The Modern GI Bill Act would amend Title 38 to let people who receive Post-9/11 educational benefits use a portion of those benefits to repay their Federal student loans. Specifically, it adds a new Sec. 3320A that allows benefits to be paid directly to lenders for the repayment of a Federal student loan (covering principal and interest). There is a cap: for 2026, the maximum annual amount is $15,900, with automatic annual increases thereafter tied to the Social Security Act’s benefit increases. Payments are issued monthly (up to 1/12 of the annual cap) and may run for up to 36 months. The benefit cannot be transferred to another person. The new program would apply to educational assistance paid for months beginning after enactment and would be administered by the Department of Veterans Affairs with regulations to implement the arrangement. A Federal student loan, for purposes of this provision, means a loan made, insured, or guaranteed under Title IV of the Higher Education Act.
Key Points
- 1Creates new Sec. 3320A in Subchapter II, Chapter 33 of Title 38 to repurpose Post-9/11 educational assistance for loan repayment.
- 2Eligible recipients: individuals entitled to educational assistance for tuition or fees under the Post-9/11 GI Bill.
- 3Use of benefits: benefits may be applied to repay some or all of the outstanding balance of a Federal student loan (principal and interest).
- 4Annual cap: 2026 maximum is $15,900; future years adjust upward annually in line with SSA benefit increases (COLA).
- 5Monthly payments: benefits are paid monthly to the lender, up to 1/12 of the annual maximum; total payment period capped at 36 months.
- 6Non-transferable: benefits cannot be transferred to another person.
- 7Payment recipient: payments are made directly to the lender.
- 8Administration: VA to establish arrangements and regulations necessary to carry out the new section.
- 9Definition: "Federal student loan" means any loan under Title IV of the Higher Education Act.
- 10Clerical amendment: adds 3320A to the table of sections.
- 11Effective date: applies to educational assistance paid for months beginning after enactment.