In this multi-part series, we discuss a GI Bill overpayment from why it happens, to how to resolve it. We start at the point of receiving the overpayment notice from the VA. At this point, the “why” of how it happened is irrelevant. Once you receive the letter, the clock is ticking. The ball is now in your court to respond.
The dreaded overpayment notice from the VA can come about due to various reasons, however one of the most common is dropping a class after the school’s official drop period. For example, if the VA has already paid you the Post 9/11 GI Bill housing allowance and book stipend (and tuition to your school) for 12 credits this semester and you drop a 3-credit class, then the VA ended up paying more than they should. This has now created an overpayment situation that has become your responsibility to either pay or resolve.
Six-Hour Exclusion
The VA realizes there are situations that can arise that force you to drop a class outside the school’s drop period. That is why they have an automatic one-time policy exclusion that allows you to drop up to six credits. You can use this “get out of financial jail free” card only once during your GI Bill use. The second time you drop a class outside the drop period (or experience any of the other potential overpayment situations), you can create a VA debt.
The First Step
If you do receive an overpayment notice, the first step should be filing a request for a waiver to the VA within 30 days of the date on the letter. At this point, you don’t know how much you owe, but it doesn’t matter – file the request right away.
The advantage of filing within 30 days is by regulation, the VA has to keep paying you benefits while your request is being reviewed and resolved – a process that can take several months.
Although you have up to 180 days to submit a waiver request, once outside the 30-day period, the VA will start withholding benefits starting on the date referenced in the letter, until the overpayment is resolved one way or the other.
Submitting the Waiver Request
Your waiver request should tell the VA why they should cancel the overpayment claim against you and the financial effect it will have on you if they don’t. Your statement should be submitted on VA Form 21-4138 – Statement in Support of a Claim and say something along the lines of:
The Debt Management Center sent me a notice, dated _________, stating that the VA has overpaid me in VA benefits. I dispute the existence and amount of the claimed overpayment, and I request a waiver of the full amount.
Go on to say how the withholding of benefits will affect you financially, like you will not be able to pay rent, buy food or pay for other basic essentials of life.
With your claim, you will also have to send in VA Form 5655 – Financial Status Report showing your income and expenses to support your financial demise. The VA will not only not process your claim without this supporting documentation, but they will outright deny it. But by submitting both forms within the 30-day limit, the ball is now in their court and the waiting game starts. If you are sending your request by snail mail, be sure to use Certified Mail, Return Receipt Requested so that you have proof your paperwork actually made it to the Debt Management Center and somebody had signed for it.
In future posts, we will discuss other reasons that can cause an overpayment situation, factors the VA uses in determining whether to approve or deny your waiver request, and actions to take if your claim is denied.
