To improve educational assistance for members of the Armed Forces and veterans in order to enhance recruitment and retention for the Armed Forces.

SA 4763. Mr. GRAHAM (for himself, Mr. Burr, and Mr. McCain) proposed
an amendment to the bill H.R. 980, to provide collective bargaining
rights for public safety officers employed by States or their political
subdivisions; as follows:

Strike the last period in the bill and insert the
following:

TITLE I--EDUCATIONAL ASSISTANCE FOR MEMBERS OF THE ARMED FORCES AND
VETERANS

SEC. 101. SHORT TITLE.

This title may be cited as the ``Enhancement of
Recruitment, Retention, and Readjustment Through Education
Act of 2008''.

SEC. 102. FINDINGS.

Congress makes the following findings:
(1) The World War II-era GI Bill assisted almost 8,000,000
members of the Armed Forces in readjusting to civilian life
after completing their service to the nation. With the
support and assistance of America's colleges and
universities, the GI Bill provided incentives that
transformed American society, making a college degree a
realizable goal for millions of Americans.
(2) In the years following World War II, the GI Bill
continued to provide educational benefits for members of the
Armed Forces who had been drafted into or volunteered for
service.
(3) The establishment of the All Volunteer Force in 1973,
and its development since its inception, has produced highly
professional Armed Forces that are recognized as the most
effective fighting force the world has ever seen.
(4) The Sonny Montgomery GI Bill was enacted in 1984 to
sustain the All Volunteer Force by providing educational
benefits to aid in the recruitment and retention of highly
qualified personnel for the Armed Forces and to assist
veterans in readjusting to civilian life. Today, it remains a
cornerstone of military recruiting and retention planning for
the Armed Forces and continues to fulfill its original
purposes.
(5) The All Volunteer Force depends for its effectiveness
and vitality on successful recruiting of highly capable men
and women, and retention for careers of soldiers, sailors,
airmen, and marines, in both the active and reserve
components of the Armed Forces, who, with the support of
their families and loved ones, develop into professional,
dedicated, and experienced officers, noncommissioned
officers, and petty officers.
(6) The achievement of educational goals, including
obtaining the means to a college degree, has traditionally
been a key reason for volunteering for service in the Armed
Forces. For members who serve a career in the Armed Forces,
this goal extends to their spouses and children and has
resulted in requests for the option to transfer educational
benefits under the GI Bill to spouses and children.
(7) As in the aftermath of World War II, colleges and
universities throughout the United States should demonstrate
their and the Nation's appreciation to veterans by dedicated
programs providing financial aid.
(8) It is in that national interest for the United States--
(A) to express the gratitude of the American people by
assisting those who have honorably served in the Armed Forces
and returned to civilian life to achieve their educational
goals;
(B) to provide significant educational benefits to provide
incentives for successful recruiting;
(C) to motivate continued service in the All Volunteer
Force by those members with the potential for military
careers and their spouses and children; and
(D) to assist those who serve and their families in
achieving their personal goals, including higher education,
while progressing in a military career.

SEC. 103. PLAN ON COORDINATION OF CURRENT EDUCATIONAL
ASSISTANCE PROGRAMS AND DEVELOPMENT OF
ADDITIONAL EDUCATIONAL ASSISTANCE PROGRAMS TO
ENABLE CAREER-ORIENTED MEMBERS OF THE ARMED
FORCES TO ATTAIN A BACHELOR'S DEGREE.

(a) Sense of Congress.--It is the sense of Congress that--
(1) the outstanding men and women who volunteer for service
in the Armed Forces and demonstrate through their service the
ability, motivation, and commitment to serve as career
commissioned officers, noncommissioned officers, petty
officers, and warrant officers should be given the
opportunities and resources needed to obtain a bachelor's
degree before they complete active duty and retire from the
Armed Forces; and
(2) every effort should be made by the leaders of the Army,
Navy, Marine Corps, Air Force, and Coast Guard to demonstrate
to members of the Armed Forces who are willing to serve and
study that the dual goals of attaining a bachelor's degree
and a distinguished military career are achievable and not
mutually exclusive.
(b) Plan To Coordinate and Develop Educational Assistance
Programs.--
(1) Plan required.--The Secretary of Defense shall, in
consultation with the Secretary of Veterans Affairs, develop
a plan to make the attainment of a bachelor's degree an
achievable goal for members of the Armed Forces who are
motivated towards careers in the Armed Forces and who are
able and willing to accept the challenges of military duty
and pursuit of college level studies.
(2) Advice of the service chiefs.--The Secretary of Defense
shall develop the plan required by paragraph (1) with the
advice of the Chief of Staff of the Army, the Chief of Naval
Operations, the Chief of Staff of the Air Force, and the
Commandant of the Marine Corps.
(3) Elements.--The plan required by paragraph (1) shall
include the following:

[[Page S4188]]

(A) Appropriate elements of current programs to assist
members of the Armed Forces in obtaining college-level
education, including tuition assistance programs, distance
learning programs, and technical training and education
provided by the military departments, including programs
currently administered by the Secretary of Veterans Affairs.
(B) Appropriate elements of current programs to provide
members of the Armed Forces with assistance in obtaining
college-level credit for the technical training and
experience they undergo during their military career.
(C) One or more additional education programs to assist
members of the Armed Forces in obtaining a college-level
education, including mechanisms for the provision by the
military departments of guidance, mentoring, and resources to
assist members in achieving their professional military and
personal educational goals.
(D) Such additional programs or mechanisms, such as
sabbaticals from the Armed Forces or college-level education
provided or funded by the military departments, as the
Secretary of Defense considers appropriate to assist members
of the Armed Forces in making adequate progress towards a
bachelor's degree from an accredited institution of higher
education while continuing a successful military career.
(E) Such mechanisms for the application of the elements of
the plan to members of the National Guard and Reserves as the
Secretary of Defense considers appropriate to ensure that
such members receive appropriate assistance in achieving
their professional military and personal educational goals.
(F) Such elements of current programs of the military
departments for in-service education of members of the Armed
Forces as the Secretary of Defense considers appropriate to
maintain and enhance the recruitment and retention by the
Armed Forces of highly trained and experienced military
leaders.
(4) Submittal to congress.--The Secretary of Defense shall
submit to the Committees on Armed Services of the Senate and
the House of Representatives a report setting forth the plan
required by paragraph (1) not later than August 1, 2009.

SEC. 104. INCREASE IN RATES OF BASIC EDUCATIONAL ASSISTANCE
UNDER THE MONTGOMERY GI BILL.

