and data available from The College Board, Trends in College Pricing: 2005.
Note: Monthly education benefits include any funds available for living expenses. The annual MGIB education benefit is based on nine months of education benefits to coincide with
a nine-month academic year. All dollar amounts have been rounded.
na: Not available

CRS-14
GI Bill Benefits and Purchasing Power: A Historical View. The
benefits provided under previous GI Bill programs are purported to have been more
generous than the current benefits. Figures 2 through 4 detail how GI Bill benefits
have fared historically in comparison with postsecondary tuition, fees, room, and
board. Reliable national data on the price of college are not available prior to the
1964-1965 academic year; therefore, the data presented are limited to the academic
years 1964-1965 to 2005-2006. As the analysis assumes a nine-month academic
year, monthly education benefits were multiplied accordingly.
As illustrated by Figure 2, the GI Bill benefits covered a greater percentage
of the average tuition, fees, room, and board at a four-year public institution in
academic year 1964-1965 than they do currently. Prior to the 1985 enactment of the
current education benefit program, the benefits never covered less than 86% of the
average price, and in some instances covered as much as 138%. Figure 2 also
demonstrates that tuition, fees, room, and board at four-year public institutions have
increased at a greater rate than the GI Bill benefits. More specifically, with the
exception of the 1970s and 1980s, tuition, fees, room, and board have exceeded the
annual GI Bill benefits. For example, from academic year 2000-2001 to 2005-2006,
the MGIB benefits have covered approximately 66% to 83% of the average tuition,
fees, room, and board at four-year public institutions.
An examination of historical data on education benefits and the percentage
of expenses they covered at four-year private and two-year public institutions reveals
similar patterns to those identified from 1985-1986 to 2005-2006. That is, the
average tuition, fees, room, and board at four-year private institutions have always
exceeded the education benefits (Figure 3) and, with few exceptions, more than
100% of the average tuition, fees, room, and board at two-year public institutions
have been covered by the education benefits (Figure 4).

CRS-15
Figure 2. Percentage of Average Tuition, Fees, Room and Board (TFRB) of Four-Year Public
Institutions Covered by GI Bill Education Benefit: 1964-1965 through 2005-2006
Source: Table prepared by CRS based on data provided by the Department of Veterans Affairs; data available from the U.S. Department of Education, National Center for Education
Statistics (NCES), Digest of Education Statistics: 2004, table 313; and data available from The College Board, Trends in College Pricing: 2005.
Note: Monthly education benefits include any funds available for living expenses. The annual MGIB education benefit is based on nine months of education benefits to coincide with
a nine-month academic year. All dollar amounts have been rounded.

CRS-16
Figure 3. Percentage of Average Tuition, Fees, Room and Board (TFRB) of Four-Year Private Institutions
Covered by GI Bill Education Benefit: 1964-1965 through 2005-2006
Source: Table prepared by CRS based on data provided by the Department of Veterans Affairs; data available from the U.S. Department of Education, National Center for Education
Statistics (NCES), Digest of Education Statistics: 2004, table 313; and data available from The College Board, Trends in College Pricing: 2005.
Note: Monthly education benefits include any funds available for living expenses. The annual MGIB education benefit is based on nine months of education benefits to coincide with
a nine-month academic year. All dollar amounts have been rounded.

CRS-17
Figure 4. Percent of Average Tuition, Fees, Room and Board (TFRB) of Two-Year Public Institutions
Covered by GI Bill Education Benefit: 1964-1965 through 2003-2004
Source: Table prepared by CRS based on data provided by the Department of Veterans Affairs; data available from the U.S. Department of Education, National Center for Education
Statistics (NCES), Digest of Education Statistics: 2004, table 313; and data available from The College Board, Trends in College Pricing: 2005.
Note: Monthly education benefits include any funds available for living expenses. The annual MGIB education benefit is based on nine months of education benefits to coincide with
a nine-month academic year. All dollar amounts have been rounded.

