Why Veterans With GI Bill Benefits Still Take Out Student Loans

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Nearly 6 in 10 U.S. military veterans who take out student loans cite living expenses, such as housing and child care, as their primary reason for borrowing, according to the first such nationally representative survey of veterans who took out student loans.

The survey—which was conducted for The Pew Charitable Trusts among veterans who served after September 11, 2001—helps shed light on a key mystery: Why so many take on student loan debt despite having access to strong GI Bill benefits after 9/11. , which covers full tuition and fees at public universities and at least partial tuition and fees at private universities. These benefits also include a stipend to cover books and supplies, as well as a housing allowance.

A separate Pew Center analysis conducted earlier this year using U.S. Department of Education data found that just over a quarter of veterans in undergraduate programs took out loans, averaging $8,000 in the 2015-16 school year.

Questions in the survey were worded to give a better idea of ​​how veterans use borrowed money, including asking for a rating of expenses being covered by student loan dollars. Among the main results:

  • 58% of those who took out student loans said they borrowed primarily to cover living expenses. The most common were housing costs (21%) and daily expenses, such as groceries and childcare (17%). (See Figure 1 for more details.)
  • 42% cited educational expenses as the initial cost they borrowed to cover. Most chose tuition and fees (36%), while a small percentage chose books and supplies (6%).
Most veterans who take out student loans do so to pay for living expenses

To many, these results may come as a surprise, in part because the post-9/11 GI bill introduces a monthly housing allowance (MHA) designed to cover — or significantly defray — the cost of housing while veterans are enrolled in a college or university. But the findings support reports that the cost of living has become a “dominant component of the cost of attending college” relative to education costs. This is especially the case for older students, such as veterans, who often have to juggle other financial obligations, including the prospect of looking after children or other family members.

Pew’s recent analysis of federal Department of Education data shows that older students are more than twice as likely as students in general to have dependents, which could increase their living expenses compared to more traditional students.

In the coming months, the Pew Center plans to take a closer look at the comprehensive data in this unique survey to create a more detailed picture of the scope and scale of veteran student loan debt. Future work will take a deeper look at the specific factors that may be associated with this borrowing, such as experiences with the use of the post-9/11 GI monthly housing allowance, use of other financial assistance resources, socioeconomic factors, credit earned for military skills and knowledge and other related issues.

This analysis is based on data from an online survey conducted by the Pennsylvania Clearinghouse for Family Military Readiness on behalf of the Pew Charitable Trusts. A nationally representative survey of 3,180 veterans was open to respondents from November 14, 2020 to January 5, 2021. Margin of error with the design effect for the total sample increases or decreases 1.9 percentage points at the 95% confidence level.

Philip Olive is a director, Scott Price is an officer, and Richa Bhattarai is a partner in the Student Loan Research Project at The Pew Charitable Trusts.

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