VA underpaying on GI Bill living stipends

The problem came to light just days before the Senate Veterans’ Affairs Committee will hold a hearing about implementation problems for the new and problem-plagued education program, which launched Aug. 1.

Monthly living stipends, a key feature of the new benefit, are based on Basic Allowance for Housing rates paid by the Defense Department, which change each Jan. 1.

This year, the locality-based housing allowances increased by an average of 2.5 percent, with some rates jumping as much as 13.6 percent. For active-duty service members, the new rates were included in January paychecks.

But VA spokesman Steve Westerfeld said the new rates will not be reflected in Post-9/11 GI Bill living stipends until July because of technological limitations.

VA hopes by July to implement the second phase of a new software system to automatically calculate and pay GI Bill benefits. Full implementation is expected in December.

VA has been telling students who ask that retroactive payments of the difference between the 2010 and 2009 living stipend rates will be made once the software updates are made.

Westerfeld said plans for the retroactive payments have not been publicly announced.

How many students will be owed money is unclear. VA officials report that about 240,000 students are using GI Bill benefits for the spring term, but many are not eligible for the living stipend.

Active-duty service members and their spouses, students enrolled only in distance learning classes and students who attend school only half time or less are not eligible for any living stipend.

VA found itself unable to pay living stipends at all during much of the fall semester because of problems with eligibility and certification. VA officials ended up providing $3,000 advance payments to veterans to help with expenses while problems were worked out. The department is now in recouping the $3,000 advances from veterans.

VA also is only now recovering from start-up problems that left schools waiting for months for tuition payments.

For the spring term, the goal has been to process claims in 24 days. VA records show that about 66,000 claims are pending for the spring term, while more than 240,000 claims have been paid.

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