To amend titles 10 and 38, United States Code, to improve educational benefits for members of the Selected Reserve, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``National Guard and Reserve Education 
Act of 2004''.

SEC. 2. INCREASE IN RATE OF EDUCATIONAL ASSISTANCE FOR MEMBERS OF THE 
              SELECTED RESERVE AS ADMINISTERED BY THE SECRETARY OF 
              VETERANS AFFAIRS.

    (a) Increase in Rate of Assistance.--Subsection (b)(1) of section 
16131 of title 10, United States Code, is amended--
            (1) in subparagraph (A), by striking ``$251'' and inserting 
        ``$400'';
            (2) by striking subparagraphs (B) and (C);
            (3) by redesignating subparagraph (D) as subparagraph (B); 
        and
            (4) in subparagraph (B), as so redesignated, by striking 
        ``for each month of less than half-time pursuit'' and inserting 
        ``for each month of less than full-time pursuit''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to months beginning after the date of the enactment 
of this Act.
    (c) No CPI Adjustment for Fiscal Year 2005.--Paragraph (2) of 
section 16131(b) of such title shall not apply to rates of basic 
educational assistance paid under such section during fiscal year 2005.

SEC. 3. PAYMENT OF EDUCATIONAL ASSISTANCE FOR MEMBERS OF THE SELECTED 
              RESERVE CALLED UP FOR SERVICE FOR CUMULATIVE PERIOD OF 
              180 DAYS OR MORE AT THE RATE APPLICABLE UNDER CHAPTER 30 
              OF TITLE 38, UNITED STATES CODE.

    (a) Increase.--Section 16131 of title 10, United States Code, is 
amended by adding at the end the following new subsection:
    ``(j)(1) In the case of a person described in paragraph (2), the 
rate payable under subsection (b) or subsection (c) to such person for 
such educational assistance for each month shall be paid at the rate 
applicable under section 3015(b) of title 38.
    ``(2) A person referred to in paragraph (1) is a person who is 
entitled to educational assistance under this chapter--
            ``(A) who, on or after September 11, 2001, serves a period 
        of active duty of at least 180 days of active duty pursuant to 
        an order to serve on active duty under section 12301(a), 
        12301(d), 12301(g), 12302, or 12304 of this title during a five 
        year period, or
            ``(B) in the case of a member of the Army National Guard of 
        the United States or Air National Guard of the United States, 
        who, on or after September 11, 2001, performed full time 
        National Guard duty under section 502(f) of title 32 for at 
        least 180 days during a five year period when authorized by the 
        President or Secretary of Defense for the purpose of responding 
        to a national emergency declared by the President and supported 
        by Federal funds.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
apply with respect to payments of educational assistance under chapter 
1606 of such title for months beginning after September 30, 2004.

SEC. 4. MODIFICATION OF DELIMITING DATE FOR USE OF ENTITLEMENT.

    (a) In General.--Section 16133 of title 10, United States Code, is 
amended--
            (1) in subsection (a), by striking ``subsection (b)'' and 
        inserting ``subsections (b) and (c)''; and
            (2) by adding at the end the following new subsection:
    ``(c) In the case of a person described in section 16131(j)(2) of 
this title, the period during which such person may use such person's 
entitlement to educational assistance under this chapter expires at the 
end of the 14-year period beginning on the date that is the last day of 
the person's last duty referred to in such section.''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on September 30, 2004, and shall apply to members of the 
Selected Reserve entitled to educational assistance under chapter 1606 
of title 10, United States Code, on or after that date.

SEC. 5. AUTHORITY FOR MEMBERS OF THE SELECTED RESERVE ENTITLED TO 
              RETIRED PAY TO TRANSFER ENTITLEMENT TO BASIC EDUCATIONAL 
              ASSISTANCE.

