Transferring your GI Bill benefits to your kids so they don’t have to deal with college tuition is a smart and responsible way to manage college costs. That’s exactly what Sgt. Desmond Watson did. Five years later, his daughter Jordan owes the VA $50,000! What?
First reported by the Florida based First Coast News this week, Sgt. Watson and Jordan aren’t alone in this mess. In 2014, one out of every four GI Bill beneficiaries was hit with a bill for overpayments by the VA. The total amount owed to the VA for overpayments that year was a massive $416 million.
Watson knew what he needed to have lined up in order to give his daughter his education benefit. He had the required six years of active service in and agreed to the additional four years of active duty service needed for the transfer. And then the Army happened.
2015 marked Watson’s 17th year of active duty. It also marked the year the Army decided to cut 40,000 people from the service. Watson was involuntarily separated, and he only had six months left of the promised four years to finish. Fast forward to 2017: Jordan had already completed three years of school when the VA sent her the collections notice.
If this happens to you, here’s what you do next.
There is good news for Sgt. Watson, Jordan, and anyone else who owes the VA, but as with most things in life, timing is key. The first step is filling a request for a waiver to the VA, but this must be done within 30 days of the date on the letter. You actually have up to 180 days to send in the waiver, but once 30 days goes by, the VA will start withholding benefits starting on the date referenced on the letter.
Chances are at this point you won’t know the amount of the overpayment, but it doesn’t matter. File the request and get the process started. On your waiver request, you need to tell the VA why they should cancel the overpayment claimed against you, and the financial effect it will have on you if they don’t cancel it. The statement needs to be submitted on VA’s Statement in Support of Claim form and should say something like:
The Debt Management Center sent me a notice, dated ______, stating that the VA has overpaid me in VA benefits. I dispute the existence and the amount of the claimed overpayment, and I request a waiver of the full amount.
Be detailed about what withholding these benefits will do to you financially. Will you not be able to pay rent? Buy food? Pay for all the other basic essentials of life? You also need to include VA Form 5655 – Financial Status Report, showing your income and expenses that support your claim of financial distress. Without VA form 5655, not only will VA not process your claim, but it will be denied outright.
If you’re sending this through the postal service, make sure you use certified mail, return receipt requested. This will give you proof that you sent in the request within the 30-day window and that someone at the Debt Management Center has the info in their hot little hands.
From this point, all you can do is wait.
To find emails, phone numbers, web addresses and any other information needed to transfer your VA educational benefits, you can go here.