Author Topic: Military: Student Loan before GI Bill?  (Read 2072 times)

T-Rex

  • Bristles
  • ***
  • Posts: 414
  • Location: SF
  • Thirtysomething woman, military vet
Military: Student Loan before GI Bill?
« on: June 23, 2015, 07:18:17 PM »
Back Story: I am a military veteran with post 9/11 GI Bill available.

GI Bill value = living stipend of $3800 + up to $20,000/yr tuition + whatever additional money specific school's Yellow Ribbon Program will kick in toward tuition.

So, I am attending a cheap community college on my own dime so I don't waste potential tuition money.

My financial situation:
Rent: $850
Savings:$17,600
Retirement: $29,200
Credit score: 750
Qualify for Pell Grant
No income
5 years VA Health Care: free / small copay
Unknown disability rating

I am planning on getting some student loans for community college, so I can use GI Bill for the much higher tuition towards a Bachelor's and law school.

I found this loan:

USAA + Wells Fargo Collegiate deal:
No Fees, repay 6 months after degree. (I'd use the generous GI Bill then)
Variable rate - 2.93% - 8.16%
Fixed rates available.
Discounts of .5% available to me for membership & auto pay.

1. Any better ideas?

2. What do you do after you max out traditional IRA for the year?
« Last Edit: June 23, 2015, 11:49:34 PM by T-Rex »

gradstudent

  • 5 O'Clock Shadow
  • *
  • Posts: 21
Re: Military: Student Loan before GI Bill?
« Reply #1 on: June 24, 2015, 05:27:25 PM »
Have you taken any CLEP tests? Most community colleges will accept a good bit of transfer credit from military schooling, so I highly recommend that. Even getting only 15 hours, which is a pretty good estimate based off my past experience (veteran, used to be responsible for the education program with my unit), you've shaved a semester off your time.

I would also only look at 4 year schools where all tuition and fees is covered either by the GI Bill, or by the GI Bill + Yellow Ribbon. Virtually all public universities fit this criteria.

The GI bill living stipend is paid monthly at the E-5 with dependents rate based off your school, not personal, zip code. At the US average payment, it's ~$15,000 tax free for a 9 month school year. It will be higher or lower base off your actual location.

One thought on waiting to use the GI Bill-if you are 100% positive that you are going to law school, then you should wait. But, the 36 months of coverage essentially mean that you get the 20k tuition payment 5 times. The way the VA counts the time used from the GI Bill is to start at the 1st published day of class and end counting at the end of exams. In my experience, that is less than 9 months for a fall / spring semester year. So, every full year of class means you use up slightly less than 1/4 of the GI Bill. If you finish 4 years of school and have used up 35 months and 29 days worth of benefits over that time period, you are eligible for the full tuition payment for the 5th year, but only 1 day of BAH.

Nords

  • Magnum Stache
  • ******
  • Posts: 3166
  • Age: 58
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Military: Student Loan before GI Bill?
« Reply #2 on: June 27, 2015, 10:19:22 PM »
I found this loan:
USAA + Wells Fargo Collegiate deal:
No Fees, repay 6 months after degree. (I'd use the generous GI Bill then)
Variable rate - 2.93% - 8.16%
Fixed rates available.
Discounts of .5% available to me for membership & auto pay.
1. Any better ideas?
It doesn't seem like a bad loan, and you'd probably get discounts for consolidating your insurance at USAA.  Hopefully USAA would also do a good job at tracking & processing the payments.

But how do people screen for student loans?  Is there such a thing as a student loan broker, like a mortgage broker?  Because that's how I'd search for a loan.

2. What do you do after you max out traditional IRA for the year?[/B]
You'd invest even more of your asset allocation in taxable accounts.

If you're not planning on converting your traditional IRA to a Roth, then you could save on its expense ratios by transferring your traditional IRA to your TSP account:
https://www.tsp.gov/PDF/formspubs/tsp-60.pdf

T-Rex

  • Bristles
  • ***
  • Posts: 414
  • Location: SF
  • Thirtysomething woman, military vet
Re: Military: Student Loan before GI Bill?
« Reply #3 on: July 30, 2015, 04:06:33 PM »
I just found out I'm getting disability compensation and I am eligible for extra college via Voc Rehab, so I'm not afraid to use the GI Bill in Fall semester.

2. What do you do after you max out traditional IRA for the year?[/B]

You'd invest even more of your asset allocation in taxable accounts.

If you're not planning on converting your traditional IRA to a Roth, then you could save on its expense ratios by transferring your traditional IRA to your TSP account:
https://www.tsp.gov/PDF/formspubs/tsp-60.pdf

I guess my health is well covered by the VA now. What do you think of getting a HSA for dental insurance? I don't have dental insurance yet. I see the max contribution is $3,350 a year for individual.

