Economic commentary: The effects of the original GI Bill

As World War II was entering its final stages, the Serviceman’s Readjustment Act of 1944 made it possible for men and women returning from military service to access a host of benefits, including college tuition and low-interest loans for mortgages and business.

But by far, the most utilized benefit was access to a college education. And it’s the part of the act, also known as the GI Bill of Rights, that has left the greatest economic legacy.

It’s unlikely that Congress understood how many veterans would access the bill’s higher-education benefit. According to many estimates, only about four in 10 Americans had a high school diploma at the time. Yet the bill provided strong incentives for veterans to pursue either college education or vocational training, and our veterans took the nation up on its offer.

According to Suzanne Mettler’s 2005 book, Soldiers to Citizens: The G.I. Bill and the Making of the Greatest Generation, a whopping 51% of veterans claimed the education and training benefits. While an estimated 5.6 million pursued vocational training in fields such as auto repair and construction, 2.2 million others used the benefit to pursue college degrees or attend graduate school. And the financial support was impressive: The bill would pay for all tuition at any college or university that accepted a veteran, regardless of the school’s tuition sticker price.

The effects were stunning—especially in higher education.

American Public Media reports that by 1947, half of all college students in the U.S. were veterans. And the U.S. Department of Defense estimates that the number of Americans holding college and university degrees more than doubled from 1940 to 1950. The GI Bill revolutionized higher education, and it revolutionized the economy, too.

Before the GI Bill, college education was largely considered a place for those in society who were already among the cultural elite. Remember, only about four in 10 Americans possessed a high school diploma then. For many, work and a paycheck were more immediate concerns than pursuing a four-year degree.

San Diego, California, September 10, 2008 – Crewman Qualification Training (CQT) students hit the surf before the start of medical training instruction at the Silver Strand beach in Coronado, California. CQT is a 14-week advanced training course teaching basic weapons, seamanship, first aid and small unit tactics to Special Warfare Combatant-craft Crewman (SWCC) trainees. SWCCs operate and maintain the Navy’s inventory of state-of-the-art, high-speed boats used to support SEALs in special operations missions worldwide.

Despite low expectations of many, the GIs thrived. Even at Harvard, where any GI who could gain admittance could study at the expense of the government, veterans proved as victorious in the classroom as they had in Europe and the Pacific. In a feature article in the June 17, 1946, issue of Life magazine, Harvard’s then-president James B. Conant pronounced the newly enrolled veterans “the most mature and promising students Harvard has ever had.” Heady praise at an institution with a history even then stretching more than 300 years.

It’s difficult to assess just how great the economic benefit of the GI Bill was overall, but Congress estimates that for every dollar spent, the economy got seven dollars back. That’s some payback compared to other contemporary stimulus programs—regardless of which party makes them happen.

It’s also widely reported that the GI Bill started the careers of 450,000 engineers, 240,000 accountants, 238,000 teachers, 67,000 doctors and 22,000 dentists, among many others. And the GI Bill gave us 14 Nobel Prize winners, three presidents, three Supreme Court justices, a dozen U.S. senators and two dozen winners of the Pulitzer Prize.

Of course, in the America of the 1940s and 1950s, not every veteran could access and make use of the GI Bill’s benefits as easily as others. In particular, as Ira Katznelson argues in his 2005 book, When Affirmative Action Was White, white veterans gained considerably more help from the bill than African American veterans. Even so, former president Bill Clinton once hailed the GI Bill as “the best deal ever made by Uncle Sam” and has claimed that it “helped to unleash a prosperity never before known.”

He is right: The GI Bill likely let loose unforeseeable prosperity that benefits all of us today. But imagine how much more prosperous we could be if the bill’s benefits had been more accessible to all our veterans.

Victor V. Claar is associate professor of economics in the Florida Gulf Coast University Lutgert College of Business. He is board president of the Freedom & Virtue Institute in Fort Myers and serves as the James Madison Institute’s George Gibbs Center for Economic Prosperity adjunct director.

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