One advantage of the Post-9/11 GI Bill over the Montgomery GI Bill is that the Post-9/11 GI Bill comes with a separate Monthly Housing Allowance (MHA).
This housing allowance is a cash payment to the student. It’s calculated based on the active-duty military’s Basic Allowance for Housing (BAH) rate for an E-5 service member with dependents living in the school’s ZIP code. MHA is paid if the student attends classes at a rate greater than half time; and it is pro-rated if attending less than full time.
This money can be used to pay rent, buy groceries, or whatever other needs the student has. This rate is adjusted annually. However, while the active duty’s BAH rates adjust each year in January, the correlated MHA rates do not take effect until the next school year beginning in August.
Read More: Can You Receive Post-9/11 GI Bill Payments and Other Financial Aid at the Same Time?
The student receives MHA for the actual days of the school term, at the end of the month or the beginning of the next month. For example, if the school term starts Aug. 21, the student receives 10 days of MHA at the end of August or beginning of September. Similarly, if the term ends on Dec. 15, the student receives only 15 days of MHA for that month.
While the MHA represents a huge financial benefit, this end-of-month payment system can present a challenge for students, whether they live on campus or have housing off campus. Understanding how it works can help you figure out how to solve the problem.
Living on Campus
For students living on campus, housing and meal plans typically require payment before the beginning of the school term. For example, a school where the term starts Aug. 21 might expect the bill to be paid in July or early August. This can create a financial hardship if the student is expecting to use MHA to pay that bill.
Several possible solutions to this problem exist:
Payment plan. One possible solution is to find out whether the school will offer you a payment plan for the housing and meals. This may incur a fee, and the first payment may still be due before you receive your first MHA. You will almost always need to pay some money out of pocket before MHA starts to arrive.
First semester out of pocket. Another choice is to use other financial resources, such as savings, to pay the first semester’s housing and meal bill. Then save each subsequent month’s MHA payment to pay the following semester’s bill. This might include money from a 529 education savings account, other savings, or your emergency fund. In the last semester of school, you’ll be able to bank the MHA payments you receive, perhaps using it to repay the original source of the first month’s payment or using it for another purpose.
First semester on a credit card. A third path is to pay each semester’s housing and meals expenses with a credit card, then pay that credit card with the monthly MHA payment. Depending on the interest rate on your credit card and how fast you can pay it off, this option may be more or less expensive than the fee for the school’s payment plan.
Living off Campus
For students living off campus, the challenges are slightly different. First, they’ll need to get settled into their housing well before MHA payments start. Most rentals require a security deposit and at least the first month’s rent up front. This means a student could be out of pocket by several thousand dollars before the first MHA payment arrives. Then, the student will have reduced MHA for the partial months at the beginning and end of each term and will receive no MHA if they don’t attend classes in the summer. Private rentals will expect to be paid rent over winter break and may require a 10-, 11- or 12-month lease.
Read More: New Bill Would Require DOD to Provide Housing Literacy to Service Members
Different problems, similar solutions. The options to solve these problems are fairly similar to on-campus solutions. Students can use other resources to get set up in their house or apartment then use each month’s MHA to pay the subsequent month’s rent. They’ll need to save money each month to pay rent in months when MHA is reduced because school is not in session. This may mean choosing housing significantly less than full MHA so there’s extra to save. In most cases, MHA pays most or all of a student’s housing and meal expenses each semester. Money may even be left over.
Families may be taken by surprise if they’re not prepared to pay for housing up front each semester. Being aware of that expectation, and having a plan to cover that expense, will reduce the stress of having a big bill due when you weren’t expecting it.
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