Educational Assistance Programs Administered by the U.S. Department of Veterans Affairs

Cassandria Dortch
Analyst in Education Policy

The U.S. Department of Veterans Affairs (VA), previously named the Veterans Administration, has been providing veterans educational assistance benefits since 1944. Although the programs are administered by the VA, the Department of Defense (DOD) pays for certain benefits and provides additional benefits to certain persons with critical skills or lengthy service. The benefits have been intended, at various times, to compensate for compulsory service, encourage voluntary service, avoid unemployment, provide equitable benefits to all who served, and promote military retention. In general, the benefits provide grant aid to eligible individuals enrolled in approved educational and training programs.

The newest program, the Post-9/11 GI Bill, has the largest number of individuals receiving benefits. The Post-9/11 GI Bill provides benefits to veterans and servicemembers who serve on active duty after September 10, 2001. The program is designed to provide individuals who served on active duty for 36 months and who are pursuing undergraduate studies at public colleges and universities with the full cost of attendance: tuition and fees, housing, books and supplies, tutorial and relocation assistance, and fees for testing and certification, as needed. The Post-9/11 Veterans Educational Assistance Improvements Act of 2010 (P.L. 111-377), enacted on January 4, 2011, makes several amendments to eligibility and benefits under the Post-9/11 GI Bill. The Restoring GI Bill Fairness Act of 2011 (P.L. 112-26), enacted on August 3, 2011, temporarily reverses a P.L. 111-377 amendment to the tuition and fees benefit for some individuals.

Before the Post-9/11 GI Bill was effective, the most popular program was the Montgomery GI Bill-Active Duty (MGIB-AD). The MGIB-AD provides a monthly allowance primarily to veterans and servicemembers who enter active duty after June 30, 1985.

The Montgomery GI Bill-Selected Reserve (MGIB-SR) provides a lower monthly allowance than the MGIB-AD to reservists who enlist, re-enlist, or extend an enlistment after June 30, 1985. The Reserves Educational Assistance Program (REAP) provides a monthly allowance that is higher than the MGIB-SR but lower than the MGIB-AD to reservists with active duty service.

The program with the fewest individuals receiving benefits is the Post-Vietnam Era Veterans’ Educational Assistance Program (VEAP). VEAP provides a monthly allowance to veterans who first entered active duty service between December 31, 1976, and July 1, 1985.

Finally, the dependents of individuals with military service may be eligible for educational assistance. The Survivors’ and Dependents’ Educational Assistance (DEA) program provides benefits to the spouse and children of servicemembers who, as a result of service, are seriously disabled, die, or are detained. The Army allows certain servicemembers to transfer their MGIBAD benefits to their dependents. Servicemembers who stay in the military for several years are able to transfer their Post-9/11 GI Bill benefits to their dependents. Also, the Post-9/11 GI Bill includes a scholarship program for the children of servicemembers who die in the line of duty, the Marine Gunnery Sergeant John David Fry Scholarship Program.

This report provides a description of the eligibility requirements, benefit availability, and benefit payments of the veterans educational assistance benefit programs. See Table 4 for a summary of selected characteristics of the programs. The report also provides some summary statistics and comparisons between the programs.


Date of Report: August 17, 2011
Number of Pages: 74
Order Number: R40723
Price: $29.95

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Federal Student Loans Made Under the Federal Family Education Loan Program and the William D. Ford Federal Direct Loan Program: Terms and Conditions for Borrowers

David P. Smole
Specialist in Education Policy

The William D. Ford Federal Direct Loan (DL) program, authorized under Title IV, Part D of the Higher Education Act of 1965 (HEA), as amended, is the primary federal student loan program administered by the U.S. Department of Education (ED). The program makes available loans to undergraduate and graduate students and the parents of dependent undergraduate students to help them finance their postsecondary education costs. Several types of loans are offered through the DL program: Subsidized Stafford Loans and Unsubsidized Stafford Loans for undergraduate and graduate students; PLUS Loans for graduate students and the parents of dependent undergraduate students; and Consolidation Loans through which borrowers may combine their loans into a single loan. For FY2012, ED estimates that 25.1 million loans (not including Consolidation Loans) totaling $124.3 billion will be made to students and their parents through the DL program.

