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Can I Use My Army College Fund to Pay Off Student Loans?

Author Ron Kness is no longer in the service.

Q: I was in the Army for 6 years. I got out in June 06. I went to school in 07. I was using the G.I. Bill and the $40,000 college fund that I received while I was in the military. However, the school I went to finished before I could finish paying off my loan, as you know you can’t receive the G.I. Bill or the college fund while you are not in school, and now I currently owe the school about $5,000. I know that you can’t use the G.I. Bill to pay off student loans, but what about the college fund? I don’t think it’s fair that I am now in debt because I am no longer in school and receiving benefits. Also, they have started to take my tax return to finish paying off this debt. I feel that it is my money that I earned with my service to the country and that I should be able to use it however I would like to as long as it is for educational purposes. Are there any other options that I could take advantage of?

A: The issue with the Army College Fund (ACF) is you have to use the GI Bill to get the college fund payment. The way the rules are written, the ACF can’t be used by itself.

Also, just so you know, you don’t really have $40,000 in your Army College Fund. That amount also includes your Montgomery GI Bill amount. In many cases, that was not clear at the time of enlistment, so people think they have $40,000 in addition to their MGIB, which is not true.

While you may think it is “your” money, there are very specific rules on how “your” money can be spent – most of which you have little to no control over. As you are finding out, student loans in that aren’t being paid down connect to the IRS, so your loan will eventually be paid off through your tax refunds – again something you have no control over.

If you want control back (and your tax refund), pay off the loan or contact your college and set-up a mutually agreed upon payment schedule and stick to it. That way you have a say in how it is paid off; right now you do not.

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