Who knew? It looks like this mid-year review is turning into a whole series!
Today and tomorrow, we're talking about Post 9/11 GI Bill benefits and the amazing Transfer of Education Benefits (TEB) option. If you think you're going to transfer your benefits, but haven't done it yet, I've got convincing reasons to do it TODAY. If you've already transferred benefits, I'll tell you why the standard "one month per dependent" rule isn't quite right, and other ways you might want to consider benefits transfers.
Haven't Transferred YetIf you are eligible for the Post 9/11 GI Bill, and you have dependents, there are compelling reasons why you should transfer those benefits and why you shouldn't wait one day longer.
The benefits transfer is pretty much the most amazing thing to ever happen to the GI Bill program. Eligible Post 9/11 GI Bill members have the option to transfer some or all of their GI Bill benefits to their spouse or their children. This transfer has to occur during certain times in the servicemember's career, and incurs an additional service obligations. Servicemembers retain the right to modify or revoke those transferred benefits at any time, but they can't add new beneficiaries to the transfer once they've left the military (or started the process).
There are three issues here: should you transfer benefits, when should you transfer benefits, and how much of your benefits should you transfer?
In my opinion, there are three short answers to these questions: yes, and as soon as possible, and all of them.
Should I Transfer Benefits?Even if you think that you want to use your entire GI Bill benefit for yourself, there is no cost or obligation to transferring benefits. You don't even have to tell your spouse or children that you've transferred them. You can always change or rescind that transfer at a future date when you are completing your education.
However, if you don't transfer benefits, and you leave the service (even unexpectedly), you can't go back and transfer them later. While we all have a vision of how our future will look, the reality is that life is unpredictable. Transferring benefits to your eligible beneficiaries gives you the widest range of options in the future. Options are good!
When Should I Transfer Benefits?Transferring benefits incurs an additional service obligation, and you can't initiate transfers once you've been selected for separation, or denied re-enlistment, or otherwise learned that you won't be able to complete that obligated service. Therefore, you should do the transfer at the earliest possible date. If you meet the transfer eligibility criteria, you should transfer it today. If you need to meet some eligibility requirement, such as re-enlisting or reaching six years of service, please transfer your benefits as soon as you are eligible. This will start the clock on your service obligation. It will also put you in a good position to have your additional service obligation waived if you become subject to voluntary or involuntary separation, or if you become eligible for early retirement under force shaping initiatives, or if you are medically discharged or retired.
How Do I Decide How To Allocate My Benefits?In my educated opinion, you should transfer all of your benefits to someone, and you should allocate at least some of your benefits to everyone who is eligible.. How you divvy it up is not as important as that you DO assign those benefits. Standard wisdom (and my earlier writing) suggests that you should allocate one month of benefits to each possible beneficiary. This is gets them "in the system" and allows you to give them more benefits in the future, once your overall plans become clear. For example, my husband assigned one month of benefits to each of our children, and one month to me. This means that he can go back and take away that month, or add more months, as people start attending school. This is a good plan, but there's a better one.
The assigning of initial benefits (to get people in the system) has to be done while the servicemember is still serving, and before separation or retirement is initiated. Changes and revocations can be done at any time, even after the servicemember has left the service. There's a morbid catch, though: if the servicemember dies, the benefits are locked in as they are allocated when the servicemember died.
In my example above, if my husband were to die, each of us would have one month of benefits and there would be 31 months of benefits just completely wasted. Now, due to the many generous benefits available to families of deceased active duty members, this wouldn't be too much of a loss. Programs such as the would cover most of our educational needs, sometimes even beyond the benefits of the Post 9/11 GI Bill. However, if my husband were to separate or retire from the military, and THEN die, those benefits would be just GONE.
Because of this situation, I recommend that you make your best educated guess and allocate all those benefits to someone. Think of this from the perspective of the worst case - that you're dead. Is your spouse going to want to go back to school, or is it more helpful to assign those benefits to one of your kids? You can always go back and modify this assignment, but you've set your family up with great benefits if something awful happens.
Also along the lines of maximizing your benefits, be sure to allocate at least one month of benefits to each of your eligible beneficiaries. You may be absolutely sure of your current allocation, but what happens if a child decides that he or she doesn't want to go to college, or what if he or she receives so much financial aid that you'd be wasting your GI Bill benefits? Again, none of us can predict the future. You want to preserve as many options as possible, and allocating at least one month of benefits to each eligible person (spouse and dependent children under the age of 21; benefits may be transferred to 21 and 22 year olds under certain circumstances.)
I know this is complicated, and it can be confusing, and it is depressing to consider. However, it is super-important. Please feel free to ask questions in the comments, and I'll see what I can do to make it more clear.
This post is part of our mid-year financial review series: