By Roland McIntyre, CFP®
As a Black financial planner and Air Force veteran, I’ve witnessed the profound impact of the GI Bill on Black veterans striving to build wealth and close the racial wealth gap. It’s a complex legacy, one that has both helped and hindered us in our pursuit of financial stability. Understanding this history is crucial to appreciating the challenges and opportunities that the GI Bill presents.
What is the GI Bill?
The GI Bill is a package of benefits offered to veterans as a thank-you for their military service. It can help pay for college, graduate school, or vocational training, and may also provide housing assistance and other financial support during your studies.
Types of GI Bills:
- Montgomery GI Bill: This is the original GI Bill. You contribute $100 per month for the first 12 months of your service, and the government covers the rest.
- Post-9/11 GI Bill: This is a newer version of the GI Bill. It provides more generous benefits than the Montgomery GI Bill, including full tuition and fees at public schools and a monthly housing allowance.
How the GI Bill Helps Close the Racial Wealth Gap
The racial wealth gap is a persistent problem in America, with Black households having significantly less wealth than white households on average. This gap is the result of centuries of systemic discrimination and inequality.
The GI Bill can help close this gap by providing African Americans with the opportunity to:
- Get a college education: A college degree is one of the best ways to increase your earning potential. The GI Bill can help you pay for college without taking on student loan debt, leaving you with more financial freedom later.
- Buy a home: Homeownership is a key component of building wealth. The VA home loan program offers favorable terms to veterans, making it easier to buy a home.
- Start a business: The GI Bill can also help you start your own business, which can be a great way to create wealth and achieve financial independence.
Military Service and Corporate Success
In addition to the GI Bill, military service can also give you a leg up in the corporate world. Employers value the skills and experience that veterans bring to the table, such as:
- Leadership: In the military, you learn how to lead and motivate others.
- Teamwork: You learn how to work effectively as part of a team.
- Discipline: You develop a strong work ethic and the ability to follow through on commitments.
VA Home Loan Benefits
One of the best benefits of being a veteran is the VA home loan program. This program offers veterans the opportunity to buy a home with no down payment and no private mortgage insurance, potentially saving you tens of thousands of dollars over the life of your loan.
Tax Benefits for Military Members
There are also a number of tax benefits available to military members. For example, your military pay may not be taxed by certain states. You may also be able to exclude some of your military income from your federal taxes.
Banking Options for Military Members
There are a couple of great banking options specifically for military members and their families:
- Navy Federal Credit Union: Navy Federal is the largest credit union in the United States. They offer a wide range of financial products and services, including checking and savings accounts, loans, and credit cards.
- USAA: USAA is another great option for military members. They offer a similar range of financial products and services as Navy Federal.
Supercharging Your Savings with the TSP
Don’t let the money you saved by using the GI Bill just sit there! You can use those funds to boost your retirement savings by investing in the Thrift Savings Plan (TSP). The TSP is similar to a 401(k), with low fees and great investment options.
VA Disability and Tax-Free Growth
If you receive VA disability payments, remember that those payments are not taxable. This can be a huge advantage for retirement planning. You can potentially take more advantage of Roth conversions, which means tax-free money for you in retirement and tax-free inheritance for your beneficiaries.
Maximizing Your Benefits with a CFP
Navigating the world of GI Bill benefits, VA loans, and military-specific financial planning can be tricky. That’s where a Certified Financial Planner (CFP) can help. A CFP can help you maximize your benefits and develop a personalized financial plan to help you achieve your goals and close the wealth gap.
The GI Bill: A Promise and a Paradox for Black Veterans
The history of African Americans in the military is complex. Despite facing discrimination and segregation, Black soldiers have served with distinction in every major American war.
Black veterans played a significant role in advocating for the original GI Bill. However, despite their service and advocacy, many Black veterans faced significant discrimination when trying to access the benefits they had earned. Many were denied loans, educational opportunities, and housing due to racist policies and practices. This systemic discrimination limited the ability of the GI Bill to truly bridge the racial wealth gap for an entire generation of Black veterans.
Today, the military is more diverse than ever before. African Americans make up a significant portion of the armed forces.
Thank You for Your Service
I want to take a moment to thank all of the active-duty military members and veterans who have served this country. Your sacrifices are appreciated.
If you have any questions about the GI Bill or other financial planning topics, please feel free to reach out to me. I’m always happy to help.
Disclaimer: I am a certified financial planner, but I am not your financial planner. The information in this blog post is for informational purposes only and should not be construed as financial advice.