SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Montgomery GI Bill for the 21st 
Century Act''.

SEC. 2. EXCLUSION OF BASIC PAY CONTRIBUTIONS FOR PARTICIPATION IN BASIC 
              EDUCATIONAL ASSISTANCE IN CERTAIN COMPUTATIONS ON STUDENT 
              FINANCIAL AID.

    (a) Exclusion.--Subchapter II of chapter 30 of title 38, United 
States Code, is amended by adding at the end the following new section:
``Sec. 3020A. Exclusion of basic pay contributions in certain 
              computations on student financial aid
    ``(a) In General.--The expected family contribution computed under 
section 475, 476, or 477 of the Higher Education Act of 1965 (20 U.S.C. 
1087oo, 1087pp, 1087qq) for a covered student shall be decreased by 
$1,200 for the applicable year.
    ``(b) Definitions.--In this section:
            ``(1) The term `academic year' has the meaning given the 
        term in section 481(a)(2) of the Higher Education Act of 1965 
        (20 U.S.C. 1088(a)(2)).
            ``(2) The term `applicable year' means the first academic 
        year for which a student uses entitlement to basic educational 
        assistance under this chapter.
            ``(3) The term `covered student' means any individual 
        entitled to basic educational assistance under this chapter 
        whose basic pay or voluntary separation incentives was or were 
        subject to reduction under section 3011(b), 3012(c), 3018(c), 
        3018A(b), or 3018B(b) of this title.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by inserting after the item relating to section 
3020 the following new item:

``3020A. Exclusion of basic pay contributions in certain computations 
                            on student financial aid.''.

SEC. 3. OPPORTUNITY FOR ENROLLMENT IN BASIC EDUCATIONAL ASSISTANCE 
              PROGRAM OF CERTAIN INDIVIDUALS WHO PARTICIPATED OR WERE 
              ELIGIBLE TO PARTICIPATE IN POST-VIETNAM ERA VETERANS 
              EDUCATIONAL ASSISTANCE PROGRAM.

    (a) Opportunity for Enrollment.--Section 3018C(e) of title 38, 
United States Code, is amended--
            (1) in paragraph (1), by inserting ``or (3)'' after 
        ``paragraph (2)'';
            (2) by redesignating paragraphs (3), (4), and (5) as 
        paragraphs (4), (5), and (6), respectively;
            (3) by inserting after paragraph (2) the following new 
        paragraph (3):
    ``(3) A qualified individual referred to in paragraph (1) is also 
an individual who meets each of the following requirements:
            ``(A) The individual is a participant in the educational 
        benefits program under chapter 32 of this title as of the date 
        of the enactment of the Montgomery GI Bill for the 21st Century 
        Act, or was eligible to participate in such program, but had 
        not participated in that program or any other educational 
        benefits program under this title, as of that date.
            ``(B) The individual meets the requirements of subsection 
        (a)(3).
            ``(C) The individual, when discharged or released from 
        active duty, is discharged or released therefrom with an 
        honorable discharge.'';
            (4) in paragraph (5), as so redesignated, by striking 
        ``paragraph (3)(A)(ii)'' and inserting ``paragraph 
        (4)(A)(ii)''; and
            (5) in paragraph (6), as so redesignated, by inserting ``, 
        or individuals eligible to participate in that program who have 
        not participated in that program or any other educational 
        benefits program under this title,'' after ``chapter 32 of this 
        title''.
    (b) Conforming and Clerical Amendments.--(1) The heading of such 
section is amended to read as follows:
``Sec. 3018C. Opportunity to enroll: certain VEAP participants; certain 
              individuals eligible for participation in VEAP''.
    (2) The table of sections at the beginning of chapter 30 of such 
title is amended by striking the item relating to section 3018C and 
inserting the following new item:

``3018C. Opportunity to enroll: certain VEAP participants; certain 
                            individuals eligible for participation in 
                            VEAP.''.

SEC. 4. COMMENCEMENT OF 10-YEAR DELIMITING PERIOD FOR VETERANS, 
              SURVIVORS, AND DEPENDENTS WHO ENROLL IN TRAINING PROGRAM.

