December 1, 2012

Calculating Pro-Rated Housing Payments

The provisions of all of the various forms of GI Bill benefits include a monthly allowance, which is intended for you to use for your educational expenses, or housing while you're in school.  The payment amounts vary considerably according which GI Bill program you're using, as well as a number of other factors.  But, once you've gotten it all figured out and started attending classes, you'd expect that your allowance would be the same every month, right?

Wrong.

Thanks to Public Law 111-377, which went into effect on August 1, 2011, the monthly allowance benefit is pro-rated at the beginning and ending of every academic term, and no longer pays for breaks between terms.  This means that you won't be getting the posted benefit rate every month. Since students are often on a tight budget, it helps to know in advance how much your monthly payments will be.  This article will tell you how you can calculate your monthly payments yourself, so you know what to expect when payday comes around.


Here's the most important rule to keep in mind, before we begin: the VA always uses a 30-day month for their calculations, regardless of how many days the month actually has.  That makes the math easier!

Also, you need to know how much your full monthly benefit rate is, which you can find out from your school certifying official, from your VA certification confirmation letter, by calculating it yourself from the posted rate tables on the VA's website, looking up your personalized information in the VA's eBenefits portal, or by contacting the VA directly (Call 1-888-GI-Bill-1).  If you qualify for an enlistment contract kicker, it should also be included in your monthly amount.

Lastly, you need to know when your academic term actually begins and ends, as certified to the VA by your school.  This may be different from when your class actually begins and ends.  Check your school's catalog or website for a published academic calendar, or check with your school certifying official.

Now, here's how it works.  First, calculate your daily pay rate by taking your monthly benefit and divide by 30.  Write it down so you don't forget!  For example, if your benefit is $1500 per month, then the daily rate would be $50 per day (1500 / 30 = 50).

Then, look at the month in which your term begins.  Start with 30 days and subtract all the days in the month BEFORE your term begins.  The number you end up with is your number of payment days for that month.  Multiply that by your daily rate, and presto! You'll know exactly how much to expect for the first month's pay. 

For example: if your semester starts on August 20, you subtract 30-19 to come up with 11 days. Multiply 11 days by $50 per day (from the example above), and you can expect $550 for August.

When your term ends, you just count the number of days in the month that were in the term, before it ended (and don't forget that the term includes final exam week, too!).  Again, multiply the number of payment days in the month by your daily rate, and you'll have your answer.

To continue our example above, if the semester will end on December 10, you'll be paid for 10 days in December, or $500.

If you are in consecutive terms that begin and end in the same month, you take 30 days and subtract the number of days in between terms to figure out how many days you'll be paid for that month. For example, if Spring semester ends on May 5 and your Summer Intersession begins on May 15, then there are 9 days in between that you will not be paid, or 21 days that you will (30 - 9 = 21).

Make sense?  There's just a few more caveats to keep in mind:
  1. The VA always pays the monthly allowance in arrears, or after the fact.  This means that if your classes begin in August, your first (prorated) monthly allowance payment will be around September 1st.
  2. Your entitlement (the 36 months of benefits you start with) is also pro-rated at the beginning and ending of each term, so you can figure out how many months and days of benefits you'll use up during the term in the same way.
  3. If you are a part-time student, your benefits will be pro-rated even further.
  4. If you started the term as a full-time student, and then drop a class and end up below full-time, you'll have to pay the difference back to the VA.
Happy calculating!

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