Post 9/11 GI Bill Benefits – Worth a Small Fortune
The Post-9/11 GI Bill is an awesome benefit for military members and their families. Pursuant to 38 U.S. Code § 1313, eligible beneficiaries can receive over $170,000 (at the Colorado Springs rates) for academic year starting in August 2021, broken down as follows:
- Tuition & Fees, for 4 years, currently a maximum of $26,042.81/yr. (Latest and historic rate tables available on the VA website)
- Monthly Stipend, of $1947/mo in Colorado Springs (the E-5 Basic Allowance for Housing at the with-dependents rate) for 36 months (Use the DoD BAH Calculator to find the current rate for your location)
- Books & Supplies Stipend, of up to $1000/yr for 4 years.
We have previously written a blog post about treatment of GI Bill benefits for purposes of family support, or for a complete discussion of post-9/11 GI Bill Benefits, and their impact on a divorce, see our Post-9/11 GI Bill Benefits in a Divorce article in the Military Divorce Guide.
Transfer Post 911 Bill Benefits to Family Members
Even better, the Post-9/11 GI Bill benefits are transferable to a member’s spouse or children (38 U.S. Code § 1319), as long as the member has fewer than 16 years of service at the time of the transfers, and at least:
- 10 years of service at the time of the transfer, or
- At least 6 years of service with an agreement to serve at least 4 more years.
Note that the transfer must be voluntary – a court in a divorce has no jurisdiction to require a member to transfer GI Bill benefits to a spouse or children, or to divide such benefits as marital property:
“Entitlement transferred under this section may not be treated as marital property, or the asset of a marital estate, subject to division in a divorce or other civil proceeding.”38 U.S. Code § 3319(f)(3).
Repayment of GI Bill Benefits for Failure to Complete Service
Note that when a member with 6-10 years of service transfers Post-9/11 GI Bill benefits to a spouse, the spouse may use them, even though the member has not yet served the additional 4 years of required service. This has the potential for problems if the required service is not completed.
Per 18 U.S. Code § 3319(i)(2), when a member fails to complete the required 4 years, the GI Bill benefits paid are treated as an overpayment. And that means a debt, which must be paid back, and both the military member and the spouse who received benefits are on the hook:
“In the event of an overpayment of educational assistance with respect to a dependent to whom entitlement is transferred under this section, the dependent and the individual making the transfer shall be jointly and severally liable to the United States for the amount of the overpayment”18 U.S. Code § 3319(i)(1).
The problem is that the military does NOT add that 4 years to the member’s obligation – it’s up to the member to track. This can create a “gotcha” situation where a member with fewer than 10 years of service transfers benefits, then ETS’s 3 years later, w/o serving the required 4 years.
This is not a hypothetical concern – a recent Stars & Stripes article discussed how nearly 200 GI Bill beneficiaries had to repay the benefits received, and had stories of family members Members would transfer the benefits to their spouses, then leave the military fewer than 4 years later, only to learn they owed the VA back tens of thousands of dollars.
How to Handle Post-9/11 GI Bill Debt in a Divorce
Though a member and spouse may be jointly & severally liable for the overpayment, that does NOT mean that the VA will go after each of them for half of the debt owing. Rather, joint & several liability means that each of them is on the hook for up to the full amount owing, and the government can collect it from either spouse.
If the GI Bill overpayment and resulting debt happened prior to the divorce, it’s easy to address upon dissolution of marriage, just like any other debt. Similarly, if the spouses have reason to believe that the service requirements will not be met, and there will be a GI Bill debt, they can address that possibility at the time of divorce.
But life is rarely that simple. What happens when a member owing a 4-year obligation leaves the military after divorce, but before completing that 4 years? The result is a marital liability which was not addressed, so the decree would need to be reopened.
Post 9/11 GI Bill Debt Within 6 Months of Divorce
If the overpayment, and resulting GI Bill debt, becomes known within 182 days of the divorce decree (admittedly, this is probably not very likely), the former spouses can reopen the property settlement pursuant to Colo. R. Civ. P. 60(b)(1) in cases of “Mistake, inadvertence, surprise, or excusable neglect”.
Unallocated Debt Within 5 years of Divorce
Most of the time spouses will learn of the Post 9/11 GI Bill overpayment, and the resulting debt, more than 182 days after a decree. In that case, there is a debt which was arguably omitted from their original disclosures, and the parties have five years to ask the Court to address the debt:
If a disclosure contains a misstatement or omission materially affecting the division of assets or liabilities, any party may file and the court shall consider and rule on a motion seeking to reallocate assets and liabilities based on such a misstatement or omission, provided that the motion is filed within 5 years of the final decree or judgment.Colo. R. Civ. P. 16.2(e)(10)
The takeaway? If you are drafting an agreement, even if there is no post-9/11 GI Bill, it’s a good idea to have a “catch-all” provision to address how to handle property or debt which may not be known, or is not divided, at the time of divorce. You don’t need to be real specific – a simple sentence like this will suffice: “The Court reserves jurisdiction to divide any marital property or debt not allocated herein.”
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