Military Advantage

Senate Passes GI Bill Fairness Act

Rep. Jeff Miller's (R-FL) Restoring GI Bill Fairness Act of 2011 has been approved by the Senate just as the next wave of GI Bill changes associated with The Post-9/11 Veterans Education Assistance Improvement Act are about to go into effect.

If signed by the President, Miller's (R-FL) bill (H.R. 1383) will temporarily authorize the VA to cover the tuition and fees for up to 24 months for veterans currently attending non-public education and training institutions that have tuition and fees which exceed $17,500 a year. In simple terms this bill would add back a "hold no harm" element to the law.

To meet Congress' pay as you go requirements, the cost of Miller's bill will be covered by adjusting the VA's Loan Guaranty Fee for "certain subsequent loans” which were planned to change in October. The Current funding fee for subsequent users is 3.3 percent. This rate was scheduled to drop about .5 percent this fall. If signed by the President, the planned fee reduction may be postponed or slightly offset until October 12, 2012.

VA Home Loan Funding Fee Explained

The VA funding fee is required by law. The fee is intended to enable the veteran who obtains a VA home loan to contribute toward the cost of this benefit, and thereby reduce the cost to taxpayers.

The funding fee for second time users who do not make a down payment is slightly higher. The idea of a higher fee for second time use is based on the fact that these veterans have already had a chance to use the benefit once, and also that prior users have had time to accumulate equity or save money towards a down payment.

VA Home Loan users who make a down payment of at least 5 percent pay a reduced funding fee of 1.5 percent, the same as first time users making the same down payment. For a 10 percent down payment, the fee drops to 1.25 percent. The effect of the funding fee on a veteran's financial situation is minimized since the fee may be financed in the loan. National Guard and Reservist veterans pay a slightly higher funding fee percentage. To determine the exact funding fee percentage, please review the funding fee table.

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