Spillover Effects of Financial Aid for Education: Does Post-9/11 GI Bill Reduce Veteran SNAP Participation?

Sarmistha Pal,Projesh Ghosh,Sebastian Negrusa

doi:10.21061/jvs.v6i3.203

Abstract

Many veterans rely on the Supplemental Nutrition Assistance Program (SNAP). We study the change in the veterans’ reliance on SNAP in response to the GI Bill, the veterans’ financial aid for higher education. Using the unanticipated increase in educational benefits due to the Post-9/11 GI Bill and employing a difference-in-differences approach, we estimate that the benefit increase lowered veteran SNAP participation by about 28%, the effect being larger among new veterans. These findings reflect changes in the veterans’ choices that are attributable to wealth effects, SNAP eligibility criteria, and human capital accumulation. SNAP eligibility typically expires when the veteran attends college, and a larger educational benefit increases the veterans’ probability of college attendance. Furthermore, a college degree increases future earnings, which reduces the veterans’ SNAP reliance in the longer run. Quantifying these relationships provides insights into how financial aid for education in general improves veterans’ economic well-being and may help break some veterans’ dependence on SNAP and similar welfare programs.

Highlights

Since 2007, the onset of the Great Recession, the percentage of US households receiving nutritional assistance under the Supplemental Nutrition Assistance Program (SNAP)1 has soared to an all-time high in 2012
Using a difference-in-differences strategy, we exploit an exogenous change in the GI Bill award that occurred in 2009 to estimate: (a) the effect of the GI Bill on SNAP participation among veterans who transitioned from military to civilian life within the previous year (“new veterans”); and (b) the impact of the GI Bill on SNAP participation among veterans who separated from the military more than a year ago (“long-term veterans”)
Our results indicate that the Post-9/11 GI Bill leads to a 28% reduction in SNAP participation among veterans, with differential effects among new veterans and long-term veterans

Summary

Introduction

Since 2007, the onset of the Great Recession, the percentage of US households receiving nutritional assistance under the Supplemental Nutrition Assistance Program (SNAP)1 has soared to an all-time high in 2012. The Post-9/11 GI Bill provides a basic housing allowance that increases the veterans’ non-labor income, generating an income effect that reduces the marginal benefit of SNAP participation.

Results

Conclusion