CRS-18
Possible Changes to GI Education Benefits with Respect to
College Price
Based on Figure 1, it appears that the current MGIB benefits usually have not
been as generous as those provided in past years and have not covered as much of the
price of attendance as previous benefits (Figures 2 - 4). As previously discussed,
however, beginning with the Korean GI Bill, there was a sense that having
beneficiaries contribute to the cost of their education was important. It should be
noted that under the MGIB, program participants initially contribute to their
education through payroll reductions.
If there is interest in ensuring that benefits cover the price of a specific level
of education, such as the price of a four-year or two-year public institution, there are
several possible steps that policymakers could take. Congress could increase or
decrease the monthly benefit to a level that would equal or exceed the current price
of tuition, fees, room, and board at a specific type of institution.18 In subsequent
years, benefits could be increased based on the most recent data available on college
price, an average of college price over a multi-year period, or by linking increases in
education benefits to changes in the Consumer Price Index-All Urban Consumers
(CPI-U) for college tuition and fees.19 Congress currently links increases in the
education benefit to the overall CPI-U, while also making additional adjustments
occasionally.20 The college tuition and fees index has been increasing more rapidly
than the overall CPI-U since 1984.21 Therefore, linking the GI Bill education benefit
to the CPI-U for tuition and fees would help to ensure that benefits are keeping pace
with changes in tuition and fees at the chosen type of institution. If Congress chooses
18 The benefit could be made more generous by also accounting for the price of books,
supplies, transportation, and other expenses. In addition, Congress could also base the
benefit on the price of attending a public two-year institution, a private four-year institution,
or the average price of attending any type of postsecondary institution. Data on these prices
are available through the U.S. Department of Education and The College Board.
19 In the long run, however, it may be difficult to set this benefit level in advance of an
academic year, since the first comprehensive data on college prices for a given academic
year are generally published in the fall of that academic year. Instead, the GI education
benefit could be set based on the previous academic year’s price of attendance. This would
be fairly simple to determine using the College Board data based on a sample of institutions.
Data for all postsecondary institutions collected by the National Center for Education
Statistics (NCES) at the U.S. Department of Education are not as timely and would not
provide data for the previous year. For example, NCES recently published preliminary price
data for the 2003-2004 academic year.
20 Benefits are increased based on the amount by which (1) the CPI-U for the 12-month
period ending June 30 preceding the beginning of the fiscal year for which the increase will
take effect exceeds (2) the CPI-U for the 12-month period prior to the 12-month period
discussed in (1). For more information, see 38 U.S.C. 3015. For the purposes of this report,
constant dollar calculations were made using the annual CPI-U index.
21 From 1984 to 2005, the overall annual CPI-U increased from 107.6 to 195.3. During the
same time period, the college tuition and fees index increased from 109.9 to 475.1,
according to the U.S. Bureau of Labor Statistics.

CRS-19
to leave current benefits at their current level, the latter option could be implemented
to ensure that benefits keep pace with changes in tuition and fees.22
Use of Education Benefits
For FY2004 (the most recent data available), of the 490,397 beneficiaries
receiving benefits, more beneficiaries participated in MGIB-AD (68%) than in any
other program (Figure 5). The MGIB-AD also distributed the most money to
beneficiaries in FY2004 — $1.8 billion out of a total of $2.4 billion (76%).
Figure 5. Percentage of Education Beneficiaries by Program:
FY2004
VEAP
DEA
0.2%
14.1%
MGIB-AD
MGIB-SR
18.1%
MGIB-SR
DEA
MGIB-AD
67.7%
VEAP
Source: Chart created by CRS based on data provided by the Department of Veterans Affairs.
With respect to how benefits are utilized for postsecondary education, as
illustrated in Figure 6, a large majority of beneficiaries across all four programs used
their benefits to pursue undergraduate education. Most notably, approximately 92%
of MGIB-SR and 85% of MGIB-AD beneficiaries utilized their benefits to pursue
undergraduate education in FY2004.
22 The CPI-U for college tuition and fees does not include room and board.

