New VA Management of Education Debts

The Johnny Isakson and David P Roe, M.D. Veterans Health Care and Benefits Improvement Act of 2020 passed into law January 5, 2021. While the law is full of changes and expansions to the variety of GI Bill programs, this post will focus on changes VA management of education debts.

Students and schools can receive overpayments of benefits through withdrawing from classes, withdrawing from school, or from failing to pass classes. Prior to the passage of the most recent Veterans Health Care and Benefits Improvement Act, students that received the overpayment were typically assigned financial responsibility for the debt. The Department of Veteran’s Affairs would then collect directly from the students. That has changed, although, the VA is still working to implement changes to comply with the new law.

What you need to know

If you are using VA GI Bill Benefits to pay for college, changes to your enrollment impact your benefits. If you drop classes on or prior to the first day of classes and the VA has already paid the school, the school is responsible for repaying the VA. If you drop classes after the first day of school, the student is financially responsible for repaying the VA. If you drop below full time and have already received benefits, you will be responsible for repaying any over payment amounts.

The Big Change

The VA will no longer collect tuition and fee debts from students. Moving forward, the VA will collect debts from the school and the school will be responsible for collecting from the students. Schools will be the holder of the tuition and fee debt. Students will have to work directly with the school to repay tuition and fee debts.  Students who owe money to the school need to be aware of how tuition and fee collections work in their state.

 Books and Stipend Debts

The Post 9-11 GI bill generously includes a housing allowance and books and supplies stipend. Changes to enrollment, such as dropping below full-time status or withdrawing from enrollment result in debts owed to the VA. Don’t forget that changes made to enrollment, such as moving from full-time to half-time status, are applied retroactively to the start of the semester. There are exceptions to repayment for specific mitigating circumstances. There is also a 6 Credit Hour Exclusion to repayment. If you don’t have a mitigating circumstances exception and you have used your OTE, be prepared to repay benefit overpayments.  It makes sense that as the benefits are paid directly from the VA to the student, the VA will still own the repayment debt. The VA will still collect the repayment debt directly from the student.

The Bottom Line

First, read those emails you get from the VA. They help you stay up to date on changes that directly affect your benefits. Secondly, if you have to withdraw from classes after the first day, be prepared to repay tuition and fees to the school. Third, if you fall below full time or withdraw from enrollment, be prepared to repay housing allowance and stipends directly to the VA.