Otherwise, I am just looking at just making an individual account at Vanguard.

Thanks for the TSP tip, I still barely understand how TSP works for a vet, I'm going to to get your book already.
« Last Edit: July 30, 2015, 04:38:37 PM by T-Rex »

goatmom

  • Bristles
  • ***
  • Posts: 290
Re: Military: Student Loan before GI Bill?
« Reply #4 on: July 30, 2015, 09:07:05 PM »
Can you use voc rehab before you use GI Bill?  Just thinking GI bill could be used for law school but getting voc rehab to pay for that would be tough. I don't think I would waste GI bill on community college.

Nords

  • Magnum Stache
  • ******
  • Posts: 3166
  • Age: 58
  • Location: Oahu
    • Military Retirement & Financial Independence blog
Re: Military: Student Loan before GI Bill?
« Reply #5 on: July 31, 2015, 12:19:24 AM »
I just found out I'm getting disability compensation and I am eligible for extra college via Voc Rehab, so I'm not afraid to use the GI Bill in Fall semester.

2. What do you do after you max out traditional IRA for the year?[/B]

You'd invest even more of your asset allocation in taxable accounts.

If you're not planning on converting your traditional IRA to a Roth, then you could save on its expense ratios by transferring your traditional IRA to your TSP account:
https://www.tsp.gov/PDF/formspubs/tsp-60.pdf

I guess my health is well covered by the VA now. What do you think of getting a HSA for dental insurance? I don't have dental insurance yet. I see the max contribution is $3,350 a year for individual.

Otherwise, I am just looking at just making an individual account at Vanguard.

Thanks for the TSP tip, I still barely understand how TSP works for a vet, I'm going to to get your book already.
I'm sorry that your rating is so high, but I guess the good news is that the VA is treating you right.  Or at least better.

I'm not sure which is worth more-- voc rehab or the GI Bill.  This is a good time to go over the numbers and options with a VA VSO or a VA counselor at a local collge.

I'm ignorant on HSAs, and I'm learning that it might be because military who are eligible for any Tricare or VA benefits are not eligible for a HSA.  For example, here's info from OPM:
https://www.opm.gov/healthcare-insurance/healthcare/health-savings-accounts/frequently-asked-questions/
"Who is eligible for an HSA?
You must participate in a High Deductible Health Plan, have no other insurance coverage other than those specifically allowed, and not be claimed as a dependent on someone else's tax return in order to be eligible for an HSA. Some examples of other coverage that would cause ineligibility are: a health care flexible spending account (HCFSA), a spouse's FSA, a spouse's family enrollment in an HMO, other non-high deductible health insurance coverage, TRICARE, Medicare, or receipt of VA or IHS benefits within the previous three months. You can still have other disability, dental, vision and long-term care insurance policies."

I did find a full list of benefits (including dental) at IRS Pub 502:
http://www.irs.gov/publications/p502/ar02.html#en_US_2014_publink1000178923

But I think receiving VA benefits may be a show-stopper.

Thanks for buying the book!  More royalties for military charities.

Let me know if I can answer more questions about the TSP.

T-Rex

  • Bristles
  • ***
  • Posts: 414
  • Location: SF
  • Thirtysomething woman, military vet
Re: Military: Student Loan before GI Bill?
« Reply #6 on: July 31, 2015, 01:25:15 AM »
Quote
"You must participate in a High Deductible Health Plan, have no other insurance coverage other than those specifically allowed... Some examples of other coverage that would cause ineligibility are... receipt of VA... benefits within the previous three months."

Oh, didn't know the HSA rule. It's weird, because most vets don't rate VA dental care, I think it is limited to people that had traumatic injury of their teeth. Kind of a bummer for student/unemployed or Mustachian veterans. I just imagined my TSP savings would have to get kicked out into the civilian sector somehow instead of chilling at TSP and able to receive more from an IRA.

Quote
Can you use voc rehab before you use GI Bill?  Just thinking GI bill could be used for law school but getting voc rehab to pay for that would be tough. I don't think I would waste GI bill on community college.

I don't think so, but I could ask a vocational rehab counselor. I have met people going to grad schools on voc rehab. I don't know much about it, except it is a benefit for career training/education similar to GI Bill available to service members with certain disability ratings.

Quote
Delta Dental has a plan for Vets who are enrolled in VA healthcare  http://www.deltadentalvadip.org/

I'm told Delta has a $10/month plan that is decent. Anything would be an upgrade from such infrequent active duty dental care.
« Last Edit: July 31, 2015, 01:28:56 AM by T-Rex »