Understanding new ‘in-state’ tuition ceiling on gi bill

Perhaps the first thing veterans using GI Bill education benefits should understand about new “in-state tuition” protection that Congress approved last month is that it won’t take effect for another year, by fall semester 2015.

That delay will give state-run colleges and universities — or, in some cases, state legislatures — time to prepare policies or laws to lower tuition and fees for non-resident veterans to match what in-state students face.

The delay also means the population primarily to benefit from the in-state tuition mandate are those planning to leave active duty to use their GI Bill in another year, says William Hubbard, vice president of government affairs for Student Veterans of America. That’s because most current GI Bill users will have established in-state residency by then anyway.

Indeed public colleges and universities in 27 states already offer non-resident veterans in-state tuition rates. Schools that don’t by July 1 next year, however, won’t be able to participate in the Post-9/11 and Montgomery GI Bill programs, forcing student vets to use education benefits elsewhere.

Currently Post-9/11 benefits cover all in-state tuition and fees at public colleges and universities. But an estimated 3,800 veterans annually face substantial out-of-pocket costs because they elect to attend state-run colleges as non-residents. Transferring GI Bill students, for example, can be hard hit for a year until they re-establish state residency.

But most of those impacted are newly discharged veterans who decide to attend college in states where they served last on active duty. Until they establish residency, they face out-of-state tuition and fees that their GI Bill benefits won’t cover, often costing them thousands of dollars.

For-profit schools have used that gap in GI Bill coverage of non-residents enrolled in public universities to pitch their own costly programs to veterans, touting huge amounts in tuition and fees that can be saved at their schools through use of the Yellow Ribbon feature of the Post-9/11 GI Bill.

Under Yellow Ribbon, private colleges, including for-profits, can elect to waive up to half of their tuition and fees not covered by basic Post-9/11 benefits — the current cap is $20,235 per academic year — and the VA must match the waived amount, further enhancing the benefit.

“There’s no doubt that many predatory for-profits misled vets into thinking they were getting a ‘better deal’ out of their GI benefits in covering higher for-profit tuition and fees,” said Makese Motley, assistant director for federal policy for American Association of State Colleges and Universities.

Besides financial relief to non-resident veterans, the new law will guarantee in-state tuition to dependents of veterans who use transferred Post-9/11 benefits. That combination of breaks also could lower the federal government’s tab for GI Bill benefits by $175 million over the next decade, CBO estimates.

Public colleges and universities set lower in-state tuition rates because most states subsidize education costs for their residents. So the new requirement on state-run schools to offer non-resident veterans lower rates too threatens to create funding shortfalls unless state legislatures vote to increase subsidies or state-run schools opt to impose tuition hikes on all students.

But Hubbard, with Student Veterans of America, predicted the impact to comply on state schools would be “fairly negligible.” He used California as an example.

“It’s a large system with lots of schools, lots of veterans,” Hubbard said. “If the entire California system were to grant tomorrow in-state tuition for student veterans, and those costs were distributed across the student population, the increase for other students would be about $4” per semester. He compared that to student activity fees, which can range from $25 to $50.

The cost to any one school also should be marginal, Hubbard said.

“We are not talking about adding hundreds of staff members. They don’t need to add a new department or a wing of professors. No one school [need worry that] 100,000 vets will show up on its doorstep. Student veterans have a diversity of interests and will pursue a diversity of schools.”

Barmak Nassirian, director of federal policy at AASCU, said his organization long has supported reducing tuition for veterans, both to limit their out-of-pocket costs and to provide “more attractive alternatives to predatory for-profit schools. Offering out-of-state veterans in-state tuition is certainly the best way of improving educational benefits for them.”

But the in-state tuition requirement enacted as part of the Veterans Access, Choice and Accountability Act of 2014 last month was “the least constructive” path Congress could have taken to achieve those key goals.

It legislated “the proverbial ‘free lunch’ by mandating in-state tuition for veterans and their dependents” without covering “the significant costs this will impose on public colleges,” Nassirian said. “If reducing college costs were simply a matter of passing laws like this, Congress could solve the nation’s college access crisis by legislating free tuition for everyone!”

The preferred path would have been to have the federal government pay states the education subsidies public colleges needed to lower tuition and fees for out-of-state veterans, Nassirian said. Or Congress could have required each state — rather than individual schools — to treat veterans as state residents entitled to the same subsidies as other student residents.

A third way, he said, would have been to lift the cap on public-sector tuition under the GI Bill and open the Yellow Ribbon feature to public colleges to be more price-competitive with private and for-profit schools.

But public colleges and universities will adapt, Nassirian said, and they still view access to education for veterans as a significant responsibility.

“There are certainly some additional costs and operational concerns associated with the new legislation, but institutions are hard at work to address them,” he said.

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