Main image courtesy of Vets HQ.
Established with the intention of rewarding soldiers willing to take an extra risk during World War II, combat pay provides a stipend to all members of the U.S. Armed Services for their service in hazardous zones in addition to their base pay. If you’re a veteran, or are thinking about enlisting, combat pay can make a serious impact on financial aid. Here’s our guide to what combat pay is, how it can impact your chances at receiving financial aid, and what you can do to help fund your education.
What is the FAFSA and Why You Need to Fill it Out
The ins and outs of the FAFSA and benefits of completing it
If you’re a newbie at applying for financial aid, whether for an undergraduate degree or something comparable, the first thing necessary in order to become eligible to receive the most amount of aid towards your education possible is filling out the FAFSA.
The FAFSA is an online form that requires information about your household members, their income, your income, and yours and other household members’ savings. When you plan to fill out the FAFSA, make sure to have tax forms and any other information about your household’s situation available and ready to type in.
Once you’ve completed the FAFSA fully and submitted it, it will be run through a program that considers all of the information you previously input to generate your amount of financial need and your expected family contribution. The expected family contribution is the amount of money that the government expects your family (and possibly you) to allot towards paying for your education. Financial need is the amount that your expected family contribution does not cover in the cost of attendance, and this financial need amount will be factored into the grants, loans, and work studies that you will become eligible for.
The FAFSA is a crucial step for every student who is interested in receiving any sort of financial aid to take before going to school. Additionally, the FAFSA must be renewed each year that you’re in school, so always make sure to stay on top of those deadlines. While it varies by state, the deadline for first-time FAFSA applicants typically falls on August 1st and May 1st for students who are renewing their application.
For a deeper look at what the FAFSA is and why you should complete it, check out our in-depth guide.
What is combat pay?
What it means to receive combat pay
Combat pay is a monthly stipend, or a fixed sum of money, given to active members of each U.S. Armed Service who are serving in certain hazardous areas. Combat pay is commonly mixed up with base pay, which is the initial salary or wage paid to those in the Armed Services for their service. Base pay does not include benefits or any other additions created later on, but it is paid consistently over the period of time that a person is employed.
Combat pay differs from base pay because it is the compensation given as a bonus to those in hazardous zones. Not all those who are serving in the U.S. Armed Service are receiving combat pay, but all those who are receiving combat pay are employed by the U.S. Armed Service.
The areas designated as hazard zones that soldiers would receive combat pay for serving in include Afghanistan, Jordan, Kyrgyzstan, Pakistan, Tajikistan, Uzbekistan, Philippines, Djibouti, Yemen, Somalia, Syria, The Federal Republic of Yugoslavia (Serbia/Montenegro), Albania, Kosovo, The Adriatic Sea, The Persian Gulf, The Red Sea, Iraq, Kuwait, Saudi Arabia, Oman, Bahrain, Qatar, and the United Arab Emirates. This list is subject to change as time passes and conditions change in those areas, but those are the places designated as combat zones for 2021.
This type of pay is given to soldiers who are put in harm's way, including if they were wounded in combat or were subject to hostile fire, mines, or other dangerous conditions. In 2021, combat pay came to $225, which would be added on top of a person’s base pay.
Combat pay is added as taxable federal income, but Social Security and Medicare will still be taken out from that pay. Additionally, each state sets their own regulations about taxing combat pay, so be sure to look up your state’s rules if you are enlisted or are planning on enlisting.
How combat pay affects financial aid
The negative impact combat pay might have on your FAFSA
While combat pay is not federally taxable, it can still make a significant impact on your FAFSA and financial aid packages that are produced from your FAFSA. Combat pay is considered a part of your income and should be denoted as such on your financial aid application.
You can include your income from combat pay on your FAFSA on worksheet B of the application under untaxed income. If you need to find out how much you earned in combat pay over the financial aid year, you should refer to your W2 issued by the U.S. Armed Services for your work.
Your combat pay should not be factored into your adjusted gross income, as it is not taxable. If you have specific questions about how you should report financial aid, or if you have special circumstances, always feel free to reach out to your university to learn more about how they approach combat pay when creating financial aid packages.
If you have a parent who received combat pay, they should approach filling out the FAFSA in the same way if you are a dependent student. They, of course, should fill out their income in the parent section of the application, and any student who received combat pay should designate their income from it in the student finances section.
Other military benefits
Additional benefits from being a military member and how it can help fund your education
Being in the military or having the status of veteran while attending school can come with some great financial opportunities despite combat pay potentially reducing aid packages. Being an active member of the military or a veteran can come with a multitude of benefits in student loans, scholarship opportunities, and more.
Under the Servicemember Civil Relief Act, all students who took out loans before entering the military are subject to interest rates that are 6% or less during their active military duty. This act applies to both private and federal loans of all types, and can greatly reduce the amount of interest accrued by military members over time.
Additionally, if you are on active duty then the repayment of your loans will be deferred for an extended period after your return from duty. This can greatly help with loan repayment while military members readjust to life after active duty, and decreases the chances of their loans becoming delinquent.
Veterans and active military members also qualify for an entire pool of scholarships specifically designated for those serving in the Armed Services. By using our guide to scholarships, you can find scholarships specifically intended for veterans and enlisted military members.
By applying to scholarships tailored towards this population, you increase your chances of receiving one due to the smaller pool of applicants. Scholarships are a great way to fund your education through means that don’t require repayment, but they do require substantial effort in order to be successful at securing one.
Aside from loans and scholarship opportunities, universities have special benefits for their veteran or active military population. Check out what opportunities your school has to offer on either their website or by contacting their financial aid office.
If you’re a veteran or are planning on enlisting, knowing what combat pay is and how it factors into your financial aid is an essential first step in understanding how to pay for college. By using the tips and tricks mentioned in our guide above, you’ll be well on your way to knowing the ins and outs of being a military member and attending university.