Until July 1, 2010, Subsidized Stafford Loans, Unsubsidized Stafford Loans, PLUS Loans, and Consolidation Loans were also available through the Federal Family Education Loan (FFEL) program, authorized under Title IV, Part B of the HEA. The SAFRA Act, part of the Health Care and Education Reconciliation Act of 2010 (HCERA; P.L. 111-152), terminated the authority to make new loans under the FFEL program after June 30, 2010. While new loans may no longer be made through the FFEL program, approximately $384 billion in FFEL program loans are outstanding and are due to be repaid over the coming years.

Under the DL program, which has effectively replaced the FFEL program, loans are made with capital provided by the federal government. Under the FFEL program, loans were made with capital provided by private lenders, and the federal government guaranteed lenders against loss through borrower default, death, permanent disability, or, in limited instances, bankruptcy. When both programs were authorized and making available essentially the same types of loans, institutions of higher education (IHEs) were permitted to select the program of their choice.

FFEL and DL program loans are low-interest loans, with maximum interest rates for each type of loan established by statute. Subsidized Stafford Loans are unique in that they are only available to students demonstrating financial need. The Secretary of Education pays the interest that accrues on Subsidized Stafford Loans while borrowers are in school, during a six-month grace period, and during authorized periods of deferment. Unsubsidized Stafford Loans and PLUS Loans are available to borrowers irrespective of their financial need; and borrowers are responsible for paying all the interest that accrues on these loans. FFEL and DL program loans have terms and conditions that may be more favorable to borrowers than private and other non-federal loans. These beneficial terms and conditions include interest rates that are often lower than rates that might be obtained from other lenders, opportunities for repayment relief through deferment and forbearance, loan consolidation, and several loan forgiveness programs.

In recent years, numerous changes to the terms and conditions of FFEL and DL program loans have been made under the College Cost Reduction and Access Act (P.L. 110-84), the Ensuring Continued Access to Student Loans Act (P.L. 110-227), the Higher Education Opportunity Act (P.L. 110-315), the 2009 technical corrections to the HEA (P.L. 111-39), and the SAFRA Act. Most recently, the Budget Control Act of 2011 (P.L. 112-25) eliminated the availability of Subsidized Stafford Loans to graduate and professional students for periods of instruction beginning on or after July 1, 2012, and the availability of certain repayment incentives for loans made on or after July 1, 2012.


Date of Report: August 9, 2011
Number of Pages: 67
Order Number: R40122
Price: $29.95

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Federal Pell Grant Program of the Higher Education Act: Background, Recent Changes, and Current Legislative Issues

Shannon M. Mahan
Specialist in Education Policy

The Federal Pell Grant program, authorized by Title IV of the Higher Education Act of 1965, as amended (HEA; P.L. 89-329), is the single largest source of federal grant aid supporting postsecondary education students. The program is estimated to have provided over $36.5 billion to approximately 8.9 million undergraduate students in FY2010. For FY2011, the total maximum Pell Grant was funded at $5,550. The program is funded primarily through annual appropriations, although mandatory appropriations play a smaller, yet increasing, role in the program.

Pell Grants are need-based aid that is intended to be the foundation for all federal student aid awarded to undergraduates. There is no absolute income threshold that determines who is eligible or ineligible for Pell Grants. Nevertheless, Pell Grant recipients are primarily low-income. In FY2009, an estimated 76% of all Pell Grant recipients had a total family income at or below $30,000.

The Pell Grant program has garnered considerable attention over the past several years in Congress. Most recently, the Budget Control Act of 2011 (BCA; P.L. 112-25) provided a combined total of $17 billion in additional mandatory funds for the program in FY2012 and FY2013. In April 2011, the Department of Defense Full-Year Continuing Appropriations Act of 2011 (P.L. 112-10) provided $23 billion in discretionary appropriations for the program to effectively maintain a $5,550 total maximum award in the upcoming award year (AY) 2011-2012. In addition, P.L. 112-10 also amended the HEA by eliminating a provision that allowed for a student to receive two Pell Grant awards in the same award year. The estimated savings in mandatory spending related to the elimination of this provision were redirected for future general use in the program as specified annual mandatory appropriations beginning in FY2012 and continuing in all subsequent years. In March 2010, the SAFRA Act, passed as part of the Health Care and Education Reconciliation Act of 2010 (HCERA; P.L. 111-152), established indefinite mandatory appropriations beginning in FY2010 to provide for increases to the maximum award amount funded with annual discretionary appropriations. The program also received substantial discretionary and mandatory supplemental funding through the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). The statutory authority for the Pell Grant program was most recently reauthorized by the Higher Education Opportunity Act of 2008 (HEOA; P.L. 110-315).

