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Anya Kamenetz Generation Debt

Anya Kamenetz, Generation Debt

Letting Uncle Sam Foot the Bill

by Anya Kamenetz

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Posted on Tuesday, July 31, 2007, 12:00AM

Both my grandfathers served in World War II, and both went to school on the GI Bill. One became an accountant and the other a pharmacist.

It's a common experience: about 8 million Americans took advantage of GI Bill benefits between 1944 and 1956. Back then, the military provided full tuition, fees, books, and a stipend to returning soldiers.

Diminishing Returns

The considerable investment paid off in both human and economic terms. It's estimated that for every dollar spent on initial GI Bill benefits, six were returned to the Treasury due to increased earnings by members of the Greatest Generation.

Flash forward 55 years, and our nation is engaged in a conflict that's surpassed the amount of time we fought in the WWII. And according to the Iraq and Afghanistan Veterans of America, a 2004 survey found that "money for college" was the No. 1 reason civilians gave for enlisting to fight in those countries.

But the current Montgomery GI Bill, passed in 1984, far from lives up to its predecessor. Higher costs, stingier benefits, and bureaucracy have put obstacles in the way of young vets attending college. Veterans' advocates are backing a new proposed law that would restore the promise of the GI Bill for all who serve.

'A Convoluted Mess'

Erik Christensen was deployed to Iraq with the Army between December 2003 and February 2005. Now he helps fellow veterans get the benefits they're entitled to at the University of Minnesota, Mankato.

"The thing about these GI Bill benefits is that it pretty much takes a lawyer to read through this stuff," he says. "These dates to these dates, active duty versus reserves, this combat zone or that one. It's a convoluted mess."

In contrast to the full ride of the original GI Bill, current benefits provide $1,075 a month for 36 months in exchange for at least three years of service and a $1,200 buy-in, taken out of a veteran's salary the first year. Under most circumstances, benefits total $38,700, which pays for about 75 percent of a public school education.

Catch-22 Revisited

Besides the red tape and the less-than-full-tuition benefits, the problem, vets say, is timing and different treatment for different branches of the military.

Anthony Arakelian, 21, an Army Reservist who did a tour in Iraq from 2005 to 2006, is a student now. He's also a Veterans Administration representative in a work-study position at Harrisburg Area Community College York Center in southeastern Pennsylvania.

Arakelian says there's a catch-22 with the Montgomery GI Bill: Benefits aren't processed until your enrollment in a college is certified, which doesn't generally happen until the semester starts. After that, "it takes about ten weeks for a new person to get processed. If somebody's trying to start school and they don't have the funds to do it, the school can't hold their classes open."

The delay, more than half a semester, might be enough to put vets in debt or turn them away from school altogether. And since benefits are paid monthly, a veteran might still have to take out a loan to pay her full tuition. (Some colleges, such as the University of Vermont, do give veterans a break on paying tuition up front).

Flyaway Benefits

A second snag is the use-it-or-lose-it trap. While active duty soldiers have 36 months of benefits and 10 years after their tour of duty is over to use them, members of the National Guard and Reservists earn reduced benefits and must be enlisted to use them, give or take a few months. That can be tough in a war of unpredictable extended deployments, and the military is relying heavily on both these branches in combat.

"The education benefits are great -- if you can go to class between combat zones," says Christensen. He points out that Minnesota is currently welcoming home 3,000 National Guard members who have been in Iraq for 22 months, one of the first groups to be affected by the ongoing surge. With all their time in combat, this group will have no more than a year to collect education benefits unless they reenlist.

Arakelian is in a similar predicament. He's currently taking summer classes and is optimistic about earning his bachelor's degree by the end of his contract in 2011, unless he's called up again. "I tried taking online classes over there," he says, "but you can only sit in front of the computer for so long. I was moving around to different bases, and you never know what the Internet access is going to be like."

Supporting Our Troops

But help may be on the way for vets like Arakelian and Christensen. Earlier this year, Sen. Jim Webb (D-Va.) introduced the Post-9/11 Veterans Educational Assistance Act of 2007.

Like the old GI Bill, this new bill provides a full ride for anyone who sees active duty: tuition, room, and board at the most expensive public university in a veteran's home state, plus a $1,000-per-month stipend. Benefits would be delivered in a lump sum in time to pay tuition bills, and red tape would be streamlined. In mid-June, Rep. Bobby Scott (D-Va.) introduced the bill in the House as well.

At the end of June a second bill -- the Veterans Education Tuition Support (VETS) Act -- was introduced in both houses. This law, drafted by veteran, activist, and law student Patrick Campbell, would help students who deploy to stay in good standing at school and with their student loans, and cap student loan interest rates for active duty military.

