GI Bill

The GI Bill is also known as the GI Bill of Rights, and formally, the Servicemen's Readjustment Act of 1944. This act of U.S. Congress provided World War II veterans the subsidized benefit of college or vocational education and one year of unemployment compensation. The act also offered loans for returning veterans to purchase homes and start businesses.

During the war, the federal government had intervened extensively in the economy. Wages were set and inflation limited through price controls. By 1944 it was clear to the government that the war against Germany and Japan would be over in a couple of years at most. The central planners wanted to make sure that there was no repeat of the recession that struck the United States after World War I, when millions of former soldiers were released into the work-force just as industry was slowing down due to the end of military production requirements. They were haunted by the specter of the Great Depression, which had only ended with the buildup for the war in 1939 and 1940. Their efforts were more successful than they could have imagined.

The bill provided for free college or vocational training. This resulted in massive growth at colleges throughout the country, as millions of veterans took advantage of an opportunity they would never have had before the war. By 1952, 2.3 million veterans attended college, and 5.4 million took vocational training courses. Another 3.4 million received onthe-job training. This explosion in the number of students—the number of students enrolled in four-year colleges doubled—changed the idea of college from an elite institution reserved for the wealthy to a realistic advancement option for all but the poorest Americans.

The second benefit was subsidized home mortgages, giving returning GIs the chance to buy a home. These mortgages transformed the landscape, as builders such as William Levitt (the builder of Levittowns in New York, Pennsylvania, and New Jersey) built thousands of houses for the newly returned—and married—soldiers. About 3.7 million veterans took advantage of no-down-payment mortgages.

The third benefit actually turned out to be little used. Every returning veteran was guaranteed $20 per week for 52 weeks, but very few needed the benefit for anywhere near the full period. Some 9 million veterans used an average of 17 weeks of benefits.

The government benefits, along with the years of pent-up demand among workers who had worked long hours for good pay during the war but had little in the way of consumer goods to buy, led to an economic boom of unprecedented proportions from the end of the war well into the 1950s. The prosperity generated by the returning soldiers led to a population surge, known as the “baby boom,” a growth in the birth rate not seen after previous wars. This population growth, in turn, led to more economic growth. As the children grew, more schools, bigger houses, and more roads and other infrastructure were needed.

The benefits provided to the returning World War II veterans revolutionized the country. It ended the idea that college was for the rich only. It created a mortgage system that allowed millions more to buy houses. It created the modern, car-dependent suburb. It created unprecedented economic prosperity for an unprecedented number of people.

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