GI Bill Passed with Discriminatory State Implementation Enabling Racial Wealth Gap

President Roosevelt signs the Servicemen’s Readjustment Act (GI Bill) on June 22, 1944, creating transformative benefits for veterans including education, housing, and unemployment assistance. However, Southern Democrats, led by Mississippi Representative John Rankin, ensure the bill’s administration is delegated to states and local institutions, enabling systematic exclusion of Black veterans from benefits.

The GI Bill offers college tuition, living expenses, low-interest home loans, and unemployment benefits to returning veterans. It represents the largest expansion of federal benefits in American history and transforms postwar America, creating a new middle class through subsidized education and homeownership. For white veterans.

Rankin, who chairs the House Veterans’ Affairs Committee, blocks proposals for federal administration of benefits. Instead, state Veterans Administrations and local institutions control implementation. In the South, this means white-controlled state agencies decide which veterans receive benefits and which institutions can accept them.

Black veterans face systematic obstacles at every step. Southern VA offices delay or deny applications. Segregated universities refuse Black applicants, and historically Black colleges lack capacity to absorb demand. Of the first 67,000 mortgages insured under the GI Bill in Mississippi, only two go to Black veterans. In New York and New Jersey, less discriminatory than the South, Black veterans still receive fewer than 100 of the first 67,000 VA mortgages.

The housing provisions are particularly devastating. VA home loans require FHA approval, and FHA explicitly refuses to insure mortgages in Black or integrated neighborhoods. Black veterans cannot use their benefits to buy homes in most areas. White veterans use GI Bill mortgages to purchase homes in new suburbs that explicitly exclude Black buyers, accumulating equity that becomes the foundation of family wealth passed to subsequent generations.

Historian Ira Katznelson documents how the GI Bill, ostensibly race-neutral, operates as “affirmative action for whites.” The racial wealth gap that persists into the 21st century traces directly to this discriminatory implementation of postwar benefits.