Defense officials had to temporarily halt the program in February after an unexpected spike in applications threatened to bust its $174 million budget.
The department on Tuesday announced plans to resume the Military Career Advancement Accounts, or MyCAA, for new applicants in October.
But new eligibility limitations aimed at cutting costs are prompting a renewed uproar among spouses who protested when the grants were suddenly halted.
Defense officials say eligibility will now be limited to spouses of servicemen and women in the five lowest enlisted ranks as well as junior officers. There were no rank limitations previously.
Grants previously capped at $6,000 now will pay only up to $4,000. Also, the money will only go toward two-year associate degrees and programs for professional licensing and certification. The program will no longer pay for courses toward bachelors and graduate degrees.
The changes have left Lori Martin of Kingsland wondering how she'll pay for her associates degree at Florida State College of Jacksonville, Fla., where she's been accepted into the dental hygiene program this fall.
Martin's husband is a Navy senior chief serving at Kings Bay Submarine Base on the Georgia coast. Because of his rank, she no longer qualifies for the grant program.
"It really doesn't seem fair," said Martin, 39, who was approved for a grant last year but has been told she'll lose it under the new rules in October. "Now they're saying they mismanaged their money, so they're taking my money from me so they can give it to someone else."
A Defense Department spokeswoman, Cynthia Smith, said Thursday evening the decision to make the grants available only to enlisted ranks and junior officers was based on several factors, including that spouses of younger service members have less disposable income and are less likely to have a college education.
"We regret the impact these changes will have on those spouses who will no longer be eligible for DoD-funded financial assistance," Smith said.
In a statement Tuesday, Clifford Stanley, the defense undersecretary over the program, said the changes would help military spouses "with the greatest need."
"The MyCAA program popularity grew beyond our expectations and became too expensive to continue," Stanley said. "Therefore, we are returning to the original intent of the program in a way that is attainable and fiscally responsible for the Defense Department."
Defense officials said the new rules mean about 379,500 spouses, just over half the 743,000 Americans married to military service members, will be ineligible for the grants.
The program started in March 2009, allowing military spouses to apply for up to $6,000 to pay for college tuition or costs associated with professional licenses and certificates. The idea was to help spouses find better jobs and overcome career obstacles associated with frequent moves required of military families.
But defense officials underestimated how popular the grants would become. In less than a year, 98,000 spouses had enrolled and more than 38,000 more had applications pending. If all received the full $6,000 grant, the estimated cost would exceeded $819 million - nearly five times the program's budget.
A month after the sudden shutdown caused howls of protest from spouses, the Defense Department resumed payments for those already approved. The program remained frozen for new applications until it could find a way to make the grants financially solvent.
But the Military Officers Association of America says the rank-based approach punishes the military families who face the most hardships from frequent moves - officers and noncommissioned officers who serve the longest.
"They picked one of the first things that was guaranteed to make people angry," said Steve Strobridge, the group's government relations director. "If it's a matter of money, we would have rather seen a partial reimbursement spread over more people."
For Army spouses under the new rules, for example, grants will be offered only for those married to soldiers of rank private through sergeant, as well as the junior officer ranks of 2nd and 1st lieutenant.
Strobridge also opposed making bachelor's and graduate degrees off limits, saying it prohibits military spouses from pursuing careers as teachers and nurses.
Rebecca Duncan, wife of a Navy sailor stationed in Corpus Christi, Texas, won't be affected by the changes because she'll have spent her $6,000 grant by the fall.
But she said the new rules have the potential to pit spouses against each other based on rank. Defense officials would have done better by offering a lower amount of money to all military spouses, she said.
"That wouldn't satisfy everybody, but nothing's going to satisfy all the spouses," said Duncan, 37. "It's such a wonderful program, but it's a door that was opened for them that keeps being slammed."
Bynum has covered the military based in Georgia since 2001.