    (a) Veterans.--Section 3031 of title 38, United States Code, is 
amended--
            (1) in subsection (a), by striking ``through (g), and 
        subject to subsection (h)'' and inserting ``through (h), and 
        subject to subsection (i)'';
            (2) by redesignating subsection (h) as subsection (i); and
            (3) by inserting after subsection (g) the following new 
        subsection (h):
    ``(h) In the case of an individual eligible for educational 
assistance under this chapter who, during the 10-year period described 
in subsection (a) of this section, enrolls in a program of training 
under this chapter, the period during which the individual may use the 
individual's entitlement to educational assistance under this chapter 
expires on the last day of the 10-year period beginning on the first 
day of the individual's pursuit of such program of training.''.
    (b) Eligible Children.--Subsection (a) of section 3512 of such 
title is amended--
            (1) in paragraph (6)(B), by striking ``and'' at the end;
            (2) in paragraph (7), by striking the period at the end and 
        inserting ``; and''; and
            (3) by adding at the end the following new paragraph:
            ``(8) if the person enrolls in a program of special 
        restorative training under subchapter V of this chapter, such 
        period shall begin on the first day of the person's pursuit of 
        such program of special restorative training.''.
    (c) Eligible Surviving Spouses.--Subsection (b) of such section is 
amended by adding at the end the following new paragraph:
    ``(3) Notwithstanding the provisions of paragraph (1) of this 
subsection, any eligible person (as defined in section 3501(a)(1)(B) or 
(D)(ii) of this title) who, during the 10-year period described in 
paragraph (1) of this subsection, enrolls in a program of special 
restorative training under subchapter V of this chapter may be afforded 
educational assistance under this chapter during the 10-year period 
beginning on the first day of the individual's pursuit of such program 
of special restorative training.''.

SEC. 5. AVAILABILITY OF EDUCATION BENEFITS FOR PAYMENT FOR NATIONAL 
              ADMISSIONS EXAMS AND NATIONAL EXAMS FOR CREDIT AT 
              INSTITUTIONS OF HIGHER EDUCATION.

