Troops may begin to think twice before tapping tuition assistance benefits starting this fall when new Pentagon rules will require more service members who get bad grades to repay their tuition money with out-of-pocket cash.

Under the new rules, troops taking undergraduate courses will have to achieve a grade of C or higher or else they will be subject to “recoupment” and have to retroactively pay the class’s costs.

Previous rules required only that service members pass the class — and even that lower standard impacted thousands of service members. For example, last year the services recouped tens of millions of dollars from at least 59,000 service members who signed up for TA-funded classes but failed to complete them with a passing grade.

The minimum-grade requirement is being set even higher for troops taking graduate-level classes: Those who fail to earn a B or better will be expected to repay the TA money allocated for that class, according to the new policy.

The new higher grade requirement could affect even more troops and likely will discourage some from pursuing off-duty education through the TA program, which offers to cover 100 percent of school bills for active-duty service members who pursue education during their off-duty hours.

In most cases, TA will pay up to $250 per semester hour, up to an overall cap of $4,000 or $4,500 per year, depending on the branch of service.

“Being told that you could be on the hook for that cost is certainly going to deter people from using the benefit,” said Emma Scherer, communications director for Student Veterans of America, a not-for-profit group based in Washington, D.C.

The new rules come as the top brass is looking for ways to cut costs and the tuition assistance budget in particular is declining for the first time in years. The Defense Department has requested $523 million for TA in 2015, which would be down about 10 percent from $578 million this year.

Officially, the new policy is designed to improve student performance, although exceptions will be granted on a case-by-case basis.

“Setting stricter minimum-grade requirement standards for coursework when a service member is using TA funds is part of an overarching strategy to improve military student success,” said Lt. Cmdr. Nate Christensen, a Pentagon spokesman. “Tuition dollars, and military student time, is both limited and valuable so we want them to maintain focus and understanding. Expectation is critical.”

Nevertheless, a defense official acknowledged that one intent of the new policy is also to make sure only the most serious students apply for tuition assistance benefits.

“This will just give them an opportunity to sit and think, ‘Is this really for me? Is this want I want to do? ... and if I really want to do this, now let me take the time to think about that,’ ” the defense official said. “And that is really the hope, that they think long and hard about what they want to do and then use that benefit which they are entitled to.”

Buffeted by crosscurrents

The new grade requirement is one of many revisions to the TA program that will take effect Sept. 5 under a new Defense Department policy that was recently finalized.

Other changes include requiring service members to pay for all nontuition fees, such as laboratory fees, book costs or other peripheral expenses.

“Educational institutions that bundle tuition, fees or books into a consolidated cost must detail the charges of fees and books separately for service members participating in the TA program,” according to the updated DoD instruction outlining the changes.

“Fees include any charge not directly related to course instruction, including but not limited to costs associated with room, board, distance learning, equipment, supplies, books/materials, exams, insurance, parking, transportation, admissions, registration, or fines,” according to the instruction.

The new changes are only the latest crosscurrents to reshape the TA program in recent years. The early 2000s saw a significant expansion of the benefit, which previously covered only up to 75 percent of tuition costs. At the same time, more service members sought to participate, driving up the program’s overall costs.

But now, as the Pentagon is facing long-term budget cuts, officials see a need to scale back the payment caps and tighten some eligibility rules.

Moreover, the nature of tuition assistance has changed as online schools have become more popular and many new for-profit schools began competing for the cash that troops were authorized to spend through the TA program.

The bulk of the changes that are taking effect in September are designed to increase oversight of the TA program and address concerns about some for-profit schools’ predatory business practices targeting troops and the taxpayer money that funds their education.

Concerns about for-profit schools have persisted for years in Washington and prompted a 2012 directive from President Obama that ordered the Pentagon to step up efforts to combat predatory business practices on military bases.

Other changes taking effect Sept. 5 include:

■ New requirements that schools disclose details about their full costs, graduation rates and other information that will help troops make informed decisions about selecting a school.

■ New standardized limits on access that representatives of online-only schools have to military installations and the troops who live there. This change aims to reduce the aggressive marketing by schools soliciting new enrollment or urging troops to transfer.

■ Offer service members for the first time an online forum to lodge complaints about schools, their recruitment tactics, their classes, their level of administrative support and other services.

Unintended consequences?

Some advocates are expressing concern about the new grade requirements creating unintended consequences, such as grade inflation. School instructors might know that a D, while technically a passing grade at most schools, has unique implications for military students.

“Human nature being what it is, a faculty member might be inclined to be generous in grading a course if a service member will be placed in financial hardship due to receiving a D,” said Jim Sweizer, a vice president for military outreach for American Military University, a popular online-only school.

While AMU and other schools officially prohibit grade inflation, Sweizer said, “I would describe it as a possible unintended consequence as school officials are constantly being reminded ... to be military friendly.”

Many school officials say military students typically perform as well, if not better, than their civilian counterparts. That is leading some advocates to question whether the new grade requirement is really intended to address performance or simply save money.

“Exactly why are we doing this? How many people are not performing at that level? Is this necessary or is it just a back-door way of cutting the benefit?” SVA’s Scherer said.

If more service members face demands to repay tuition assistance money, that’s likely to put more pressure on the waiver process through which they can seek exemptions by claiming that their military duties interfered with their studies and, as a result, they should not have to repay their TA.

That process will continue to be handled at the service level, and may vary greatly across the force and across military communities. Granting such waivers may not be a difficult decision when a service member’s unit is called up for an unplanned deployment. But operational tempo faced by individual troops can vary for many reasons.

“It will be interesting to see what that waiver looks like. I’m not sure how well that would play out,” Scherer said. “What concerns us is not those clean-cut situations so much, but [whether] there are going to be some cases with a lot of nuances. That’s what worries us.”

Staff writer George Altman contributed to this story.

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