["Contemporary Economic Policy, EarlyView. ", "\nAbstract\nRecent veteran college graduates report experiencing high levels of underemployment, which have a negative impact on their well‐being and hinder their successful transition to civilian life. This paper quantifies the scope of this problem by estimating the impact of World War II, Vietnam War, and Post‐9/11 G.I. Bill subsidies on the U.S. underemployment rate. The paper identifies several determinants of underemployment, including choice of college major, lower academic ability, lower rates of graduate school completion, loss of labor market experience, combat exposure effects, and cohort size effects. Underemployment explains approximately a quarter of the earnings penalty experienced by recent college educated veterans.\n"]