Tips to Use Now

While awaiting word on the passage of the Post-9/11 Veterans Educational Assistance and VETS acts, here are some tips veterans can use to take full advantage of educational benefits right now:

• Master the forms.

To get your benefits as soon as possible, you can send in form VA 22-1990 to determine eligibility even before you choose a school. It asks for your education, employment, and service information, as well as your educational goals. You can submit it online.

While you're enrolled, you'll need to verify eligibility each month either at the web site or by calling 1-888-GIBILL-1.

• Get your full benefits.

In addition to the GI Bill, drilling Reservists and active-duty military may be eligible for up to $4,500 annually in tuition assistance.

• Watch the clock.

Active-duty troops have 36 months of benefits and 10 years to use them. Reservists and National Guard members can use benefits while they're enlisted, prorated for time spent overseas. You may need to take summer or night classes to finish a degree on-schedule.

• Look for state and other supplemental cash.

Many states have expanded education benefits for military members. You can find them on this list.

There are also thousands of scholarships across the country targeted to military members. Search for them here or here.

• Reach out for help.

An increasing number of colleges of all sizes have veterans' clubs or veterans' affairs offices or both. Here are a few examples: CUNY, California Community Colleges, University of Michigan Dearborn, and University of Minnesota.

Veterans often face problems adjusting to college, and these groups can be invaluable sources of information and support.

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53 Comments

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  • Jay - Wednesday, August 1, 2007, 7:29PM ET  Report Abuse

    • Overall: 3/5

    The first person to comment is completly wrong. If they want to do away with benefits for people who choose to serve their nation then lets do away with the benefits that the poor get. That will put a very large dent in the deficit and the overall debt. These soldiers choose to go and they are fighting for your ability to make idiotic comments. They are no less deserving of the full benefits than the WW2 generation that they were created for. Unlike the poor who keep relying upon gov't support for generations these people actually do contribute to societry during and after the time they get the benefits.

  • Yahoo! Finance User - Wednesday, August 1, 2007, 7:19PM ET  Report Abuse

    • Overall: 1/5

    First, the GI Bill was for those were DRAFTED. They served AGAINST THEIR WILL IN A MORALLY JUST WAR. Now we have a professional army which CHOOSES TO SERVE in a war which is fought for the benefit of Dick Cheney and George Bush. Why should we subsidize these soldiers? Fact is, you fund a standing army, you get wars. And wars cost MORE than the listed price b/c soldiers become disabled and a burden on society. And unlike the past, there is not a financial gain for conquering a country, but actually a further financial loss. So, economically, this makes no sense. Second, it is a poor financial decision to enlist to pay for college. Quite likely, you will end up maimed and disabled for life. That will more than offset the financial gains of a college degree. Overall, this author has no economic background or common sense. I don't understand how you chose her as an "expert".

  • Yahoo! Finance User - Wednesday, August 1, 2007, 7:18PM ET  Report Abuse

    • Overall: 4/5

    I am trying to send this information to my Nephewin MO who served14 months in Iraq w/ the Mo Nat'l Guard and had his tuition cancelled by MO. this story could help[ him get some $ for college. A note keeps popping up that says it can not be sent. ???

  • BobR - Wednesday, August 1, 2007, 6:28PM ET  Report Abuse

    • Overall: 5/5

    Why should a government, or people that support a war, or our soldiers have to give our soldiers better compensation for putting their lives on the line for the country? Can't we just take it for granted? It's amazing that the Democrats (liberals) want to improve the compensation given to our troops (improve hospitals and the new GI not yet passed), and do not support the War in Iraq, while the Republicans (the people who shove our troops into the meat grinder war that is Iraq) did not get the job done when they had a majority in Congress, and a President in the White House. Republicans really do not support this country, they support the currency printed in the mints of this country. How much is the Iraq War costing the US? The Republicans will not allow the troops to be pulled out, and did not do enough to support our wounded troops by providing good medical care when they came home wounded. Some Patriotism! The Republicans can act like they are fiscal conservatives all they want, but people are starting to see through the BS. A war that has cost us trillions of dollars, created a huge deficit, gave NO BID CONTRACTS TO HALIBURTON. I wonder who benefits from this war. Let's no forget Bush's new arms sales to our enemies in the War on Terrorism. Bush's friends, the Saudi's are going to be given arms, have not been punished for 9/11 (even though most of the hijackers came from Saudi Arabia), and still continue to support the Sunni's in Western Iraq, who pretty much is al Qaeda, the people our troops are "defending our country from, and can't come home from Iraq until this is done." The GOP is a disgrace to this country.

