Veteran’s education benefits will be treated as resources, not income, for Federal student financial aid purposes. What this means is veterans should not report their veteran’s education benefits as income on the FAFSA. The FAFSA will include separate questions that ask about the monthly benefits and the number of months of benefits still expected during the school year (July 1 to June 30). However, there will be a few exceptions.

Section 480(c)(2) of the Higher Education Act of 1965 (HEA) defines veteran’s education benefits to include, but not limited to, the following veteran’s benefits:

• Reserve Officer Training Corps scholarship. (US Code, Title 10, Chapter 2)
• Selective Reserve. (US Code, Title 10, Chapter 106)
• Selective Reserve Educational Assistance Program. (US Code, Title 10, Chapter 107)
• Reserve Officer Training Corps Program. (US Code, Title 37, Chapter 2)
• Montgomery GI Bill – active duty. (US Code, Title 38, Chapter 30)
• Vocational Rehabilitation. (US Code, Title 38, Chapter 31)
• Post-Vietnam Era Veterans. Educational Assistance Program. (US Code, Title 38, Chapter 32)
• Dependents Educational Assistance Program. (US Code, Title 38, Chapter 35)
• Restored Entitlement Program for Survivors (or Quayle benefits). (Public Law 97-376, Section 156)
• Educational Assistance Pilot Program. (Public Law 96-342, Section 903)

The HEA specifies in Section 480(b)(4) that these benefits will not be reported on Worksheet B of the FAFSA. These benefits are typically considered to be resources. All other veterans’ benefits, such as income earned from the Veterans Affairs Student Work-Study Allowance Program (VASWSAP) and veterans non-education benefits (e.g., Disability, Death Pension, or Dependency & Indemnity Compensation (DIS)) will be reported in Worksheet B of the FAFSA as untaxable income.

It is important to understand that although veteran’s education benefits are not reported on Worksheet B, there is a special question on the FAFSA that will ask about veteran’s education benefits. This question asks for the number of months of benefits and the amount per month. A common error that does occur is to report the annual amount of benefits, as opposed to the monthly amount. If the monthly amount varies, do an average by calculating the monthly figure by dividing the annual figure by the number of months of benefits. The answer to this particular question does not affect the EFC.

It is also important to understand whether a benefit is treated as a resource or as income. Resources will reduce need-based financial aid dollar for dollar. So if you do include a resource as income on the FAFSA, you will be penalized twice: once because it will increase your Expected Family Contribution (EFC) and once by having the resource reduce your Federal student financial aid eligibility.

Much of the questions on veteran’s education benefits occur in the sections that deal with over awards. Over awards occur when the total of a college student’s financial aid and resources exceeds his or her demonstrated financial aid need. When an over award occurs, the school is required to reduce the financial aid package to compensate for it. Basically, this is just a fancy way of saying that every dollar that is classified as a resource will reduce the college student’s need-based financial aid by a dollar.

The over award regulations for Title 34 concerning General Provisions for the Federal Perkins College Student Loan, FWS, and FSEOG Programs specify that resources will include any veterans education benefits paid under US Code Title 38, Chapters 30, 31, 32 and 35. This does includes the Montgomery GI Bill benefits. However, an exception is made to not have it count as resources any veterans education benefits that were included in the calculation of the college student’s expected family contribution .

In addition, the regulations specify that the college or university may exclude as a resource any portion of a subsidized Stafford College Student Loan that is less than or equal to the amount of the student’s Montgomery GI Bill benefits.