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GI Bill Housing Allowance vs. BAH

Joe Wallace

There are two types of housing allowances that military members considering a return to college should be aware of. Do you know the differences between the Basic Allowance for Housing (BAH) for those currently serving and the Monthly Housing Allowance (MHA) for veterans using their GI Bill education benefits?

While both help with housing costs, they work differently because they’re meant for different situations.

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Basic Allowance for Housing (BAH): For Those Currently Serving

BAH is money given to active-duty service members in the United States who don’t live in military housing. Its main goal is to help them pay for a place to live in regular neighborhoods or to stay in privatized military housing on base, where the third-party rental management company collects rent.

This ensures service members can afford decent housing without having to stay on base, which helps them financially and encourages people to join and stay in the military.

How BAH Is Calculated

The Department of Defense (DoD) calculates BAH rates every year. They do this by examining housing costs in specific areas. Here are the main things they consider:

• BAH is based on the ZIP code of where the service member’s main job is, not necessarily where they choose to live. This ensures they receive money for typical housing costs near their workplace. There are over 300 different military housing areas in the U.S., and each has its own housing prices.
• The allowance typically increases with a service member’s rank. This is because higher-ranking personnel often require larger homes or those with more features.
• The amount changes depending on whether the service member has family members (such as a spouse or children) living with them or elsewhere. Those with families typically receive more money to cover the additional space and expenses.
• The most important part of figuring out BAH is looking at how much it costs to rent homes and pay for basic utilities (like electricity, heat, and water) in each area. The DoD connects these rental costs to different military pay levels. For example, the cost of homes with three or four bedrooms helps set the rates for higher-ranking enlisted members and officers.

 

 

 

Yearly Changes and Rate Protection

BAH rates are updated and released annually, typically in mid-December, and take effect on January 1st of the new year. This yearly update ensures the allowance keeps pace with changes in the civilian rental market. If local housing costs increase, BAH rates typically do as well.

An important feature of BAH is Individual Rate Protection. This means that if the BAH rate for a service member’s current location decreases, they’ll continue to receive the higher amount they were previously receiving, as long as they remain at the same job location, their rank doesn’t change, and their family situation remains unchanged.

This protection is crucial because it prevents financial difficulties for service members who have signed leases or mortgages based on a specific housing allowance. If rates increase, the service member receives the new, higher rate.

It’s worth noting that BAH isn’t always meant to cover 100% of housing costs. Historically, it covered less, and now it generally covers about 95-97% of housing expenses, meaning service members might pay a small part out of their own pocket. This shared cost was reinstated in 2015 to help manage the program’s budget.

GI Bill Monthly Housing Allowance (MHA): For Veterans Going to School

The Monthly Housing Allowance (MHA) for the pos is different from BAH.

MHA is an education benefit. It’s designed to assist eligible veterans with covering living expenses, including housing, while attending school or pursuing job training. It’s a key component of the larger GI Bill, which helps veterans transition to civilian life by providing education and other support.

The first GI Bill, enacted in 1944, provided veterans with benefits such as medical care, home ownership, and, most importantly, education after World War II. While earlier versions provided some living money, the modern MHA directly links to housing costs to support veterans while they’re students. The Post-9/11 GI Bill, which was enacted for those who served after September 11, 2001, greatly expanded these education benefits, including the MHA. More recently, the “Forever GI Bill” in 2017 further increased who could get these benefits and for how long.

How MHA Is Calculated

The way MHA is calculated utilizes some of the same information as BAH, but it applies it more simply to assist students. Here’s how it works:

• MHA is based on the BAH rate for an E-5 with family members (a specific military rank and situation), regardless of the veteran’s actual rank or family status. This standard rate makes it easier to manage the benefit and provides a consistent base for student housing support. This rate is based on the ZIP code of the school’s main campus.
• Unlike BAH, which changes on January 1st each year, MHA rates usually change to match the academic year, which typically runs from August 1st to July 31st. This timing helps students plan their money for the whole school year.
• A significant factor in MHA is the number of classes a student is taking, referred to as their “rate of pursuit.” To get any MHA, a student must be taking more than half of a full course load. The amount of MHA they receive is then adjusted based on the extent of their course load. For example, if a full course load is 12 credits and a student takes 9, they get 80% of the full MHA.
• The MHA also pays differently for entirely online classes versus classes taken in person. For classes that are only online, the MHA is half of the national average, with a maximum limit. However, if a student takes at least one class in person, even if others are online, they might get a higher MHA rate based on the school’s ZIP code.
• For veterans participating in on-the-job training or apprenticeship programs, the MHA benefits change over time. It usually starts at 100% of the full BAH rate for the first six months, then gradually decreases (to 80%, then 60%, etc.) as the veteran continues their training. This decrease acknowledges that as a veteran gains skills, they might start earning more money, so they might not need as much housing support from the GI Bill.

Why Are BAH and MHA Adjusted Differently?

The different ways BAH and MHA are adjusted come from their primary goals. BAH is for active military members. It’s housing money based on where they’re stationed and their family situation. It’s part of their ongoing pay, meant to cover current living costs. MHA is for veterans (and some family members) pursuing higher education. It’s a benefit that helps them adjust to civilian life and pursue an education.

BAH is based on the service member’s exact rank, family status, and the precise zip code of their duty station. BAH rate protection is a situational benefit, ensuring service members don’t lose money if rates drop.

MHA uses a standard “E-5 with family” rate for all students, no matter their previous rank. This makes it simpler to manage for many different students and focuses the money on general living costs during their education. The adjustments are applied more broadly based on the academic year.

Flexibility and Predictability

BAH’s yearly, market-driven changes and rate protection are crucial for active-duty personnel who frequently relocate and need their housing allowance to reflect current costs in their new location. The protection offers financial stability if the rental market declines. MHA’s academic year adjustment cycle provides students with the predictability to plan their finances for the entire school year.

BAH tries to keep up with real-time changes in rental markets and utility costs. It’s a direct response to current housing prices. MHA, while using BAH data, has a bigger goal of supporting education. Its adjustments are less about tiny market changes for individual homes and more about giving a reasonable amount to students in various school settings.

How Status Changes Affect BAH and MHA

A service member’s BAH can change if they move to a new base, get a lower rank, or their family situation changes. A veteran’s MHA may change depending on the number of classes they take, when they began using their benefits (due to law changes), or if they switch between in-person and online learning. There were some “grandfathering” rules for MHA that allowed people who started benefits before a certain date to keep older, potentially higher, rates.

 

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