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Paying for College

Uncle Sam Wants (to Thank) You

The new G.I. Bill offers military veterans a generous reward.

Members of the military on active duty since September 11, 2001, just received a big bouquet from Congress. The Post- 9/11 Veterans Educational Assistance Act, recently signed by President Bush, boosts the educational benefits offered to Iraq and Afghanistan veterans, making it the most comprehensive education program since the first G.I. Bill, signed in 1944.

The new law, which kicks in August 2009, pays up to the full cost of tuition and fees at the most expensive public school in the state in which you enroll -- guaranteeing a free education if you attend your state institution and qualify for the full amount. The existing veterans program, the Montgomery G.I. Bill, pays only 70% of the cost of a public institution and less than a third of the cost of a private-school education.

The law also drops the requirement that G.I.s pay a $1,200 fee to enroll in the program.

With these improvements, "people can actually afford to go to school without taking out loans," says Vince Patton of Military.com, a membership organization. "Overall, it’s a huge, huge win in the military veteran’s community."

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Who qualifies. To get in on the deal, you have to have seen at least three months of active duty since 9/11, after which benefits are pro-rated according to months served, up to 36. If you serve at least three years of active duty, for instance, you qualify for 36 months worth of in-state tuition and fees, or four academic years. I; if you serve 24 months, you qualify for 80% of the in-state tuition, plus 80% of the stipends for books and housing. Vets who leave the military as a result of a service-related disability and served at least 30 days of continuous active duty qualify for the maximum benefit.

Unlike previous G.I. bills, the new law extends equal benefits to activated members of the National Guard and the Reserves. You have 15 years -- instead of the ten currently allowed -- in which to take advantage of the offer. Military men and women who graduate from a service academy, receive an ROTC scholarship or attend medical school on Uncle Sam’s dime have to complete their service obligation before the clock starts ticking on the 36 months of active duty required for full benefits.

How it works Say you serve three years and then enroll at your home state’s priciest public institution. The feds will cover in-state tuition and fees and give you a housing stipend pegged to area housing prices, plus $1,000 a year toward books and up to $1,200 toward tutoring expenses. If you attend as an out-of-state student, you’ll have to make up the difference between in-state and out-of-state costs. If you attend a private institution that costs more than the state flagship university, you’re on the hook for the extra amount.

To bridge the gap between what the program covers and actual costs, the bill also establishes a so-called Yellow Ribbon program in which the feds will match institutional grants offered by participating schools to vets who qualify for the maximum benefit.

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For Kevin Montgomery, a sergeant first class serving in Iraq, the best provision of the new law is the one that allows soldiers -- many of whom already have a college degree -- to transfer education benefits to their spouse or kids. "It lifts the burden off our shoulders," says Montgomery. To qualify, you must have served six years of active duty since 9/11 and commit to serving four more or serve at least ten years after 9/11. Children are exempt from the 15-year time limit but must be under 26 at the time they use the benefit.