CRS-20
Figure 6. Education and Training Pursued by Beneficiaries by Military
Education Program: FY2004
645
100%
5,881
608
851
14
394
3,318
311
412
2,623
34
80%
Vocational/Technical
8
60%
Graduate
18,546
64,674
9,904
Colege, Non-degree
40%
119
Undergraduate
20%
0%
MGIB-AD
MGIB-SR
DEA
VEAP
Source: Chart created by CRS based on data provided by the U.S. Department of Veterans Affairs.
Title IV Federal Student Aid Program Descriptions
This section discusses the federal student aid programs under Title IV of the
HEA and the treatment of military education benefits under these programs. It
describes each of the federal student aid programs, including a general discussion of
how they function and how each of the programs interacts with military education
benefits. In addition, the basic structure of the federal student aid need analysis
system is included to explain how military education benefits are treated.
The federal student aid programs authorized in Title IV of the HEA provide
grant aid (which does not have to be repaid), loans, and work-study assistance. The
largest Title IV student aid programs are federal Pell Grants and federal student
loans. Under each, students receive funds to attend the eligible postsecondary
education institution of their choice.23 A brief description of each of the Title IV
student aid programs follows.24
23 For additional information regarding institutional eligibility requirements to participate
in the Title IV student aid programs, see CRS Report RL31926, Institutional Eligibility for
Participation in Title IV Student Aid Programs Under the Higher Education Act:
Background and Issues, by Rebecca R. Skinner.
24 Other programs to support individuals receiving military education benefits are available,
(continued...)

CRS-21
Federal Pell Grants. The Pell Grant program provides grants to
financially needy undergraduate students. In any year, federal funding is available to
ensure that all eligible students attending eligible institutions receive a Pell Grant.
Pell Grants are portable; that is, the grant aid follows students to the eligible
postsecondary education institution in which they enroll. The size of the grant is
based, principally, on the financial resources that students and their families are
expected to contribute toward postsecondary education expenses, and the
appropriated maximum grant. For FY2006, the appropriated maximum grant is
$4,050.25
Student Loans. The federal government operates two major student loan
programs: the Federal Family Education Loan program (FFEL) and the William D.
Ford Direct Loan program (DL). The FFEL program insures and subsidizes loans
that private lenders make to students or their parents to help them meet the costs of
postsecondary education. FFELs are made by private lenders and are available to
undergraduate and graduate students, and their parents. Certain types of FFELs are
need-based; others are not. Several types of FFEL program loans are available,
including federal need-based subsidized Stafford loans (under which the government
pays the interest while the borrower is in school, or during a grace period or
deferment); unsubsidized Stafford loans; federal PLUS loans (for parents of
undergraduate students); and federal consolidation loans. A common feature of all
of these loans is that the federal government guarantees lenders against loss through
borrower default, death, permanent disability, or, in limited instances, bankruptcy.
Lenders are also provided an interest subsidy to insure a sufficient return given
financial market conditions.
Unlike FFEL, DLs are made by the federal government to students through
their institutions, thus eliminating the need for private capital and guaranty
agencies.26 Schools may serve as direct loan originators, or the loans may be
originated as well as serviced by contractors working for ED. Loan terms and
conditions for DLs are generally the same as those in the FFEL programs.27
Campus-Based Programs. Three smaller Title IV student aid programs
— Federal Supplemental Educational Opportunity Grants (FSEOG), Federal
24 (...continued)
such as the student work-study Allowance Program administered by the U.S. Department
of Veterans Affairs. These programs are beyond the scope of this report. Additional
information about these programs may be found at the U.S. Department of Veterans Affairs’
website at [http://www.va.gov].
25 For additional information about the Pell Grant program, see CRS Report RL31668,
Federal Pell Grant Program of the Higher Education Act: Background and
Reauthorization, by Charmaine Mercer.
26 Guaranty agencies are state agencies created by state governments or private nonprofit
agencies operating only within a state or nationally. Each state has a guaranty agency
selected to serve as the “designated” guarantor of FFELs for students going to schools in the
state or state residents going to schools elsewhere.
27 For additional information about the federal student loan programs, see CRS Report
RL30655, Federal Student Loans: Terms and Conditions for Borrowers, by Adam Stoll.