(a) Increase in General Rates and Augmented Rates for
Extended Service.--
(1) Rates based on three years of obligated service.--
Subsection (a)(1) of section 3015 of title 38, United States
Code, is amended by striking ``on a full-time basis, at the
monthly rate of'' and all that follows and inserting ``on a
full-time basis--
``(A) in the case of an individual who served on active
duty in the Armed Forces for 12 or more years, at the monthly
rate of--
``(i) for months occurring during fiscal year 2009, $1,650;
``(ii) for months occurring during fiscal year 2010,
$1,800;
``(iii) for months occurring during fiscal year 2011,
$2,000; and
``(iv) for months occurring during a subsequent fiscal
year, the amount for months occurring during the preceding
fiscal year increased under subsection (h); and
``(B) in the case of an individual who served on active
duty in the Armed Forces for less than 12 years, at the
monthly rate of--
``(i) for months occurring during fiscal year 2009, $1,500;
and
``(ii) for months occurring during a subsequent fiscal
year, the amount for months occurring during the preceding
fiscal year increased under subsection (h); or''.
(2) Rates based on two years of obligated service.--
Subsection (b)(1) of such section is amended--
(A) by striking subparagraphs (A) through (C) and inserting
the following new subparagraph (A):
``(A) for months occurring during fiscal year 2009, $950;
and''; and
(B) by redesignating subparagraph (D) as subparagraph (B).
(b) Effective Date.--
(1) In general.--The amendments made by subsection (a)
shall take effect on October 1, 2008, and shall apply with
respect to basic educational assistance payable for months
beginning on or after that date.
(2) Limitation on cost-of-living adjustments.--
(A) Certain rates based on three years of obligated
service.--No adjustment under subsection (h) of section 3015
of title 38, United States Code, shall be made in the rates
of educational assistance payable under subsection (a)(1)(A)
of such section (as amended by subsection (a)(1) of this
section) for any of fiscal years 2009 through 2011.
(B) Other rates.--No adjustment under subsection (h) of
section 3015 of title 38, United States Code, shall be made
in the rates of educational assistance payable under
subsection (a)(1)(B) of such section (as so amended), or
subsection (b) of such section, for fiscal year 2009.

SEC. 105. ANNUAL STIPEND FOR RECIPIENTS OF BASIC EDUCATIONAL
ASSISTANCE UNDER THE MONTGOMERY GI BILL.

(a) Entitlement to Stipend.--
(1) In general.--Subchapter II of chapter 30 of title 38,
United States Code, is amended by adding at the end the
following new section:

``Sec. 3020A. Educational stipend

``(a) Entitlement.--Each individual receiving basic
educational assistance under this subchapter who is pursuing
a program of education at an institution of higher learning
(as such term is defined in section 3452(f) of this title) is
entitled to an educational stipend under this section.
``(b) Amount of Stipend.--The educational stipend payable
under this section to an individual entitled to such a
stipend shall be paid--
``(1) in the case of an individual pursuing an approved
program of education on at least a half-time basis, at the
annual rate of $1,000; and
``(2) in the case of an individual pursuing an approved
program of education on less than a half-time basis, at the
annual rate of $500.
``(c) Payment Frequency and Method.--The educational
stipend payable under this subsection shall be paid with such
frequency (including by lump sum), and by such mechanisms, as
the Secretary shall prescribe for purposes of this
section.''.
(2) Clerical amendment.--The table of sections at the
beginning of chapter 30 of such title is amended by adding at
the end of the items relating to subchapter II the following
new item:

``3020A. Educational stipend.''.
(b) Effective Date.--Section 3020A of title 38, United
States Code, as added by subsection (a), shall take effect on
the date that is one year after the enactment of this Act.

SEC. 106. INCREASE IN RATES OF EDUCATIONAL ASSISTANCE FOR
MEMBERS OF THE SELECTED RESERVE.

(a) Increase in Rates.--Section 16131(b)(1) of title 10,
United States Code, is amended--
(1) in subparagraph (A), by striking ``$251'' and inserting
``$634'';
(2) in subparagraph (B), by striking ``$188'' and inserting
``$474''; and
(3) in subparagraph (C), by striking ``$125'' and inserting
``$314''.
(b) Effective Date.--
(1) In general.--The amendments made by subsection (a)
shall take effect on October 1, 2008, and shall apply with
respect to educational assistance payable for months
beginning on or after that date.
(2) No cost-of-living adjustment.--No adjustment under
paragraph (2) of section 16131(b) of title 10, United States
Code, shall be made in the rates of educational assistance
payable under paragraph (1) of such section for fiscal year
2009.

SEC. 107. INCREASE IN RATES OF EDUCATIONAL ASSISTANCE FOR
RESERVE COMPONENT MEMBERS SUPPORTING
CONTINGENCY OPERATIONS AND OTHER OPERATIONS
WITH EXTENDED SERVICE IN THE SELECTED RESERVE.

(a) Increase in Rates for Extended Service.--Paragraph (2)
of section 16162(c) of title 10, United States Code, is
amended to read as follows:
``(2) The educational assistance allowance provided under
this chapter shall be the amount as follows (as adjusted
under paragraphs (3) and (4)):
``(A) In the case of a member who serves an aggregate of 12
years or more in the Selected Reserve of the Ready Reserve,
the amount provided under section 3015(a)(1)(A) of title 38
for the fiscal year concerned, except that if a member
otherwise covered by this subparagraph ceases serving in the
Selected Reserve the amount shall be the amount provided
under subparagraph (B) of this paragraph.
``(B) In the case of any other member, the amount provided
under section 3015(a)(1)(B) of title 38 for the fiscal year
concerned.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on October 1, 2008, and shall apply with
respect to educational assistance payable for months
beginning on or after that date.

SEC. 108. ENHANCEMENT OF TRANSFERABILITY OF ENTITLEMENT TO
EDUCATIONAL ASSISTANCE.

(a) Modification of Authority To Transfer Entitlement Under
Montgomery GI Bill.--
(1) In general.--Subsection (a) of section 3020 of title
38, United States Code, is amended to read as follows:
``(a) In General.--Subject to the provisions of this
section, the Secretary of Defense shall authorize each
Secretary concerned to permit an individual described in
subsection (b) who is entitled to basic educational
assistance under this subchapter to elect to transfer to one
or more of the dependents specified in subsection (c) the
unused portion of such individual's entitlement to such
assistance, subject to the limitation under subsection
(d).''.
(2) Eligible individuals.--Subsection (b) of such section
is amended to read as follows:
``(b) Eligible Individuals.--An individual referred to in
subsection (a) is any member of the Armed Forces serving on
active duty or as a member of the Selected Reserve who, at
the time of the approval by the Secretary concerned of the
member's request to transfer entitlement to basic educational
assistance under this section--
``(1) has completed six years of service in the Armed
Forces; and
``(2) meets such other requirements as the Secretary of
Defense may prescribe for purposes of this section.''.
(3) Limitations on months of transfer.--Subsection (d) of
such section is amended to read as follows:
``(d) Number of Months Transferrable.--(1) Except as
provided in paragraphs (2) and (3), an individual may
transfer under this section any number of months of unused
entitlement of the individual to basic educational assistance
under this chapter.