  • DaM - Wednesday, August 1, 2007, 6:18PM ET  Report Abuse

    • Overall: 1/5

    The GI Bill indeed helped me, especially after I lost both of my legs from a mortar round in Vietnam in October of 1969. Now mind you one and all, I did not volunteer but was drafted in 1967, but everything in life comes with soem degree of risk I guess, I mean if you wish to be one of the collegiate crowd, and you want it so bad that the loss of an appendage does nto really bother you, run out and sign up.

  • Yahoo! Finance User - Wednesday, August 1, 2007, 4:57PM ET  Report Abuse

    • Overall: 5/5

    Many of you forget the reason for the GI Bill. It is for those people who give a portion of their life to serve their country. For those of us who has served or will serve time to pay their debt to society but DO NOT make a career out of the military, the GI Bill helps. A person who served in the military loading bombs on bomber or fighter has a hard time transferring those skills to the corporate world. I too am working on my MBA, but I am not even going to a Top 25 program and the GI Bill doesn't come close to covering costs. This is not socialism or a hand out. This is a benefit for those who sacrifice for our freedoms. I find it disappointing that so many people find this a waste of money. I bet if share holders of their company demanded that tomorrow their health insurance was to be funded 100% by the worker they would be up in arms about their entitlement to health care. I know health care is different from tuition assistance, but a benefit is a benefit. Even if this bill passes, I am unlikely to use any of it because I am 1.5 quarters away from completing my degree, but I believe it is a worthy investment in our future as a nation. Thanks to all those who serve so we can write what we think and feel on this web board.

  • Yahoo! Finance User - Wednesday, August 1, 2007, 4:42PM ET  Report Abuse

    • Overall: 3/5

    It's pathetic that our government is more stingy with military personnel than welfare anchors, and the sons and daughters of welfare anchors, and poor people who contribute little or nothing in the form of taxes who get much more generous tax-payer money to pay for college.

  • Christopher - Wednesday, August 1, 2007, 4:31PM ET  Report Abuse

    • Overall: 1/5

    The GI Bill monthly stipend has tripled in the past two decades and has kept pace with inflation. The amount paid to veterans under the GI Bill is more than enough to pay for tuition, books and fees at most state universities, which meets the intent of the program. I got my MBA with it only a few years ago. This liberal writer is trying to make veterans appear to be another victim class, when in fact we walk away from military with more skills to survive in the modern world than those who choose not to serve. This following message is to the affluent people of this country. STOP raising liberal children who think they have a place in the world helping us non-rich people because it always comes down to social programs that the rich do not pay for because of the tax loopholes that only you benefit from - because you write the tax code. Your idiot liberal children, like Anna, think they can save the world with tax-funded initiatives that myself and other middle-class Americans have to pay for. Anna...Rich people like your parents do not pay taxes. They employ an army of accountants and wealth management professionals, in addition to making generous political campaign contributions in order to protect and grow their wealth. People like me that slave away for 40 years to retire do not need you to continue to hack away at my savings to provide programs that make you feel better.

  • Fog - Wednesday, August 1, 2007, 4:29PM ET  Report Abuse

    • Overall: 4/5

    I'm a big fan of rewarding vets via the GI Bill. However, just like WWII, we should have a real draft.

  • Noblesse Oblige - Wednesday, August 1, 2007, 4:28PM ET  Report Abuse

    • Overall: 4/5

    Ruth3294 has it right, and thanks to her and those like her for serving. Ms Kamenetz has written an informative, positive piece about a subject few non volunteers are familiar with. In the modern era, benefit structure should take into account the potential for multiple deployments and national guard/ reservist participation. It should be a "full ride" without obstacles or red tape. As with the GI bill, this would pay rich dividends economically and help develop the future leaders we will need. Noblesse Oblige

  • Matthew - Wednesday, August 1, 2007, 4:17PM ET  Report Abuse

    • Overall: 3/5

    The article is interesting, but I am not sure I understand what the message or point of it is. A career or job in the military is just like any other. Do we need more military? If the answer is yes, then we should consider increasing benefits to attract more people, if the answer is no, then the benefits are fine as is. The article doesn't mention that we all need to make plans and evaluate the avenues to get there. The military is just one of many.

  • Yahoo! Finance User - Wednesday, August 1, 2007, 3:54PM ET  Report Abuse

    • Overall: 1/5

    Uh, OK, why pay off the military with college credits? Lets just give them more cash. Considering how liberal college campuses are trying to get rid of the military, I see no reason to pump soldier compensation into the hands of the far left...