CRS-22
Work-Study, and Federal Perkins Loans — are collectively known as the
campus-based programs because their funds are allocated to postsecondary
institutions for award to students. Institutions must match a portion of their
allocation under each of these programs. Undergraduate students can participate in
each of these programs, while graduate students are only eligible for Work-Study and
Perkins Loans.28
Leveraging Educational Assistance Partnership. Another relatively
small student aid program under Title IV is the Leveraging Educational Assistance
Partnership (LEAP) program. LEAP provides matching federal funds to states to
encourage and assist them in providing eligible postsecondary students with need-
based grant and work-study aid.29
Federal Need Analysis
The expected family contribution (EFC) is the amount that the federal need
analysis system (Title IV, Part F) determines a family has available to contribute
toward postsecondary education expenses. In calculating the EFC, consideration is
given to available income (a combination of taxable and untaxed income and
benefits) and, for some families, available assets. In addition, living expenses,
retirement needs, and federal and state tax liability are considered. The income
contribution is calculated by determining the total income of a student and his or her
family (where applicable), determining available income by subtracting a series of
allowances from total income, and then considering a percentage of that available
income as an income contribution toward postsecondary education costs. A
contribution from assets is similarly calculated. The combination of the available
income contribution and asset contribution divided by the number of individuals in
the family enrolled in college constitutes the EFC.
The calculation of the EFC varies depending upon the applicant’s dependency
status. There are three separate dependency classifications for individual applicants:
dependent student, independent student with dependents, and independent student
without dependents. These distinctions are important because parental financial
information is not considered if the applicant meets the statutory definition of an
independent student. To be classified as statutorily independent [Title IV, Section
480(d)], an applicant must meet one of the following conditions:
! 24 years of age or older;
! married;
! enrolled in a graduate or professional program;
! have a dependent other than a spouse;
! orphan or ward of the court (or was up until age 18); or
28 For additional information about the federal campus-based programs, see CRS Report
RL31618, Campus-Based Student Financial Aid Programs Under the Higher Education Act,
by David P. Smole.
29 For additional information about LEAP, see CRS Report RS21183, Leveraging
Educational Assistance Program: An Overview, by Laura L. Monagle.

CRS-23
! a military veteran30 or active duty service member.
Students who do not meet any of the aforementioned conditions are considered to be
dependent for the purposes of Title IV student aid.
Cost of attendance (COA) is determined by each higher education institution.
The COA is a measure of student’s educational expenses at a specific IHE.31 In
general, it is the sum of tuition and fees; an allowance for books, supplies,
transportation, and miscellaneous personal expenses; and a room and board
allowance.
The financial aid administrator determines the student’s need for federal aid
and other sources of aid, based primarily upon the EFC and COA. This is true for all
federal student aid programs except for the Pell Grant program (see below). The
final outcome is the financial aid award or package, which consists of the specific
sources and amounts of student aid each applicant will receive to help pay for his/her
education-related expenses.32
Military Education Benefits and Need Analysis
This section describes military education benefits and how they are treated
in the federal need analysis system. In addition, where applicable, specific Title IV
programs and their relationship to military education benefits in determining the
amount of aid awarded for the specific Title IV program and/or in calculating the
students’ need for federal student aid are also discussed.
Military education benefits33 are not treated as income, and therefore are not
utilized in calculating the EFC. However, depending upon the federal student aid
program, veterans’ education benefits may be treated as a resource or other estimated
financial assistance (to be discussed).34 Financial need is calculated by subtracting
30 Section 480(c) defines a veteran as an individual who was engaged in the active duty in
the U.S. Army, Navy, Air Force, Marines or Coast Guard; and was released under a
condition other than dishonorable.
31 See HEA Title IV, Section 472 for relevant statutory language.
32 For a more detailed description of the federal student aid need analysis system, see CRS
Report RL33266, Federal Student Aid Need Analysis System: Background, Description and
Legislative Action, by Charmaine Mercer.
33 HEA Section 480(c)(2) defines “veterans’ education benefits” as including, but not
limited to, 10 different sources of veterans’ education support. In addition to the
Montgomery GI Bill benefits, these include benefits from such sources as the Dependents
Educational Assistance program (U.S.C., Title 38, Chapter 35), and the Reserve Officer
Training Corps program (U.S.C., Title 37, Chapter 2).
34 The program regulations for the campus-based programs refer to other types of aid, such
as veterans’ education benefits, as a resource and the federal Stafford Loan programs refer
to them as estimated financial assistance. HEA Title IV, Section 480(j)(1) states that for the
purpose of determining a student’s eligibility for funds under this title, estimated financial
(continued...)

