Question: Is the VA changing their debt collection policy? — Josh M.
Answer: In December 2011, the Department of Veterans Affairs (VA) announced its intention to withhold unpaid debts from veterans’ tuition and fee payments sent to schools. Under the proposal, the VA would resume an old policy where outstanding veteran Post 9/11 GI Bill debt would be deducted from the tuition payments that schools get on behalf of veteran students enrolled in courses.
Under the current policy, veterans who owe money to the VA, usually a result of advance payments or housing and book stipend overpayments, have their debt turned over to the VA Debt Management Center (DMC). Once notified by the DMC, the veteran student must either pay the money owed or arrange to pay it before s/he can again receive Post 9/11 GI Bill benefits. But up until now, the VA has not gone as far as collecting back from veterans the tuition and fees it paid to schools.
Proposed changes to VA debt collection policy
Under the proposed policy, the VA would reduce the tution and fees payment sent to a school on behalf of a veteran in the amount of the veteran’s debt. This in effect creates a debt owed to the school by the veteran student for tuition and fees offset not paid by the VA.
In most schools (and in some cases mandated by law), if a student owes their school money, s/he is not allowed to enroll in future classes until that debt is paid, thus putting the veteran’s educational opportunities in jeopardy. So by the VA offsetting tuition and fees owed to them by the student, and putting the burden on the school, they are in effect transferring debt collection to the school.
On April 23rd, the National Association of College and University Business Officers (NACUBO) sent a letter to Veterans Affairs Secretary Eric Shinseki warning him of the “unintended consequences” and “violation of the faith and intent of the enrollment certification process,” if the VA carries forward their proposed intent.
“We fully recognize the fiduciary responsibility VA must uphold in collecting any non-tax debts owed to the federal government by the recipients of VA benefits,” said John Walda, president and CEO of the National Association of College and University Business Officers, in a letter sent to VA Secretary Shinseki, “However, the proposed policy exposes veterans to even greater debt liabilities and unduly stresses the partnership between the federal government, and colleges and universities in their mutual goal to provide educational opportunity to our nation’s veterans.”
Most traditional and online colleges that accept the GI Bill now allow veteran students to enroll and begin classes before the school receives tuition and fee payments from the VA. But if those payments to the school are reduced to cover past debts, the college has no choice but to pass on the unexpected debt to the student. “Instead of owing the VA, they now owe the school, but the school didn’t know this ahead of time,” said Anne Gross, NACUBO’s vice president for regulatory affairs.
Compounding the problem is the fact that colleges and universities have no way of knowing in advance if a veteran has outstanding VA debts until the benefit check on behalf of the student arrives, so the school financial aid office can’t advise veterans students in advance that they need to make other educational financial arrangements to cover the upcoming tuition/fees shortfall.
Hopefully Secretary Shinseki will reassess the VA’s proposed policy and decide not to continue with its implementation.