    (a) Covered Exams.--Sections 3452(b) and 3501(a)(5) of title 38, 
United States Code, are each amended by adding at the end the following 
new sentence: ``Such term also includes national tests for admission to 
institutions of higher learning or graduate schools (such as the SAT, 
LSAT, GRE, and GMAT exams) and national tests providing an opportunity 
for course credit at institutions of higher learning (such as the AP 
exam).''.
    (b) Amount of Payment.--
            (1) Chapter 30.--Section 3032 of such title is amended by 
        adding at the end the following new subsection:
    ``(g)(1) Subject to paragraph (3), the amount of educational 
assistance payable under this chapter for a national test for admission 
or national test providing an opportunity for course credit at 
institutions of higher learning described in section 3452(b) of this 
title is the amount of the fee charged for the test.
    ``(2) The number of months of entitlement charged in the case of 
any individual for a test described in paragraph (1) is equal to the 
number (including any fraction) determined by dividing the total amount 
of educational assistance paid such individual for such test by the 
full-time monthly institutional rate of educational assistance, except 
for paragraph (1), such individual would otherwise be paid under 
subsection (a)(1), (b)(1), (d), or (e)(1) of section 3015 of this 
title, as the case may be.
    ``(3) In no event shall payment of educational assistance under 
this subsection for a test described in paragraph (1) exceed the amount 
of the individual's available entitlement under this chapter.''.
            (2) Chapter 32.--Section 3232 of such title is amended by 
        adding at the end the following new subsection:
    ``(d)(1) Subject to paragraph (3), the amount of educational 
assistance payable under this chapter for a national test for admission 
or national test providing an opportunity for course credit at 
institutions of higher learning described in section 3452(b) of this 
title is the amount of the fee charged for the test.
    ``(2) The number of months of entitlement charged in the case of 
any individual for a test described in paragraph (1) is equal to the 
number (including any fraction) determined by dividing the total amount 
of educational assistance paid such individual for such test by the 
full-time monthly institutional rate of educational assistance, except 
for paragraph (1), such individual would otherwise be paid under this 
chapter.
    ``(3) In no event shall payment of educational assistance under 
this subsection for a test described in paragraph (1) exceed the amount 
of the individual's available entitlement under this chapter.''.
            (3) Chapter 34.--Section 3482 of such title is amended by 
        adding at the end the following new subsection:
    ``(i)(1) Subject to paragraph (3), the amount of educational 
assistance payable under this chapter for a national test for admission 
or national test providing an opportunity for course credit at 
institutions of higher learning described in section 3452(b) of this 
title is the amount of the fee charged for the test.
    ``(2) The number of months of entitlement charged in the case of 
any individual for a test described in paragraph (1) is equal to the 
number (including any fraction) determined by dividing the total amount 
of educational assistance paid such individual for such test by the 
full-time monthly institutional rate of educational assistance, except 
for paragraph (1), such individual would otherwise be paid under this 
chapter.
    ``(3) In no event shall payment of educational assistance under 
this subsection for a test described in paragraph (1) exceed the amount 
of the individual's available entitlement under this chapter.''.
            (4) Chapter 35.--Section 3532 of such title is amended by 
        adding at the end the following new subsection:
    ``(g)(1) Subject to paragraph (3), the amount of educational 
assistance payable under this chapter for a national test for admission 
or national test providing an opportunity for course credit at 
institutions of higher learning described in section 3501(a)(5) of this 
title is the amount of the fee charged for the test.
    ``(2) The number of months of entitlement charged in the case of 
any individual for a test described in paragraph (1) is equal to the 
number (including any fraction) determined by dividing the total amount 
of educational assistance paid such individual for such test by the 
full-time monthly institutional rate of educational assistance, except 
for paragraph (1), such individual would otherwise be paid under this 
chapter.
    ``(3) In no event shall payment of educational assistance under 
this subsection for a test described in paragraph (1) exceed the amount 
of the individual's available entitlement under this chapter.''.

SEC. 6. INCREASE IN MAXIMUM AMOUNT OF HOME LOAN GUARANTY FOR 
              CONSTRUCTION AND PURCHASE OF HOMES AND ANNUAL INDEXING OF 
              AMOUNT.

    (a) Maximum Loan Guaranty Based on 100 Percent of Freddie Mac 
Conforming Loan Rate.--Section 3703(a)(1) of title 38, United States 
Code, is amended by striking ``$60,000'' each place it appears in 
subparagraphs (A)(i)(IV) and (B) and inserting ``the maximum guaranty 
amount (as defined in subparagraph (C))''.
    (b) Definition.--Such section is further amended by adding at the 
end the following new subparagraph:
    ``(C) In this paragraph, the term `maximum guaranty amount' means 
the dollar amount that is equal to 25 percent of the Freddie Mac 
conforming loan limit limitation determined under section 305(a)(2) of 
the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) 
for a single-family residence, as adjusted for the year involved.''.
Montgomery GI Bill for the 21st Century Act - Reduces, for purposes of certain student financial aid computations, the expected family contribution for individuals receiving educational assistance under the Montgomery GI Bill (MGIB) by an amount equal to the statutory reduction in basic pay or voluntary separation incentives for such individuals.

Authorizes enrollment in the MGIB basic educational assistance program by certain individuals who participated in or were eligible to participate in the post-Vietnam era veteran's educational assistance program.

Provides for commencement of the ten-year delimiting period for the receipt of certain training program benefits by veterans, survivors, and dependents upon commencement of such training.

Makes MGIB educational benefits available for payment of fees associated with national admissions exams and national exams for credit at institutions of higher education.

Increases the maximum loan guarantee amount for veterans seeking assistance under the Veterans Administration home loan guaranty program by indexing that amount to the Freddie Mac conforming loan limit, adjusted annually.
A bill to amend title 38, United States Code, to extend and enhance benefits under the Montgomery GI Bill, to improve housing benefits for veterans, and for other purposes.