CRS-24
the EFC and resources or other estimated financial assistance from the student’s
COA. As a result, as the amount of the EFC or estimated financial
assistance/resources increases, the amount of need declines, which reduces the
amount of need-based aid a student can receive.
Military Education Benefits and Pell Grants. The primary Pell Grant
award rule is that a student’s annual grant is the lesser of three different amounts: the
maximum appropriated Pell Grant minus EFC; COA minus EFC; or the tuition
sensitivity amount.35 For nearly all Pell recipients, the Pell Grant award is calculated
by subtracting the EFC from the maximum appropriated Pell Grant for the year (i.e.,
without regard for the COA). This is because the maximum Pell Grant minus the
recipient’s EFC is almost always lower than the COA minus the EFC. Because
military education benefits are not considered in calculating the EFC, the receipt of
these benefits does not affect a student’s Pell Grant award.
Military Education Benefits and Federal Student Loans. The
amount of federal student loans awarded is primarily dependent upon a student’s
EFC, other estimated financial assistance, and the COA of the postsecondary
institution that the student chooses to attend. As a result, as the amount of the EFC
or estimated financial assistance increases, a recipient’s unmet need declines,
reducing eligibility for need-based student loans.
Under the provisions of the Higher Education Amendments of 1998 (P.L.
105-244), MGIB benefits, but not other veterans’ education benefits, 36 are excluded
from consideration as estimated financial assistance for purposes of subsidized
Stafford Loans, but not for unsubsidized Stafford Loans. As a result, receipt of
MGIB benefits does not reduce a student’s financial need for subsidized Stafford
Loans, but does reduce a student’s financial need for unsubsidized loans.
34 (...continued)
assistance shall include all scholarships, grants, loans, or other assistance known to the
institution at the time the determination of the student’s need is made, including veterans’
education benefits as defined in Subsection (c), and national service education awards or
post-service benefits under Title I of the National and Community Service Act of 1990.
According to the Federal Student Aid Handbook, 2004-2005, the term resources comprises
aid from federal student aid programs, as well as grants, scholarships, loans, and need-based
employment that a financial aid administrator can reasonably anticipate at the time he/she
awards aid to the student, regardless of whether the assistance is awarded by the school or
by an individual or organization outside the school (pp. 3-90).
35 As implemented by ED, tuition sensitivity reduces the Pell Grant award received by a
small number of the poorest students attending institutions with very low tuition charges.
For FY2005, the only students whose Pell Grant may possibly be reduced under tuition
sensitivity are those students whose tuition charges (and any allowances for dependent care
or disability-related expenses) are less than $675; whose EFCs are $700 or less; and whose
total COA is $3,400 or higher.
36 For example, Survivors’ and Dependents’ Educational Assistance (Title 38, Chapter 35)
may be considered in determining estimated financial need for subsidized or unsubsidized
Stafford Loans.

CRS-25
Military Education Benefits and Campus-Based Programs. For
campus-based student aid programs, military education benefits, including MGIB
benefits, are considered to be a resource. As a result, veterans’ education benefits,
including MGIB benefits, directly affect the determination of a student’s need for
campus-based student aid. Program regulations, issued in 1999 by ED, permit an
institution of higher education, in its determination of a student’s campus-based
assistance, to exclude from consideration as a resource any portion of a subsidized
student loan up to the amount of a student’s active duty MGIB benefits.37 This
regulatory authority has the effect of allowing an institution to protect — if it chooses
to do so — a certain amount of the subsidized loan assistance from having an adverse
effect on the MGIB benefit recipient’s campus-based assistance.
Student Eligibility Requirements for
Title IV Programs and Military Education Benefits
As illustrated by Table 4, few similarities exist between the student eligibility
requirements for Title IV programs and the eligibility requirements for military
education benefits. The only similarity among all of the programs is that a student
must maintain satisfactory academic progress — as determined by the institution —
while enrolled.
The differences between the programs are primarily eligibility-related, and
are targeted to the particular program. For example, the eligibility requirements for
military education benefits generally focus on the beneficiary’s time and duration of
service, the amount that was contributed toward the benefit, and how much the
recipient is eligible to receive. Similarly, the eligibility requirements for the Title IV
programs generally relate to the student having the requisite education and
citizenship status, not having a drug conviction, not owing money to the federal
government, and registering for the Selective Service (where applicable).
37 Federal Register, October 28, 1999, p. 58292.