[[Page S4189]]

``(2) In the case of an individual who has completed at
least six but less than 12 years of service in the Armed
Forces at the time of the approval by the Secretary concerned
of the individual's request to transfer entitlement under
this section, the number of months that may be transferred by
the individual under this section may not exceed the lesser
of--
``(A) the number of months transferrable by the individual
under paragraph (1); or
``(B) 18 months.''.
(4) Timing, revocation, and modification of transfer.--
Subsection (f) of such section is amended--
(A) in paragraph (1), by striking ``without regard'' and
all that follows and inserting ``while the individual is a
member of the Armed Forces.''; and
(B) in paragraph (2)(A), by inserting ``while the
individual is serving as a member of the Armed Forces or in
the Selected Reserve'' after ``at any time''.
(5) Exclusion from marital property.--Subsection (f) of
such section is further amended by adding at the end the
following new paragraph:
``(3) Entitlement transferred under this section may not be
treated as marital property, or the asset of a marital
estate, subject to division in a divorce or other civil
proceeding.''.
(6) Overpayment.--Subsection (i) of such section is
amended--
(A) by striking ``(1)'' before ``In the event''; and
(B) by striking paragraphs (2) and (3).
(7) Regulations.--Subsection (k) of such section is amended
to read as follows:
``(k) Regulations.--The Secretary of Defense shall, in
coordination with the Secretary of Veterans Affairs,
prescribe regulations for purposes of this section. Such
regulations shall specify the following:
``(1) The circumstances under which the Secretaries
concerned may permit and approve transfers of entitlement
under this section.
``(2) Such requirements for eligibility for transfer of
entitlement under this section as the Secretary of Defense
considers appropriate for purposes of subsection (b)(2).
``(3) The manner and effect of an election to modify or
revoke a transfer of entitlement under subsection (f)(2).''.
(8) Heading amendment.--The heading of such section is
amended to read as follows:

``Sec. 3020. Transfer of entitlement to basic educational
assistance''.

(9) Clerical amendment.--The table of sections at the
beginning of chapter 30 of such title is amended by striking
the item relating to section 3020 and inserting the
following:

``3020. Transfer of entitlement to basic educational assistance.''.

(b) Authority for Transfer of Entitlement Under Reserve
Components Educational Assistance Programs.--
(1) Selected reserve program.--
(A) In general.--Chapter 1606 of title 10, United States
Code, is amended by inserting after section 16131a the
following new section:

``Sec. 16131b. Transfer of entitlement to educational
assistance

``(a) In General.--Subject to the provisions of this
section, the Secretary concerned may permit a member of the
Armed Forces described in subsection (b) who is entitled to
educational assistance under this chapter to elect to
transfer to one or more of the dependents specified in
subsection (c) a portion of such member's entitlement to such
assistance, subject to the limitations under subsection (d).
``(b) Eligible Members.--A member described in this
subsection is a member of the Selected Reserve of the Ready
Reserve who, at the time of the approval of the member's
request to transfer entitlement to educational assistance
under this section--
``(1) has completed at least six years of service in the
Selected Reserve; and
``(2) meets such other requirements as the Secretary of
Defense may prescribe for purposes of this section.
``(c) Eligible Dependents.--A member approved to transfer
an entitlement to educational assistance under this section
may transfer the member's entitlement as follows:
``(1) To the member's spouse.
``(2) To one or more of the member's children.
``(3) To a combination of the individuals referred to in
paragraphs (1) and (2).
``(d) Number of Months Transferrable.--(1) Except as
provided in paragraph (2), a member may transfer under this
section any number of months of unused entitlement of the
member to educational assistance under this chapter.
``(2) In the case of a member who has completed at least
six but less than 12 years of service in the Selected Reserve
at the time of the approval by the Secretary concerned of the
member's request to transfer entitlement under this section,
the number of months that may be transferred by the member
under this section may not exceed the lesser of--
``(A) the number of months transferrable by the individual
under paragraph (1); or
``(B) 18 months.
``(e) Designation of Transferee.--A member transferring an
entitlement to educational assistance under this section
shall--
``(1) designate the dependent or dependents to whom such
entitlement is being transferred;
``(2) designate the number of months of such entitlement to
be transferred to each such dependent; and
``(3) specify the period for which the transfer shall be
effective for each dependent designated under paragraph (1).
``(f) Time for Transfer; Revocation and Modification.--(1)
Subject to the time limitation for use of entitlement under
section 16133 of this title, a member approved to transfer
entitlement to educational assistance under this section may
transfer such entitlement at any time after the approval of
the member's request to transfer such entitlement.
``(2)(A) A member transferring entitlement under this
section may modify or revoke at any time the transfer of any
unused portion of the entitlement so transferred.
``(B) The modification or revocation of the transfer of
entitlement under this paragraph shall be made by the
submittal of written notice of the action to both the
Secretary concerned and the Secretary of Veterans Affairs.
``(3) Entitlement transferred under this section may not be
treated as marital property, or the asset of a marital
estate, subject to division in a divorce or other civil
proceeding.
``(g) Commencement of Use.--A dependent to whom entitlement
to educational assistance is transferred under this section
may not commence the use of the transferred entitlement
until--
``(1) in the case of entitlement transferred to a spouse,
the completion by the member making the transfer of six years
of service in the Selected Reserve; or
``(2) in the case of entitlement transferred to a child,
both--
``(A) the completion by the member making the transfer of
six years of service in the Selected Reserve; and
``(B) either--
``(i) the completion by the child of the requirements of a
secondary school diploma (or equivalency certificate); or
``(ii) the attainment by the child of 18 years of age.
``(h) Additional Administrative Matters.--(1) The use of
any entitlement to educational assistance transferred under
this section shall be charged against the entitlement of the
member making the transfer at the rate of one month for each
month of transferred entitlement that is used.
``(2) Except as provided under subsection (e)(2) and
subject to paragraphs (5) and (6), a dependent to whom
entitlement is transferred under this section is entitled to
educational assistance under this chapter in the same manner
as the member from whom the entitlement was transferred.
``(3) The monthly rate of educational assistance payable to
a dependent to whom entitlement is transferred under this
section shall be the monthly amount payable to the member
making the transfer under section 16131 or 16132a of this
title, as applicable.
``(4)(A) The death of a member transferring entitlement
under this section shall not affect the use of the
entitlement by the dependent to whom the entitlement is
transferred.
``(B) The involuntary separation or retirement of a member
transferring entitlement under this section because of a
nondiscretionary provision of law for age or for years of
service, as described in section 16133(b) of this title, or
medical disqualification which is not the result of gross
negligence or misconduct of the member shall not affect the
use of entitlement by the dependent to whom the entitlement
is transferred.
``(5) A child to whom entitlement is transferred under this
section may not use any entitlement so transferred after
attaining the age of 26 years.
``(6) The purposes for which a dependent to whom
entitlement is transferred under this section may use such
entitlement shall include the pursuit and completion of the
requirements of a secondary school diploma (or equivalency
certificate).
``(7) The administrative provisions of this chapter shall
apply to the use of entitlement transferred under this
section, except that the dependent to whom the entitlement is
transferred shall be treated as the eligible member for
purposes of such provisions.
``(i) Overpayment.--(1) In the event of an overpayment of
educational assistance with respect to a dependent to whom
entitlement is transferred under this section, the dependent
and the member making the transfer shall be jointly and
severally liable to the United States for the amount of the
overpayment for purposes of section 3685 of title 38.
``(2)(A) Except as provided in subparagraph (B), in the
case of a member transferring entitlement under this section
whose eligibility is terminated under section 16134(2) of
this title, the amount of any transferred entitlement under
this section that is used by a dependent of the member as of
the date of the failure of the member to participate
satisfactorily in training as specified in section 16134(2)
of this title shall be treated as an overpayment of
educational assistance under paragraph (1).
``(B) Subparagraph (A) shall not apply in the case of a
member who fails to complete service agreed to by the
member--
``(i) by reason of the death of the member; or
``(ii) for a reason referred to in section 16133(b) of this
title.
``(j) Approvals of Transfer Subject to Availability of
Appropriations.--The Secretary concerned may approve
transfers of

