To amend title 10, United States Code, to establish a program of interest-free loans to members of the Selected Reserve who experience financial hardship due to service on active duty in the Armed Forces.

Summary: Support for Military Reserve Families Act of 2004 - Directs the Secretary of Defense to establish, for members of the Ready Reserve (including the Coast Guard Reserve), a loan program to be known as the Ready Reserve Mobilization Loan Program. Directs the Secretary, upon application, to make a Program loan to a Ready Reserve member who has one or more dependents enrolled in the Department of Defense Enrollment Eligibility Reporting System for any period during which the member performs active duty under an involuntary call or order to active duty in support of a contingency operation if: (1) the income of the member during such service is less than the member's income before being called or ordered to such service; and (2) the member incurs a financial hardship by reason of such service. Prohibits such loans from being used for investment purposes.

Allows loan amounts of up to $500 for each full month of covered service. Makes such loans interest-free for: (1) five years after the end of such service, if the service is for less than 12 consecutive months; or (2) ten years after the end of such service, if the service is for 12 consecutive months or more. Mandates a five percent interest rate thereafter. Requires such loans to be repaid within the same period as the interest-free period, above.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Support for Military Reserve 
Families Act of 2004''.

SEC. 2. LOAN PROGRAM FOR MEMBERS OF THE SELECTED RESERVE.

    (a) In General.--Part II of subtitle E of title 10, United States 
Code, is amended by inserting after chapter 1215 the following new 
chapter:

        ``CHAPTER 1216--READY RESERVE MOBILIZATION LOAN PROGRAM

``12591. Definitions.
``12592. Establishment of loan program.
``12593. Members eligible for loans.
``12594. Loan amounts.
``12595. Interest.
``12596. Payment.
``Sec. 12591. Definitions
    ``In this chapter:
            ``(1) The term `eligible member' means a member of the 
        Ready Reserve who has one or more dependents enrolled in the 
        Department of Defense program Defense Enrollment Eligibility 
        Reporting System (DEERS).
            ``(2) The term `covered service' means active duty 
        performed by a member of a reserve component under an 
        involuntary call or order to active duty in support of a 
        contingency operation.
``Sec. 12592. Establishment of loan program
    ``(a) Establishment.--The Secretary of Defense shall establish for 
members of the Ready Reserve (including the Coast Guard Reserve) a loan 
program to be known as the `Ready Reserve Mobilization Loan Program'.
    ``(b) Administration.--The loan program shall be administered by 
the Secretary under such regulations as the Secretary considers 
appropriate for carrying out the program.
    ``(c) Agreement With Secretary of Homeland Security.--The Secretary 
and the Secretary of Homeland Security shall enter into an agreement 
with respect to the administration of the program for the Coast Guard 
Reserve.
``Sec. 12593. Members eligible for loans
    ``(a) In General.--The Secretary of Defense shall make a loan under 
the program under this chapter to an eligible member, upon receipt of 
an application for such loan from such member, for any period during 
which the member performs covered service if, as determined by the 
Secretary--
            ``(1) the income of the member during such service is less 
        than the member's income before being called or ordered to such 
        service; and
            ``(2) the member incurs a financial hardship by reason of 
        such service.
    ``(b) Determination of Income.--The Secretary shall make a 
determination under paragraph (1) of subsection (a) by comparing--
            ``(1) the member's regular military compensation (as 
        defined in section 101 of title 37), stated as an annualized 
        amount; with
            ``(2) the amount of income of the member over the 52 weeks 
        preceding the beginning of such service derived from sources 
        that will not be available to the member while performing such 
        service.
    ``(c) Use of Loan Amounts.--The Secretary shall take such steps as 
the Secretary considers necessary to ensure that a loan under the 
program is not used for investment purposes (other than deposit in a 
demand account).
``Sec. 12594. Loan amounts
    ``(a) Amount of Loan.--The amount of a loan to an eligible member 
under this chapter may be in any amount specified by the eligible 
member up to $500 for each full month of covered service performed by 
the member.
    ``(b) Disbursement of Loan Amount.--The Secretary of Defense shall 
disburse a loan under the program under this chapter in such manner as 
may be directed by the member taking out the loan. The Secretary shall 
provide means to assist the member in facilitating the making of the 
amount of such loan available for the use or benefit of dependents of 
the member. A member may designate in writing another person to receive 
the amount of a loan under the program, and the member may direct that 
such an amount for a person so designated be deposited with a bank or 
other financial institution to the credit of the designated person.
``Sec. 12595. Interest
    ``(a) Interest Free Period.--Except as provided in subsection 
(b)(2), a loan under this chapter for any month of covered service 
shall bear no interest for the period beginning on the date of the loan 
and ending at the end of--
            ``(1) five years from the end of the period of covered 
        service including that month, if that period of covered service 
        is a period of less than 12 consecutive months; and
            ``(2) ten years from the end of the period of covered 
        service including that month, if that period of covered service 
        is a period of 12 consecutive months or more.
    ``(b) 5 Percent Interest.--A loan under this chapter shall bear 
interest at the rate of 5 percent per year commencing to accrue--
            ``(1) as of the date that is the end of the interest-free 
        period specified in subsection (a); or
            ``(2) if the service of the member in the Selected Reserve 
        ends before the date referred to in paragraph (1), as of the 
        date such service in the Selected Reserve ends.
``Sec. 12596. Payment
    ``(a) Period of Payment.--(1) Repayment of a loan under this 
chapter shall commence when the member to whom the loan is made is 
released from the period of active duty that includes the covered 
service for which the loan is made. Unless the member enters into an 
alternative repayment agreement with the Secretary, the loan shall be 
repaid over the period beginning on the date of the loan and ending at 
the end of--
            ``(1) five years, if the period of covered service is a 
        period of less than 12 consecutive months; and
            ``(2) ten years, if that period of covered service is a 
        period of 12 consecutive months or more.
    ``(b) Method of Payment.--Unless the member enters into an 
alternative repayment agreement with the Secretary, payment on a loan 
under this chapter shall be by deduction from the amount of basic pay 
or inactive-duty pay earned by the member while in an active status but 
not on active duty (other than for training).''.
    (b) Clerical Amendment.--The tables of chapters at the beginning of 
subtitle E, and at the beginning of part II of subtitle E, of title 10, 
United States Code, are amended by inserting after the item relating to 
chapter 1215 the following new item:

``1216. Ready Reserve Mobilization Loan Program.............   12591''.