The Pell Grant program recently experienced substantial increases in program costs—largely due to legislative changes that have led to increased benefits for more students, increases in the number of students enrolling in college and applying for Pell Grant aid, and a weakened economy. Consequently, these factors contributed to annual funding shortfalls in four of the last five years from FY2007 to FY2011.

Many of the issues concerning the Pell Grant program that confront Congress include potential challenges associated with funding the program, both in the short term and the long term. Additional mandatory funding provided in the BCA may alleviate the need for additional substantial discretionary appropriations in FY2012 and FY2013, although additional funding may still be required in order to maintain the current eligibility parameters of the program in FY2012. As a long-term strategy, Congress could consider ways to change the distribution of overall benefits by targeting aid to the most needy students or by revising the program’s award rules and eligibility parameters.


Date of Report: August 4, 2011
Number of Pages: 50
Order Number: R41437
Price: $29.95

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Federal Pell Grant Program of the Higher Education Act: Background, Recent Changes, and Current Legislative Issues

Shannon M. Mahan
Specialist in Education Policy

The Federal Pell Grant program, authorized by Title IV of the Higher Education Act of 1965, as amended (HEA; P.L. 89-329), is the single largest source of federal grant aid supporting postsecondary education students. The program is estimated to have provided over $36.5 billion to approximately 8.9 million undergraduate students in FY2010. For FY2011, the total maximum Pell Grant was funded at $5,550. The program is funded primarily through annual appropriations, although mandatory appropriations play a smaller, yet increasing, role in the program.

Pell Grants are need-based aid that is intended to be the foundation for all federal student aid awarded to undergraduates. There is no absolute income threshold that determines who is eligible or ineligible for Pell Grants. Nevertheless, Pell Grant recipients are primarily low-income. In FY2009, an estimated 76% of all Pell Grant recipients had a total family income at or below $30,000.

The Pell Grant program has garnered considerable attention over the past several years in Congress. Most recently, the Department of Defense Full-Year Continuing Appropriations Act of 2011 (P.L. 112-10) provided $23 billion in discretionary appropriations for the program to effectively maintain a $5,550 total maximum award in the upcoming award year (AY) 2011-2012. In addition, P.L. 112-10 also amended the HEA by eliminating a provision that allowed for a student to receive two Pell Grant awards in the same award year. The estimated savings in mandatory spending related to the elimination of this provision were redirected for future general use in the program as specified annual mandatory appropriations beginning in FY2012 and continuing in all subsequent years. In March 2010, the SAFRA Act, passed as part of the Health Care and Education Reconciliation Act of 2010 (HCERA; P.L. 111-152), established indefinite mandatory appropriations beginning in FY2010 to provide for increases to the maximum award amount funded with annual discretionary appropriations. The program also received substantial discretionary and mandatory supplemental funding through the American Recovery and Reinvestment Act of 2009 (ARRA; P.L. 111-5). The statutory authority for the Pell Grant program was most recently reauthorized by the Higher Education Opportunity Act of 2008 (HEOA; P.L. 110-315).

The Pell Grant program recently experienced substantial increases in program costs—largely due to legislative changes that have led to increased benefits for more students, increases in the number of students enrolling in college and applying for Pell Grant aid, and a weakened economy. Consequently, these factors contributed to annual funding shortfalls in four of the last five years from FY2007 to FY2011. Despite a substantial funding increase in FY2011, the program is expected to face a discretionary funding shortfall of $2.5 billion through FY2011.

Many of the issues concerning the Pell Grant program that confront Congress include potential challenges associated with funding the program, both in the short term and the long term. In the short-term, substantial discretionary appropriations may be required in FY2012 to ensure current award levels are maintained, leading to the program comprising an increasingly larger share of the discretionary funding allocated for programs that are funded in Labor, Health and Human Services (HHS), and Education appropriations. As a long-term strategy, Congress could also consider ways to change the distribution of overall benefits by targeting aid to the most needy students or by revising the program’s award rules and eligibility parameters.

Both the House and Senate versions of the Budget Control Act of 2011 provide additional mandatory appropriations for the Pell Grant Program in FY2012 and FY2013.


Date of Report: July 29, 2011
Number of Pages: 50
Order Number: R41437
Price: $29.95

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