[[Page S4190]]

entitlement to educational assistance under this section in a
fiscal year only to the extent that appropriations for
military personnel are available in that fiscal year for
purposes of making deposits in the Department of Defense
Education Benefits Fund under section 2006 of this title in
that fiscal year to cover the present value of future
benefits payable from the Fund for the Department of Defense
portion of payments of educational assistance attributable to
increased usage of benefits as a result of such transfers of
entitlement in that fiscal year.
``(k) Regulations.--The Secretary of Defense shall, in
consultation with the Secretary of Veterans Affairs,
prescribe regulations for purposes of this section. Such
regulations shall specify the following:
``(1) The circumstances under which the Secretaries
concerned may permit and approve transfers of entitlement
under this section.
``(2) Such requirements for eligibility for transfer of
entitlement under this section as the Secretary of Defense
considers appropriate for purposes of subsection (b)(2).
``(3) The manner and effect of an election to modify or
revoke a transfer of entitlement under subsection (f)(2).''.
(B) Clerical amendment.--The table of sections at the
beginning of chapter 1606 of such title is amended by
inserting after the item relating to section 16131a the
following new item:

``16131b. Transfer of entitlement to educational assistance.''.
(2) Program for reserve components supporting contingency
and other operations.--
(A) In general.--Chapter 1607 of title 10, United States
Code, is amended by inserting after section 16162a the
following new section:

``Sec. 16162b. Transfer of entitlement to educational
assistance

``(a) In General.--Subject to the provisions of this
section, the Secretary concerned may permit a member of the
Armed Forces described in subsection (b) who is entitled to
educational assistance under this chapter to elect to
transfer to one or more of the dependents specified in
subsection (c) a portion of such member's entitlement to such
assistance, subject to the limitations under subsection (d).
``(b) Eligible Members.--A member referred to in subsection
(a) is a member of the Armed Forces who, at the time of the
approval of the member's request to transfer entitlement to
educational assistance under this section--
``(1) has completed at least six years of service in the
Armed Forces; and
``(2) meets such other requirements as the Secretary of
Defense may prescribe for purposes of this section.
``(c) Eligible Dependents.--A member approved to transfer
an entitlement to educational assistance under this section
may transfer the member's entitlement as follows:
``(1) To the member's spouse.
``(2) To one or more of the member's children.
``(3) To a combination of the individuals referred to in
paragraphs (1) and (2).
``(d) Number of Months Transferrable.--(1) Except as
provided in paragraph (2), a member may transfer under this
section any number of months of unused entitlement of the
member to educational assistance under this chapter.
``(2) In the case of a member who has completed at least
six but less than 12 years of service in the Armed Forces at
the time of the approval by the Secretary concerned of the
member's request to transfer entitlement under this section,
the number of months that may be transferred by the member
under this section may not exceed the lesser of--
``(A) the number of months transferrable by the individual
under paragraph (1); or
``(B) 18 months.
``(e) Designation of Transferee.--A member transferring an
entitlement to educational assistance under this section
shall--
``(1) designate the dependent or dependents to whom such
entitlement is being transferred;
``(2) designate the number of months of such entitlement to
be transferred to each such dependent; and
``(3) specify the period for which the transfer shall be
effective for each dependent designated under paragraph (1).
``(f) Time for Transfer; Revocation and Modification.--(1)
Subject to the time limitation for use of entitlement under
section 16164 of this title, a member approved to transfer
entitlement to educational assistance under this section may
transfer such entitlement only while serving as a member of
the Armed Forces when the transfer is executed.
``(2)(A) A member transferring entitlement under this
section may modify or revoke at any time the transfer of any
unused portion of the entitlement so transferred.
``(B) The modification or revocation of the transfer of
entitlement under this paragraph shall be made by the
submittal of written notice of the action to both the
Secretary concerned and the Secretary of Veterans Affairs.
``(g) Commencement of Use.--A dependent to whom entitlement
to educational assistance as transferred under this section
may not commence the use of the transferred entitlement
until--
``(1) in the case of entitlement transferred to a spouse,
the completion by the member making the transfer of the years
of service in the Armed Forces applicable to the member under
subsection (b); or
``(2) in the case of entitlement transferred to a child,
both--
``(A) the completion by the member making the transfer of
the years of service in the Armed Forces applicable to the
member under subsection; and
``(B) either--
``(i) the completion by the child of the requirements of a
secondary school diploma (or equivalency certificate); or
``(ii) the attainment by the child of 18 years of age.
``(h) Additional Administrative Matters.--(1) The use of
any entitlement to educational assistance transferred under
this section shall be charged against the entitlement of the
member making the transfer at the rate of one month for each
month of transferred entitlement that is used.
``(2) Except as provided under subsection (e)(2) and
subject to paragraphs (5) and (6), a dependent to whom
entitlement is transferred under this section is entitled to
educational assistance under this chapter in the same manner
as the member from whom the entitlement was transferred.
``(3) The monthly rate of educational assistance payable to
a dependent to whom entitlement is transferred under this
section shall be the monthly amount payable to the member
making the transfer under section 16162 or 16162a of this
title, as applicable.
``(4) The death of a member transferring an entitlement
under this section shall not affect the use of the
entitlement by the dependent to whom the entitlement is
transferred.
``(5) A child to whom entitlement is transferred under this
section may not use any entitlement so transferred after
attaining the age of 26 years.
``(6) The purposes for which a dependent to whom
entitlement is transferred under this section may use such
entitlement shall include the pursuit and completion of the
requirements of a secondary school diploma (or equivalency
certificate).
``(7) The administrative provisions of this chapter shall
apply to the use of entitlement transferred under this
section, except that the dependent to whom the entitlement is
transferred shall be treated as the eligible member for
purposes of such provisions.
``(i) Overpayment.--In the event of an overpayment of
educational assistance with respect to a dependent to whom
entitlement is transferred under this section, the dependent
and the member making the transfer shall be jointly and
severally liable to the United States for the amount of the
overpayment for purposes of section 3685 of title 38.
``(j) Approvals of Transfer Subject to Availability of
Appropriations.--The Secretary concerned may approve
transfers of entitlement to educational assistance under this
section in a fiscal year only to the extent that
appropriations for military personnel are available in that
fiscal year for purposes of making deposits in the Department
of Defense Education Benefits Fund under section 2006 of this
title in that fiscal year to cover the present value of
future benefits payable from the Fund for the Department of
Defense portion of payments of educational assistance
attributable to increased usage of benefits as result of such
transfers of entitlement in that fiscal year.
``(k) Regulations.--The Secretary of Defense shall, in
consultation with the Secretary of Veterans Affairs,
prescribe regulations for purposes of this section. Such
regulations shall specify the following:
``(1) The circumstances under which the Secretaries
concerned may permit and approve transfers of entitlement
under this section.
``(2) Such requirements for eligibility for transfer of
entitlement under this section as the Secretary of Defense
considers appropriate for purposes of subsection (b)(2).
``(3) The manner and effect of an election to modify or
revoke a transfer of entitlement under subsection (f)(2).''.
(B) Clerical amendment.--The table of sections at the
beginning of chapter 1607 of such title is amended by
inserting after the item relating to section 16162a the
following new item:

``16162b. Transfer of entitlement to educational assistance.''.
(3) Funding under department of defense education benefits
fund.--Section 2006(b)(2)(D) of title 10, United States Code,
is amended by inserting before the period at the end the
following: ``, including payments attributable to increased
usage of benefits as a result of transfers of entitlement to
educational assistance under sections 16131b and 16162b of
this title''.
(c) Effective Date.--The amendments made by this subsection
shall take effect on October 1, 2009.

SEC. 109. USE OF EDUCATIONAL ASSISTANCE TO REPAY FEDERAL
STUDENT LOANS.

(a) Use of Educational Assistance To Repay Federal Student
Loans.--
(1) In general.--Subchapter II of chapter 30 of title 38,
United States Code, as amended by section 104(a) of this Act,
is further amended by inserting after section 3020A the
following new section:

``Sec. 3020B. Use of basic educational assistance benefits
for repayment of Federal student loans

``(a) In General.--An individual entitled to basic
educational assistance under this subchapter who is serving
on active duty in the Armed Forces may elect to apply

[[Page S4191]]

amounts of basic educational assistance otherwise available
to the individual under this subchapter to repay all or a
portion of the outstanding principal and interest on any
Federal student loan owed by the individual for the
individual's pursuit of a course of education.
``(b) Designation of Loans and Amounts Payable.--An
individual electing under this section to apply amounts of
basic educational assistance to the payment of the
outstanding principal and interest on Federal student loans
shall designate (in such form and manner as the Secretary
shall prescribe for purposes of this section) the following:
``(1) Each Federal student loan of the individual for which
payment shall be made under this section.
``(2) For each Federal student loan designated under
paragraph (1), the monthly amount to be paid under this
section.
``(c) Limitation on Amount of Payments.--(1) The monthly
amount payable with respect to an individual under this
section may not exceed the monthly rate of basic educational
assistance to which the individual is otherwise entitled
under this subchapter at the time of payment of such monthly
amount.
``(2) The aggregate amount of basic educational assistance
payable with respect to an individual under this section for
any 12-month period may not exceed $6,000.
``(d) Frequency of Payments.--Payment of amounts of
principal and interest on Federal student loans of an
individual under this section shall be made on a monthly
basis.
``(e) Cessation of Payments.--Payments made under this
section with respect to an individual shall cease if the
individual ceases serving on active duty in the Armed Forces,
effective as of the first month that begins after the date on
which the individual ceases serving on active duty in the
Armed Forces.
``(f) Charge Against Entitlement.--The period of
entitlement to basic educational assistance under this
subchapter of an individual for whom payments are made under
this section shall be charged at the rate of one month for
each payment or aggregate of payments under this section that
are equivalent in amount to the monthly rate of basic
educational assistance to which the individual is otherwise
entitled under this subchapter.
``(g) Regulations.--The Secretary shall prescribe such
regulations as the Secretary considers appropriate for
purposes of the administration of this section.
``(h) Federal Student Loan Defined.--In this section, the
term `Federal student loan' means any loan made under title
IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et
seq.).''.
(2) Clerical amendment.--The table of sections of
subchapter II of chapter 30 of such title, as so amended, is
further amended by inserting after the item relating to
section 3020A the following new item:

``3020B. Use of basic educational assistance benefits for repayment of
Federal student loans.''.
(b) Effective Date.--Section 3020B of title 38, United
States Code, as added by subsection (a), shall apply with
respect to educational assistance payable for months that
begin on or after the date that is one year after the date of
the enactment of this Act.

SEC. 110. EDUCATIONAL ASSISTANCE FOR GRADUATES OF THE SERVICE
ACADEMIES AND RESERVE OFFICERS' TRAINING CORPS
PROGRAMS.

(a) Active Duty Program.--
(1) In general.--Subsection (a)(1) of section 3011 of title
38, United States Code, is amended--
(A) in subparagraph (B), by striking ``or'' at the end;
(B) in subparagraph (C), by adding ``or'' at the end; and
(C) by adding at the end the following new subparagraph:
``(D) after September 30, 2009--
``(i) receives or has received a commission as an officer
in the Armed Forces--

``(I) upon graduation from the United States Military
Academy, the United States Naval Academy, the United States
Air Force Academy, or the Coast Guard Academy; or
``(II) upon completion of a Senior Reserve Officers'
Training Corps program under chapter 103 of title 10; and