CRS-26
Table 4. Student Eligibility Requirements for Participation in the Federal Student Aid Programs
Under Title IV of the Higher Education Act and GI Bill Education Benefits
Montgomery GI Bill-Selected
Veterans Education
Eligibility criteria
HEA, Title IV programs
Montgomery GI Bill-Active Duty
Reserve
Assistance Program (VEAP)
Citizenship
requirement
Generally, students must be
U.S. N/A
N/A
N/A
citizens or U.S. permanent residents.
Individuals with several other entrance
statuses can qualify for aid
Contribution
N/A
Pay reduction of $100 per month for None
$25 to $100 per month; $2,700
the first 12 months of pay
maximum.
Discharge requirement
N/A
Fully honorable
Must remain with Reserve unit
C o n d i t i o n s o t h e r t h a n
dishonorable
Drug conviction
Conviction for possession or sale of N/A
N/A
N/A
drugs can disqualify students for federal
student aid
Duration of benefits
N/A
Lesser of 36 months or number of 36 months
Lesser of 36 months or number
months on active duty
of months they contributed
Education
requirement
Students must have a high
school High school diploma or equivalency, High school diploma or equivalency N/A
diploma or the recognized equivalent; or 12 hours of college credit
before applying for benefits
absent such a diploma or its equivalent,
students must demonstrate an ability to
benefit from postsecondary education
by passing an examination approved by
the Department of Education

CRS-27
Montgomery GI Bill-Selected
Veterans Education
Eligibility criteria
HEA, Title IV programs
Montgomery GI Bill-Active Duty
Reserve
Assistance Program (VEAP)
Enrollment
status
Must be enrolled or accepted
for Courses must lead to an educational, Courses must lead to an educational, Courses must lead to an
enrollment in a degree, certificate, or professional, or vocational objective. professional, or vocational objective
educational, professional, or
other program leading to a recognized
vocational objective
educational credential
Imprisonment
Students who are incarcerated in a Only the costs of tuition and fees, Benefits will be reduced
Only the costs of tuition and
federal or state penal institution are necessary books, and supplies are
fees, necessary books, and
ineligible for a Pell Grant, but may covered
supplies are covered
qualify for other federal aid
Length of service
N/A
Served continuously for 181 days
Accepted 6-year reserve obligation
Minimum 181 continuous days
or more; 24 months of active duty
after June 30, 1985
of active duty service, if
if enlisted after September 7, 1980
entered before October 16,
1981; 24 months of continuous
active duty service if entered
after October 16, 1981
Money owed to federal
Cannot owe a refund on a grant N/A
N/A
N/A
government
previously received, or be in default on
any education loan
Period of service
N/A
Entered active duty after June 30,
July 1, 1985, to present
December 31, 1976, through
1985
July 1, 1985

CRS-28
Montgomery GI Bill-Selected
Veterans Education
Eligibility criteria
HEA, Title IV programs
Montgomery GI Bill-Active Duty
Reserve
Assistance Program (VEAP)
Progress while enrolled
Students have to maintain satisfactory Satisfactory attendance, conduct,
Satisfactory attendance, conduct, and Satisfactory attendance,
academic progress while enrolled in
and progress, as determined by the
progress, as determined by the
conduct and progress, as
postsecondary education in order to be institution
institution
determined by the institution
eligible for federal student aid;
satisfactory progress is delineated by
policies developed by each
participating higher education
institution.
Selective Service registration
Males between ages 18-25 must
N/A
N/A
N/A
register for the selective service.
Time limitation on use of
N/A
Within 10 years of discharge or
Within 14 years of initial eligibility,
Within 10 years of discharge
benefits
release from active duty
if eligible on or after October 1,
or release from active duty
1992 — prior to October 1, 1992,
benefits must be used within 10
years of initial eligibility
Source: Table prepared by CRS based on data available from the U.S. Department of Education, U.S. Department of Veterans Affairs, relevant legislation, and the Code of Federal
Regulations.