Most veterans try hard to get the most value from their GI Bill benefits and other financial aid packages offered when attending a college or university. But a little-known, under-the-radar practice called scholarship swapping, used by many private colleges and universities, can leave veterans with a much larger than expected bill at the end of a semester or academic school year.

Post 9/11 GI Bill

Before getting into how swapping works, we have to quickly go over the part that the Post 9/11 GI Bill pays because it is a large factor in the practice of swapping. If attending a public school under the Post 9/11 GI Bill, tuition and fees are paid in full at the resident rate for veterans at the 100% tier. But if attending a private school, the VA will only pay up to $25,162.14 per year.

With some schools charging upwards of $60,000 per year in tuition and fees, this leaves a large unpaid balance that must be paid out-of-pocket by the veteran student or in conjunction with other sources of financial aid, such as scholarships, grants, or student loans. With that background information, let’s see how swapping works.

The practice of swapping

With regard to financial aid, many private schools offer their own scholarships, most of which are need-based and can be quite generous. However, many of them reduce their scholarship offer dollar-for-dollar, if a student also receives any outside scholarships, grants, and other third-party financial aid. Unfortunately, many of these schools consider Post GI Bill money the same as other scholarship money, instead of recognizing it for what it is – an earned entitlement.

The numbers

To see the effect of this process, let’s say the school charges $50,162.14 per year for tuition and fees. We know that at the 100% tier level, the Post 9/11 GI Bill would pay $25,162.14 per year in tuition and fees. That leaves an unpaid balance of $25,000. But wait, your school had offered you a $19,000 scholarship early in the application and funding process, which should have reduced your remaining unpaid balance to $6,000.

However after finding out that part of your financial aid is the GI Bill, they apply scholarship swapping and take back the entire $19,000 because of the $25,162.14 paid to them by the VA on your behalf. So instead of owing $6,000 you end up owing $25,000. When in school, an unexpected expense of this size can be devastating.

Principles of Excellence

For schools that accept GI Bill payments, they must abide by the VA’s Principles of Excellence. If not, they will be barred by the VA from being an approved institution of higher learning for GI Bill users. Those principles in part include giving you the veteran student a written personal summary of the total cost of your educational program, which includes:

  • The costs covered by your GI Bill benefits
  • The financial aid you may qualify for
  • Your expected student-loan debt after you graduate (if any)
  • Other information to help you compare aid packages offered by different schools

Know the Parameters For your Scholarship Before you Begin

Unfortunately, it does not specifically address scholarship swapping disclosure. Some schools will disclose it up front and some will not. The lesson learned is if your schools offers you a scholarship, ask if that money is subject to swapping. Knowing if it is or not up front can prevent you from getting unexpected bill at the end of a semester or school year from your school.

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Kness retired in November 2007 as a Senior Noncommissioned Officer after serving 36 years of service with the Minnesota Army National Guard of which 32 of those years were in a full-time status along with being a traditional guardsman. Kness takes pride in being able to still help veterans, military members, and families as they struggle through veteran and dependent education issues.