``(ii) completes at least five years of continuous active
duty in the Armed Forces (excluding any period of obligated
service in connection with receipt of a commission as an
officer in the Armed Forces under clause (i) and excluding
any other period of obligated service in connection with
education, training, or instruction provided or funded,
whether in whole or in part, by the United States);''.
(2) Conforming amendments.--Such section is further
amended--
(A) in subsection (b), by striking ``subsection (c)(1)''
and inserting ``subsection (c)'';
(B) in subsection (c)--
(i) by striking ``(1)'' after ``(c)''; and
(ii) by striking paragraphs (2) and (3); and
(C) in subsection (e)(1), by striking ``subsection (c)(1)''
and inserting ``subsection (c)''.
(b) Selected Reserve Program.--
(1) In general.--Subsection (a)(1) of section 3012 of such
title is amended--
(A) in subparagraph (B), by striking ``or'' at the end;
(B) in subparagraph (C), by adding ``or'' at the end; and
(C) by adding at the end the following new subparagraph:
``(D) after September 30, 2009--
``(i) receives or has received a commission as an officer
in the Armed Forces--

``(I) upon graduation from the United States Military
Academy, the United States Naval Academy, the United States
Air Force Academy, or the Coast Guard Academy; or
``(II) upon completion of a Senior Reserve Officers'
Training Corps program under chapter 103 of title 10; and

``(ii) completes at least five years of continuous active
duty in the Armed Forces (excluding any period of obligated
service in connection with receipt of a commission as an
officer in the Armed Forces under clause (i) and excluding
any other period of obligated service in connection with
education, training, or instruction provided or funded,
whether in whole or in part, by the United States);''.
(2) Conforming amendments.--Such section is further
amended--
(A) in subsection (c), by striking ``subsection (d)(1)''
and inserting ``subsection (d)'';
(B) in subsection (d)--
(i) by striking ``(1)'' after ``(d)''; and
(ii) by striking paragraphs (2) and (3); and
(C) in subsection (f)(1), by striking ``subsection (d)(1)''
and inserting ``subsection (d)''.
(c) Amount of Basic Educational Assistance.--Section
3015(c) of such title is amended--
(1) in paragraph (1), by striking ``paragraph (2)'' and
inserting ``paragraphs (2) and (3)''; and
(2) by adding at the end the following new paragraph:
``(3) Paragraph (1) of this subsection also applies to the
following:
``(A) An individual entitled to an educational assistance
allowance under section 3011 of this title by reason of
subsection (a)(1)(D) of such section.
``(B) An individual entitled to an educational assistance
allowance under section 3012 of this title by reason of
subsection (a)(1)(D) of such section.''.
(d) Effective Date.--The amendments made by this section
shall take effect on October 1, 2009.

SEC. 111. OPPORTUNITY FOR CURRENT AND CERTAIN RETIRED VEAP-
ERA PERSONNEL TO ENROLL IN BASIC EDUCATIONAL
ASSISTANCE UNDER THE MONTGOMERY GI BILL.

(a) Opportunity for Current and Certain Retired VEAP-Era
Personnel to Enroll.--
(1) In general.--Chapter 30 of title 38, United States
Code, is amended by inserting after section 3018C the
following new section:

``Sec. 3018D. Opportunity for current and certain retired
VEAP-era personnel to enroll

``(a) In General.--An individual described in subsection
(b) who makes an election described in paragraph (5) of such
subsection is entitled to basic educational assistance under
this chapter, subject to the provisions of subsection (d).
``(b) Covered Individuals.--An individual described in this
subsection is an individual who meets each of the following
requirements:
``(1) The individual first became a member of the Armed
Forces or first entered on active duty as a member of the
Armed Forces on or after January 1, 1977, but before July 1,
1985.
``(2) The individual, as of the date of the individual's
election under paragraph (5)--
``(A) is serving on active duty without a break in service
(other than as described in section 3202(1)(C) of this title)
since the date the individual first became such a member or
first entered on active duty as such a member; or
``(B) is retired from the Armed Forces after serving at
least 20 years on active duty in the Armed Forces, which
service included service on active duty in the Armed Forces
on or after September 11, 2001, and elected not to
participate in the program of educational assistance under
chapter 32 of this title.
``(3) The individual, before applying for benefits under
this section, has completed the requirements of a secondary
school diploma (or equivalency certificate) or has
successfully completed the equivalent of 12 semester hours in
a program of education leading to a standard college degree,
but has not completed the requirements for nor been awarded a
bachelor's degree.
``(4) The individual--
``(A) in the case of an individual described by paragraph
(2)(A), is discharged with an honorable discharge or released
with service characterized as honorable by the Secretary
concerned; or
``(B) in the case of an individual described by paragraph
(2)(B), was discharged with an honorable discharge or
released with service characterized as honorable by the
Secretary concerned.
``(5) During the one-year period beginning on October 1,
2009, the individual makes an irrevocable election to receive
benefits under this section pursuant to procedures which the
Secretary of each military department shall provide in
accordance with regulations prescribed by the Secretary of
Defense for the purpose of carrying out this section or which
the Secretary of Transportation shall provide for such
purpose with respect to the Coast Guard when it is not
operating as a service in the Navy.
``(c) Reduction of Pay; Collection and Payment of
Amounts.--(1) In the case of an individual described by
subsection (b) who

[[Page S4192]]

makes an election under this section to become entitled to
basic educational assistance under this chapter--
``(A) the basic pay or retired or retainer pay, as
applicable, of the individual shall be reduced (in a manner
determined by the Secretary concerned) until the total amount
by which such pay is reduced is $2,700; or
``(B) to the extent that the basic pay of the individual is
not so reduced before the individual's discharge or release
from active duty as described in subsection (d)(4)(A), the
Secretary concerned shall collect from the individual an
amount equal to the difference between $2,700 and the total
amount of reductions with respect to the individual under
subparagraph (A).
``(2) An individual covered by paragraph (1) may at any
time pay the Secretary concerned an amount equal to the
difference between the total of the reductions otherwise
required with respect to the individual under that paragraph
and the total amount of the reductions with respect to the
individual under that paragraph at the time of the payment.
``(3) Any amounts collected under paragraph (1)(B) or paid
under paragraph (2) shall be paid into the Treasury as
miscellaneous receipts.
``(4) The total amount of reductions in pay, or of
collections or payments, required with respect to an
individual under paragraph (1) shall be achieved not later
than 12 months after the date on which the individual makes
an election under subsection (b)(5).
``(5) No amount of educational assistance allowance under
this chapter shall be paid to an individual covered by
paragraph (1) until the date on which the total amount of
reductions in pay, or of collections or payments, required
with respect to the individual under paragraph (1) is
achieved.
``(d) Limitations on Basic Educational Assistance.--(1) The
basic educational assistance allowance payable under this
chapter to an individual entitled to such educational
assistance allowance under this section shall be payable at
the monthly rate of basic educational assistance payable
under section 3015(a)(1)(B) of this title.
``(2) Basic educational assistance under this section shall
be available only for pursuit of a non-degree vocational
training program, an associate degree, or a bachelor's
degree, but shall not be available for pursuit of a masters
degree or other advanced college degree.
``(3) An individual entitled under this section to basic
educational assistance under this chapter is entitled to the
educational stipend provided under section 3020A of this
title.
``(4)(A) Entitlement under this section to basic
educational assistance under this chapter is not
transferrable under the provisions of section 3020 of this
title.
``(B) An individual entitled under this section to basic
educational assistance under this chapter is not eligible for
the following:
``(i) The use of basic educational assistance benefits
under this chapter for the repayment of Federal student loans
under section 3020B of this title.
``(ii) Supplemental educational assistance authorized by
subchapter III of this chapter.
``(5)(A) Except as provided in subparagraph (B), the
provisions of section 3031 of this title shall apply to the
use of entitlement under this section to basic educational
assistance under this chapter.
``(B) In the case of an individual entitled under this
section to basic educational assistance under this chapter
who is described by subsection (b)(2)(B), the period during
which the individual may use such entitlement expires on
October 1, 2019.
``(e) Outreach.--The Secretary shall, in coordination with
the Secretary of Defense, provide for notice of the
opportunity under this section to elect to become entitled to
basic educational assistance under this chapter.''.
(2) Clerical amendment.--The table of sections at the
beginning of chapter 30 of such title is amended by inserting
after the item relating to section 3018C the following new
item:

