Category: United States of America

Source: US Congressional Budget Office

Bill Summary

H.R. 1458 would make several modifications, specifically related to GI Bill contributions and independent study courses, to education benefit programs administered by the Department of Veterans Affairs (VA). The bill also would extend the reduction of pension payments from VA for veterans and survivors who reside in Medicaid nursing homes. Finally, the bill would require VA to notify schools about changes to policies that affect education benefits.

Estimated Federal Cost

The estimated budgetary effects of H.R. 1458 are shown in Table 1. The costs of the legislation fall within budget functions 550 (health) and 700 (veterans benefits and services).

Basis of Estimate

For this estimate, CBO assumes that H.R. 1458 will be enacted in fiscal year 2025 and that provisions will take effect upon enactment. CBO also estimates that outlays will follow historical spending patterns for affected programs.

Direct Spending

H.R. 1458 would make several changes to VA education benefit programs described below. The costs of those programs are paid from mandatory appropriations. The bill also would extend the reduction of pension payments for veterans and survivors who reside in Medicaid nursing homes. In total, the bill would decrease net direct spending by $2 million over the 2025-2035 period.

Education Benefit Reforms. Several sections of H.R. 1458 would modify education benefit programs administered by VA. Those changes would increase net direct spending by $62 million over the 2025‑2035 period.

Contribution Refunds.Under the Montgomery GI Bill (MGIB), service members must contribute at least $1,200 from their basic pay to become eligible for benefits. Contributions are not required for eligibility under the Post-9/11 GI Bill, which pays for tuition and fees and, in most cases, includes a monthly housing allowance. People who are eligible for both the MGIB and Post-9/11 GI Bill may receive a refund of their MGIB contributions if they received benefits—including a housing allowance—under the Post-9/11 GI Bill. That refund is made if they use all 36 months of Post-9/11 GI Bill benefits for which they are eligible. The refund is paid along with their last monthly housing payment.

Section 2 would require VA to refund MGIB contributions to beneficiaries within 60 days of the last benefit payment they receive under the Post-9/11 GI Bill, regardless of whether they receive a housing allowance. Using data from VA, CBO estimates that, under H.R. 1458, roughly 24,000 more people would receive refunds over the 2025‑2035 period, increasing direct spending by $28 million.

Independent Study. Section 3 would allow veterans to use their education benefits for independent study programs offered by for-profit schools that are approved to participate in the Department of Education’s financial assistance programs. Independent study is training through which an individual student and instructor meet or communicate directly to explore a chosen subject rather than regularly gathering in a classroom with a group of students. Benefits cannot be used for independent study programs at for-profit schools under current law.

Using information from VA, CBO estimates that under this provision, about 150 people would use more education benefits each year than they would use under current law. The average cost of those benefits would be about $18,000 in 2025. After adjusting for annual inflation, those additional benefit payments would increase direct spending by $34 million over the 2025-2035 period, CBO estimates.

Activation During School. Section 4 would expand the options available to students using VA education benefits who are activated for military service during an academic term. Those students could agree with their schools to complete courses by other means if they have completed at least half of the courses in their program of education. Students are currently able to take a leave of absence if activated, after which schools must allow them to attempt to complete the academic term. Because both options enable students to complete their academic obligations and the section would not affect benefits paid for tuition and fees, CBO does not expect section 4 to significantly change direct spending.

Pensions. Under current law, VA reduces pension payments to veterans and survivors who reside in Medicaid nursing homes to $90 per month. That required reduction expires November 30, 2031. Section 7 would extend that reduction for 16 months through March 31, 2033. CBO estimates that extending that requirement would reduce VA benefits by $10 million per month. (Those benefits are paid from mandatory appropriations and are therefore considered direct spending.) As a result of that reduction in beneficiaries’ income, Medicaid would pay more of the cost of their care, increasing spending for that program by $6 million per month. Thus, enacting section 7 would reduce net direct spending by $64 million over the 2025‑2035 period.

Spending Subject to Appropriation

Section 6 would require VA to notify schools that participate in education benefit programs administered by the department of changes to policies that affect those programs within two weeks. CBO estimates that such notifications would increase spending subject to appropriation by less than $500,000 over the 2025‑2035 period.

Pay-As-You-Go Considerations

The Statutory Pay-As-You-Go Act of 2010 establishes budget-reporting and enforcement procedures for legislation affecting direct spending or revenues. The net changes in outlays that are subject to those pay-as-you-go procedures are shown in Table 1.

Increase in Long-Term Net Direct Spending and Deficits

CBO estimates that enacting H.R. 1458 would not increase net direct spending by more than $2.5 billion in any of the four consecutive 10-year periods beginning in 2036.

CBO estimates that enacting H.R. 1458 would not increase on‑budget deficits by more than $5 billion in any of the four consecutive 10-year periods beginning in 2036.

Mandates

The bill contains no intergovernmental or private-sector mandates as defined in the Unfunded Mandates Reform Act.

Mandates: Grace Watson

Estimate Reviewed By

David Newman
Chief, Defense, International Affairs, and Veterans’ Affairs Cost Estimates Unit

Kathleen FitzGerald
Chief, Public and Private Mandates Unit

Christina Hawley Anthony
Deputy Director of Budget Analysis

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