Many military veterans borrow to pay for college despite having access to the robust Post-9/11 GI Bill. Much of the current policy discussion about this student loan debt has focused on borrowing at for-profit schools, but just more than half of the total amount of loans taken out by prior-enlisted undergraduate veterans goes to those attending public institutions, according to a survey done for The Pew Charitable Trusts.

Although problems at for-profit institutions have grabbed headlines because of allegations that the schools defrauded borrowers or led some student veterans to unknowingly acquire student loan debt, the nationally representative survey of more than 3,180 veterans indicates that the issues are broader and more nuanced.

Data from the survey collected in late 2020 and early 2021 shows that the median loan amount borrowed was in fact higher at for-profit four-year schools than the other types of higher education institutions that undergraduate student veterans most commonly attend. But the survey also reveals significant levels of borrowing at public schools, a surprising finding given that the Post-9/11 GI Bill covers up to 100% of in-state tuition and fees at public schools for eligible veterans. It also can provide a housing allowance and assistance to pay for books and supplies.

Pew conducted the survey of post-9/11 veterans to examine the scope and scale of veterans’ borrowing and explore why so many are taking out student loans to pay for higher education. Key findings include:

• 52% of the total amount of student loans was taken out by undergraduate veterans who attended either two-year or four-year public institutions. This analysis does not include officers since they already have undergraduate degrees when they serve.
• The proportion of the undergraduate veterans who had at least one student loan was about the same at for-profit, nonprofit, and public four-year institutions—ranging between 17% and 19%.
• The median loan amount borrowed over a four-year period was the highest at for-profit four-year institutions and varied greatly by institution type.

Most dollars covered costs at public institutions, reflecting attendance patterns

Although similar proportions of undergraduate veterans borrowed student loans across all three types of four-year institutions—public, for-profit, and nonprofit—the survey data reveals that a surprising amount flowed to veterans enrolled in public schools between 2016 and 2020 despite access to the GI Bill, as shown in Figure 1. Forty percent of loan dollars went to veterans at public four-year schools and 12% went to those attending public two-year schools—adding up to just over half (52%) of all student loan dollars borrowed.

Likewise, public institutions were by far the most popular choice among undergraduate veterans, with 82% attending a public four-year and/or a public two-year school between 2016 and 2020. (See Figure 2.) Thus, the distribution of student loan dollars shown in Figure 1 reflected the enrollment preferences shown in Figure 2. However, share of loan dollars flowing to for-profit four-year schools (22%) skewed somewhat higher than their share of enrollment (17%).

A deeper look at student veteran borrowing patterns

Although the Post-9/11 GI Bill covers 100% of in-state tuition and fees at public institutions for eligible veterans, the benefits can fall short of covering full tuition and fees at four-year for-profit and nonprofit schools. The Pew research, however, shows that more than half of student loan dollars borrowed by undergraduate veterans went to those enrolled at public institutions. The survey highlights one possible explanation: The majority of undergraduate student veterans borrow primarily to cover living expenses such as housing and child care, and the need to cover basic necessities would apply to undergraduate veterans attending any type of school.

Another factor could be that some veterans do not tap into Department of Veterans Affairs education benefits such as the Post-9/11 GI Bill. In fact, Pew’s survey data indicates that 16% of GI Bill-eligible veterans who enroll in a bachelor’s degree program or lower-level degree/certification program after their discharge did not use those benefits for themselves between 2016 and 2020. According to the survey, the top reason they did not  do so: They transferred some or all of their benefits to dependents instead.

The reality that so many borrow to meet living costs also may help to explain the high median loan amount at for-profit schools. Many of the institutions that were the top recipients of Post-9/11 GI Bill funds between fiscal years 2009 and 2017 were online for-profit colleges and universities. Veterans enrolled in purely online programs receive a reduced housing allowance, which may have led to increased rates of borrowing to cover living expenses.

Understanding why veterans make certain decisions about their higher education plans—including how to pay for it—and what the policy implications are for the available benefits requires a nuanced appreciation of veterans’ financial situations and learning experiences. Pew’s future work will draw upon the extensive data gathered in this survey to further explore those nuances. 

This analysis is based on data from an online survey conducted by Penn State’s Clearinghouse for Military Family Readiness on behalf of The Pew Charitable Trusts. The nationally representative survey of 3,180 veterans was open to respondents from Nov. 14, 2020, to Jan. 5, 2021. The margin of error with design effect for the total sample is plus or minus 1.9 percentage points at the 95% confidence level.

Richa Bhattarai is an associate, Scott Brees is an officer, and Phillip Oliff is a director with The Pew Charitable Trusts’ student loan research project.