  • theoneandonly - Wednesday, August 1, 2007, 3:37PM ET  Report Abuse

    • Overall: 1/5

    If the policy makers in America were to consist largely of "financial experts" like Anna Kamenetz, United States of America could long ago have been called the Soviet States of America.

  • D. - Wednesday, August 1, 2007, 3:23PM ET  Report Abuse

    • Overall: 2/5

    There seems to be no point here, other than "let's reward our military". That's fine, but when do we as a country begin to face our $50 trillion (that's trillion, with a "T") in currently unfunded debt obligations. As much as we all support our military, where will this money come from? We can't even cover social security and medicaid. There's a big wake-up call coming some time in the next 10 years...

  • Preston - Wednesday, August 1, 2007, 3:08PM ET  Report Abuse

    • Overall: 4/5

    A good article, I’m serving as an Army officer in Afghanistan and received my bachelors’ degree using the GI bill after serving 4 years as an enlisted soldier. The GI bill was adequate and I graduated without having to incur any college debt, although I did go to a community college my first two years and a relatively inexpensive public university after that. What I really want to address though is that the enlisted Paratroopers I serve with here deserve every benefit they receive and more. They are volunteers in a time of war, which makes them very special. They, and their families have sacrificed so much in defense of this country, and it makes me proud to see Americans make these sacrifices voluntarily. They are the reason this country, without a doubt, has the greatest armed forces in the world I believe the volunteer veterans coming home from Iraq and Afghanistan should have a full ride at the public university of their choice waiting for them and every American should feel it is their duty to pay for it. These are the best men and women this country has to offer and it is in America’s best interest to ensure these most patriotic of Americans receive a college education and a chance to become tomorrow’s professionals and leaders. The government also needs to cut through the VA’s administrative red tape so these veterans can begin college without delay. It amazes me that such a relatively small number of veterans compared to past conflicts spending multiple year tours should want for any medical or educational VA benefit when they come home. It’s time for this county to do the right thing and ensure every veteran has the opportunity to attend a public university free of charge. Some have made comments that this article is not relevant to them because they do not serve in America’s armed forces. To them I say not true. The manner in which we treat our current veterans will determine how future generations will view military service to country when conflict is again at our doorstep. We must not fail today’s or yesterday’s veterans. There is a moral contract between the American people and America’s armed forces. Our veterans protect us and in doing so sacrifice their precious time with family as well as see and experience the horrible face of war. It is our duty as American citizens to help these brave men and women returning home in every way possible.

  • Michael Tsen - Wednesday, August 1, 2007, 3:01PM ET  Report Abuse

    • Overall: 3/5

    http://www.youtube.com/watch?v=TMQXfolGzfA

  • Yahoo! Finance User - Wednesday, August 1, 2007, 3:00PM ET  Report Abuse

    • Overall: 5/5

    It is really sad how the U.S. government treats its own people. I thought America is this beacon of hope but from reading this article, I am appalled that citizens have to pay for health care/insurance and exorbitant college tuition costs. It is true that while the troops fight this war, most Americans (especially women) are engrossed with their daily shopping at the malls.

  • Yahoo! Finance User - Wednesday, August 1, 2007, 2:40PM ET  Report Abuse

    • Overall: 3/5

    There needs to be different benefits for active duty and the weekend warriors. This all encompassing solution proposed by some politician would fill our military with reservists, or basically civilians. And if it passes i'll reup in the reserves serve my time and get them to pay for my MBA, all the while keep my cushy 120k salary job. Doesn't that sound good for business/America? or maybe I'll just work hard and do it myself. 5 years on active duty, and I may have paid 4k for my degree, and only used 8 months of GI Bill. Basic and your MOS training almost gives you a year of college credits. Another approach might be to give 100% support (from internal commands) for active duty service members that want to go to school, like a 6 year program. After 6 years of active service a degree and real experience, and the military gets smart motivated individuals. Tuitions Assistance (different that GI BIll), paid 75% while I was in, ditch the GI Bill and make it 100%. I attended classes while I was deployed during Operation Joint Endeavor, with kevlar and m-16 in hand. I credit this dedication to the command I was under. Throwing money at a problem rarely is a solution, but label it "9/11" and nobody would dare dispute it, right? More politics, that hurt all Americans.

  • NYJ - Wednesday, August 1, 2007, 2:36PM ET  Report Abuse

    • Overall: 4/5

    Whats with all the whining about this being a hand out? Is your company giving you medical and dental benefits a hand out? The military needs to recruit people somehow; offering college is how they fill their demand. If the offer a college education goes away, the supply of kids willing to go into the military drops. If the military people simply got paid the equivelent of the cost of college education while they were enlisted get you so pissed?