``3018D. Opportunity for current and certain retired VEAP-era personnel
to enroll.''.
(b) Conforming Amendments.--Section 3017(b)(1) of such
title is amended--
(1) in subparagraphs (A) and (C), by striking ``or
3018C(e)'' and inserting ``3018C(e), or 3018D(c)''; and
(2) in subparagraph (B), by striking ``or 3018C(e) of this
title'' after ``section 3018C(e), or 3018D(c) of this title
or paid by the individual under section 3018D(c) of this
title''.

SEC. 112. COLLEGE PATRIOTS GRANT PROGRAM.

(a) Program Authorized.--
(1) In general.--Chapter 36 of title 38, United States
Code, is amended by adding at the end the following new
subchapter:

``SUBCHAPTER IV--COLLEGE PATRIOTS GRANTS

``Sec. 3699A. College Patriots Grant Program

``(a) Purpose.--It is the purpose of this section to
provide, through a partnership with the Department and
institutions of higher education, supplemental educational
grants to assist in making available the benefits of
postsecondary education to qualified veterans by meeting such
veterans' unmet financial need.
``(b) Establishment of Program.--The Secretary shall carry
out a supplemental educational grant program under which--
``(1) an institution of higher education participating in
the program voluntarily provides a covered individual
enrolled in the institution with the non-Federal share of a
percentage of the covered individual's unmet financial need
determined in accordance with subsection (e); and
``(2) the Secretary provides the Federal share of a
percentage of the covered individual's unmet financial need
determined in accordance with subsection (e).
``(c) Designation of Program.--The program under this
section shall be known as the `College Patriots Grant
Program'.
``(d) Institutional Eligibility Criteria.--Assistance may
be made available under this section only to an institution
of higher education that satisfies any criteria specified by
the Secretary. Such criteria shall include an agreement or
other appropriate assurance from the institution of higher
education that--
``(1) the non-Federal share of a covered individual's unmet
financial need awarded under this section shall be provided
from non-Federal resources, including--
``(A) institutional grants and scholarships;
``(B) tuition or fee waivers;
``(C) State scholarships; and
``(D) foundation or other charitable organization funds;
and
``(2) funds made available under this section shall be
provided to a covered individual for whom the institution of
higher education has made a determination that the covered
individual has an unmet financial need, which determination
shall be made before including Federal student loans under
title IV of the Higher Education Act of 1965 in the covered
individual's financial aid package.
``(e) Federal Share; Non-Federal Share.--
``(1) In general.--The Secretary shall not approve an
institution of higher education for participation in the
College Patriots Grant Program unless the institution of
higher education has provided, in the manner required by the
Secretary, the following:
``(A) An agreement or other assurance that the institution
of higher education will provide the non-Federal share in
accordance with this subsection.
``(B) Information on the specific methods by which the non-
Federal share shall be paid.
``(C) An acknowledgment that the non-Federal share provided
under this subsection shall supplement and not supplant other
Federal and non-Federal funds.
``(2) Federal and non-federal shares.--Each institution of
higher education participating in the program under this
section shall select one of the three contribution percentage
tiers described in paragraph (3) for purposes of meeting a
percentage of the unmet financial needs of covered
individuals enrolled in the institution.
``(3) Percentage contribution tiers.--
``(A) 25 percent tier.--In the case of a covered individual
enrolled in the institution who has an unmet financial need
that is--
``(i) less than $8,000, the non-Federal share shall be 12.5
percent of the unmet financial need and the Federal share
shall be 12.5 percent of the unmet financial need, except
that the Federal share shall not exceed $1,000; and
``(ii) equal to or greater than $8,000, the Federal share
shall be $1,000 and the non-Federal share shall be 25 percent
of the covered individual's unmet financial need minus
$1,000.
``(B) 50 percent tier.--In the case of a covered individual
enrolled in the institution who has an unmet financial need
that is--
``(i) less than $8,000, the non-Federal share shall be 25
percent of the unmet financial need and the Federal share
shall be 25 percent of the unmet financial need, except that
the Federal share shall not exceed $2,000; and
``(ii) equal to or greater than $8,000, the Federal share
shall be $2,000 and the non-Federal share shall be 50 percent
of the covered individual's unmet financial need minus
$2,000.
``(C) 100 percent tier.--In the case of a covered
individual enrolled in the institution who has an unmet
financial need that is--
``(i) less than $6,000, the non-Federal share shall be 50
percent of the unmet financial need and the Federal share
shall be 50 percent of the unmet financial need, except that
the Federal share shall not exceed $3,000; and
``(ii) equal to or greater than $6,000, the Federal share
shall be $3,000 and the non-Federal share shall be 100
percent of the covered individual's unmet financial need
minus $3,000.
``(f) Regulations.--The Secretary shall prescribe
regulations necessary to implement and administer the College
Patriots Grant Program, including regulations establishing
the procedures for determining eligibility for the program,
applying for supplemental educational grants under the
program, and distributing the Federal share provided by the
Secretary under the program.
``(g) Outreach.--The Secretary of Veterans Affairs, in
coordination with the Secretary of Defense and the Secretary
of Education, shall--
``(1) make available to the public on the Internet website
of the Department--
``(A) a current list of institutions of higher education
participating in the College Patriots Grant Program; and
``(B) information on the extent of participation of each
institution of higher education participating in the College
Patriots Grant Program;
``(2) make available to the public on the Internet website
of the Department information about all Federal and State
education benefits that members of the regular components of
the Armed Forces, members of the