  • Red White-N-Blue Guy - Wednesday, August 1, 2007, 2:34PM ET  Report Abuse

    • Overall: 4/5

    I think we owe our service personnel the best benefits we can possibly provide (and that's much better than what we currently provide). Anyone who disagrees with that should volunteer to go to Iraq or Afghanistan on an indefinite deployment.

  • Darth Iverson - Wednesday, August 1, 2007, 2:33PM ET  Report Abuse

    • Overall: 1/5

    This girl adds nothing to the conversation. She started out talking about debt and it becomes clear her whole angle is 'Debt is not your fault, keep spending, someone else will pay it' Worst advice on Yahoo

  • DennisAOK - Wednesday, August 1, 2007, 2:29PM ET  Report Abuse

    • Overall: 3/5

    I worked for the VA one summer while in college, processing education benefits. I would say maybe 10% of the money was well spent. Adequate controls were lacking, and there was far too much red tape, as always happens with government programs. Many of the programs were lightweight or fly-by-night with a very unclear social benefit. A better approach would be to simply pay military people more and let them use the money as they see fit.

  • Brian - Wednesday, August 1, 2007, 2:08PM ET  Report Abuse

    • Overall: 5/5

    What's with the tude in your picture?

  • Yahoo! Finance User - Wednesday, August 1, 2007, 1:58PM ET  Report Abuse

    • Overall: 4/5

    Informative and well-written (for the most part).

  • hocus - Wednesday, August 1, 2007, 1:56PM ET  Report Abuse

    • Overall: 1/5

    Govt. subsidized benefits don't come out of thin air; that money either comes from other program cuts, or increased taxes. The Marxist leaning ideology that Anya preaches might look fine initially; but there are serious flaws in this type of thinking; the current world is more populated and globalized; the baby boomer giveaways of the 50's are not sustainable today. What in the world is Yahoo! thinking giving a financial "expert" column to a misguided, 26 year old girl??

  • Bernard - Wednesday, August 1, 2007, 1:37PM ET  Report Abuse

    • Overall: 1/5

    Red Anya of Generation Handout is working every angle to try to pick the US Taxpayer pocket. Last week the impoverished student in an art major. This week it's more clever, she is playing on the justified sympathy for US servicemen. But the end is always the same: where do I get my check?

  • Jaime - Wednesday, August 1, 2007, 1:05PM ET  Report Abuse

    • Overall: 4/5

    Very good article and about Miss Anya, she is pretty and precious

  • Yahoo! Finance User - Wednesday, August 1, 2007, 12:48PM ET  Report Abuse

    • Overall: 3/5

    swmod52, I must take issue with your comment below. If anyone needs a haircut it would be Cheesy Jim Citrin. And if anyone looks like they just got banged it would be The Mortgage Professor. Yours, Anon

  • PatM - Wednesday, August 1, 2007, 12:45PM ET  Report Abuse

    • Overall: 4/5

    Good article and information I will probably suggest my marines take a look at this article. I echo below, it is not as good as it used to be, but then again college is more expensive these days too. I am a marine reservist and have used the GI bill to get my bachelors. Illinois also pays full tuition at state schools for all veterans. They've caused some paperwork headaches but I'm not complaining.

  • Yahoo! Finance User - Wednesday, August 1, 2007, 12:43PM ET  Report Abuse

    • Overall: 2/5

    I served six years during Desert Storm and used the GI Bill in conjunction with debt to pay for college after I got out. GI Bill is a great program, but should only pay enough to attract people to join. That's what it is in essence, additional compensation to get recruits to sign on the dotted line. If you are hitting your recruiting numbers, you don't need to increase compensation. It's just plain good economics (one thing I don't accuse the government of doing frequently). I didn't feel bad at all going into debt to pay for the remaining tuition bills not covered by the GI Bill, as I will make much more over my lifetime to cover those costs. I don't have a problem with a ten week processing time, you won't explode if you have to take a student loan to cover the first semester. I don't understand this aversion to student loans. Young people will buy a $25-30k car they can't really afford and cry about having to spend a like amount on an education that lasts a lifetime. If you have to go in debt by $100k for an education that won't pay it back, find a different profession or cheaper college. By the way, this Uncle Sam character always seems to have plenty of money to spend. Where the heck does he get all of it I wonder?

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More from Anya Kamenetz

Read the Generation Debt Book

According to economics professor Laurence J. Kotlikoff, Generation Debt offers "a truly gripping account of how young Americans are being ground down by low wages, high taxes, huge student loans, sky-high housing prices, not to mention the impending retirement of their baby boomer parents." Generation Debt will inspire you to take charge of your financial future.

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