[[Page S4193]]

reserve components of the Armed Forces, veterans, and their
dependents may be eligible to receive; and
``(3) make available to institutions of higher education
information about the College Patriots Grant Program and take
appropriate actions to encourage broad participation of
institutions of higher education in the program.
``(h) Awards for Institutional Recognition.--The Secretary
may establish and administer an awards program to recognize
the extent of an institution of higher education's
participation in the College Patriots Grant Program.
``(i) Definitions.--In this section:
``(1) Cost of attendance.--The term `cost of attendance'
has the meaning given the term in section 472 of the Higher
Education Act of 1965 (20 U.S.C. 1087ll).
``(2) Covered individual.--The term `covered individual'
means an individual who--
``(A) is enrolled in an institution of higher education
that is participating in the College Patriots Grant Program;
``(B) has such amount of remaining entitlement to
educational assistance under chapter 30 or 32 of this title,
or under chapter 1606 or 1607 of title 10, as the Secretary
may require for purposes of this section; and
``(C) after receipt of any of the educational assistance
described in subparagraph (B), has an unmet financial need to
attend the institution of higher education for which a
supplemental educational grant is sought.
``(3) Institution of higher education.--The term
`institution of higher education' has the meaning given the
term in section 102 of the Higher Education Act of 1965 (20
U.S.C. 1002).
``(4) Unmet financial need.--The term `unmet financial
need' means, with respect to a covered individual, the cost
of attendance for the covered individual to attend an
institution of higher education participating in the College
Patriots Grant Program, minus the sum of--
``(A) grant and work assistance received by the covered
individual under title IV of the Higher Education Act of 1965
(20 U.S.C. 1070 et seq.); and
``(B) any educational assistance payments received by the
covered individual through any programs administered by the
Department of Veterans Affairs or the Department of
Defense.''.
(2) Clerical amendment.--The table of sections at the
beginning of chapter 36 of such title is amended by adding at
the end the following new items:

``subchapter iv--college patriots grants

``3699A. College Patriots Grant Program.''.

(b) Effective Date.--The amendments made by this section
shall take effect one year after the date of the enactment of
this Act, and shall apply to terms, quarters, or semesters
beginning on or after that date.

SEC. 113. TERMINATION OF CONTRIBUTIONS BY MEMBERS OF THE
ARMED FORCES FOR PARTICIPATION IN THE
MONTGOMERY GI BILL PROGRAM.

(a) Active Duty Program.--Notwithstanding subsection (b) of
section 3011 of title 38, United States Code, no reduction in
basic pay otherwise required by such section shall be made in
the case of a member of the Armed Forces who first enters on
active duty on or after the date of the enactment of this Act
and elects to receive basic educational assistance under such
section.
(b) Selected Reserve Program.--Notwithstanding subsection
(c) of section 3012 of such title, no reduction in basic pay
otherwise required by such section shall be made in the case
of a member of the Armed Forces who first becomes eligible
for basic educational assistance under such section on or
after the date of the enactment of this Act and elects to
receive basic educational assistance under such section.

SEC. 114. MODIFICATION OF SERVICE REQUIREMENT FOR EDUCATIONAL
ASSISTANCE FOR RESERVE COMPONENT MEMBERS
SUPPORTING CONTINGENCY OPERATIONS AND OTHER
OPERATIONS WITH EXTENDED SERVICE IN THE
SELECTED RESERVE.

(a) In General.--Section 16162(c)(4) of title 10, United
States Code, is amended by striking subparagraphs (A) through
(C) and inserting the following new subparagraphs:
``(A) 40 percent in the case of a member of a reserve
component who performed active service for--
``(i) 90 consecutive days but less than one continuous
year; or
``(ii) an aggregate of one year but less than two years,
none of which was continuous service of one year or more;
``(B) 60 percent in the case of a member of a reserve
component who performed active service for--
``(i) one continuous year but less than two continuous
years; or
``(ii) an aggregate of two years but less than three years,
none of which was continuous service of two years or more; or
``(C) 80 percent in the case of a member of a reserve
component who performed active service for--
``(i) two continuous years or more; or
``(ii) an aggregate of three years or more.''.
(b) Effective Date.--The amendment made by subsection (a)
shall take effect on October 1, 2008, and shall apply with
respect to educational assistance payable for months
beginning on or after that date.

SEC. 115. MODIFICATION OF FORMULA FOR DETERMINATION OF ANNUAL
COST ADJUSTMENT IN RATES OF EDUCATIONAL
ASSISTANCE.

(a) Active Duty Program.--Section 3015(h) of title 38,
United States Code, is amended--
(1) in paragraph (1)--
(A) by striking ``With respect to any fiscal year'' and
inserting ``Subject to paragraphs (2) and (3), with respect
to any fiscal year''; and
(B) by striking ``the percentage by which--'' and all that
follows through the end of the paragraph and inserting ``the
percentage increase in the average cost of tuition, fees,
room, and board at public four-year institutions of higher
education (as determined by the Secretary in consultation
with the Secretary of Education and Secretary of Defense)
over the one-year period ending on the June 30 preceding the
beginning of the fiscal year for which the increase is
made.'';
(2) by redesignating paragraph (2) as paragraph (3); and
(3) by inserting after paragraph (1) the following new
paragraph (2):
``(2) With respect to any fiscal year, in no event shall
the increase in rates under paragraph (1) be less than a
percentage increase equal to the percentage by which--
``(A) the Consumer Price Index (all items, United States
city average) for the 12-month period ending on the June 30
preceding the beginning of the fiscal year for which the
increase is made, exceeds
``(B) such Consumer Price Index for the 12-month period
preceding that 12-month period.''.
(b) Selected Reserve Program.--Section 16131(b)(2) of title
10, United States Code, is amended--
(1) by striking ``With respect to any fiscal year'' and
inserting ``(A) Subject to subparagraph (B), with respect to
any fiscal year'';
(2) by striking ``the percentage by which--'' and all that
follows and inserting ``the percentage increase in the
average cost of tuition, fees, room, and board at public
four-year institutions of higher education (as determined by
the Secretary of Veterans Affairs in consultation with the
Secretary of Education and Secretary of Defense) over the
one-year period ending on the June 30 preceding the beginning
of the fiscal year for which the increase is made.''; and
(3) by adding at the end the following new subparagraph:
``(B) With respect to any fiscal year, in no event shall
the increase in rates under subparagraph (A) be less than a
percentage increase equal to the percentage by which--
``(i) the Consumer Price Index (all items, United States
city average) for the 12-month period ending on the June 30
preceding the beginning of the fiscal year for which the
increase is made, exceeds
``(ii) such Consumer Price Index for the 12-month period
preceding that 12-month period.''.
(c) Effective Date.--The amendments made by this section
shall take effect on October 1, 2009, and shall apply with
respect to fiscal years that begin on or after that date.
______