    (a) Establishment of Authority to Transfer Entitlement.--(1) 
Chapter 1606 of title 10, United States Code, is amended by adding at 
the end the following new section:
``Sec. 16138. Transfer of entitlement to basic educational assistance 
              by members of the Selected Reserve entitled to retired 
              pay
    ``(a) In General.--Subject to the provisions of this section, each 
Secretary concerned may permit an individual described in subsection 
(b) who is entitled to basic educational assistance under this chapter 
to elect to transfer to one or more of the dependents specified in 
subsection (c) a portion of such individual's entitlement to such 
assistance.
    ``(b) Eligible Individuals.--An individual referred to in 
subsection (a) is an individual who--
            ``(1) is entitled to retired pay under chapter 1223; and
            ``(2) is entitled to educational assistance under this 
        chapter.
    ``(c) Eligible Dependents.--An individual approved to transfer an 
entitlement to basic educational assistance under this section may 
transfer the individual's entitlement as follows:
            ``(1) To the individual's spouse.
            ``(2) To one or more of the individual's children.
            ``(3) To a combination of the individuals referred to in 
        paragraphs (1) and (2).
    ``(d) Designation of Transferee.--An individual transferring an 
entitlement to basic 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).
Each designation under this section shall be made in writing and shall 
be transmitted to the Secretary concerned and the Secretary of Veterans 
Affairs.
    ``(e) Time for Transfer; Revocation and Modification.--(1) Subject 
to the time limitation for use of entitlement under section 16133 of 
this title, an individual approved to transfer entitlement to basic 
educational assistance under this section may transfer such entitlement 
at any time after the approval of the individual's request to transfer 
such entitlement without regard to whether the individual is a member 
of the Armed Forces when the transfer is executed.
    ``(2)(A) An individual 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.
    ``(f) Commencement of Use.--In the case of entitlement transferred 
to a child to whom entitlement to basic educational assistance is 
transferred under this section, the child may not commence the use of 
the transferred entitlement until either--
            ``(1) the completion by the child of the requirements of a 
        secondary school diploma (or equivalency certificate); or
            ``(2) the attainment by the child of 18 years of age.
    ``(g) Additional Administrative Matters.--(1) The use of any 
entitlement to basic educational assistance transferred under this 
section shall be charged against the entitlement of the individual 
making the transfer at the rate of one month for each month of 
transferred entitlement that is used.
    ``(2) Except as provided under subsection (d)(2) and subject to 
paragraphs (4) and (5), a dependent to whom entitlement is transferred 
under this section is entitled to basic educational assistance under 
this chapter in the same manner and at the same rate as the individual 
from whom the entitlement was transferred.
    ``(3)(A) The death of an individual transferring an entitlement 
under this section shall not affect the use of the entitlement by the 
dependent to whom the entitlement is transferred.
    ``(B) Entitlement may only be transferred under this section before 
the date of death of the individual making the transfer.
    ``(4) A child to whom entitlement is transferred under this section 
may not use any entitlement so transferred after attaining the age of 
26 years.
    ``(5) The administrative provisions of chapter 30 of title 38 
(including the provisions set forth in section 3034(a)(1) of that 
title) 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 veteran for purposes of 
such provisions.
    ``(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).
    ``(h) Overpayment.--In the event of an overpayment of basic 
educational assistance with respect to a dependent to whom entitlement 
is transferred under this section, the dependent and the individual 
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.
    ``(i) Approvals of Transfer Subject to Availability of 
Appropriations.--The Secretary concerned may approve transfers of 
entitlement to basic 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 basic educational assistance 
attributable to increased usage of benefits as a result of such 
transfers of entitlement in that fiscal year.
    ``(j) Regulations.--After consultation with the Secretary of 
Veterans Affairs, the Secretary of Defense shall prescribe regulations 
for purposes of this section. Such regulations shall specify the manner 
and effect of an election to modify or revoke a transfer of entitlement 
under subsection (e)(2) and shall specify the manner of the 
applicability of the administrative provisions referred to in 
subsection (g)(5) to a dependent to whom entitlement is transferred 
under this section.
    ``(k) Annual Report.--(1) As part of the report required under 
section 3020(l) of title 38, (beginning in 2006), the Secretary of 
Defense shall include information on the transfers of entitlement to 
basic educational assistance under this section that were approved by 
each Secretary concerned during the preceding fiscal year.
    ``(2) Each report shall set forth--
            ``(A) the number of transfers of entitlement under this 
        section that were approved by such Secretary during the 
        preceding fiscal year; or
            ``(B) if no transfers of entitlement under this section 
        were approved by such Secretary during that fiscal year, a 
        justification for such Secretary's decision not to approve any 
        such transfers of entitlement during that fiscal year.''.
    (2) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by adding at the end the following new item:

``16138. Transfer of entitlement to basic educational assistance by 
                            members of the Selected Reserve entitled to 
                            retired pay.''.
    (b) Conforming Amendment.--Section 3020 of title 38, United States 
Code, is amended--
            (1) by redesignating subsection (m) as subsection (n); and
            (2) by inserting after subsection (l) the following new 
        subsection:
    ``(m) Coordination With Authority for Transfers Under the Reserve 
Montgomery GI Bill.--In carrying out this section and section 16138 of 
title 10, each Secretary concerned shall take such steps as may be 
necessary to ensure that a transfer of entitlement under each such 
section is made pursuant to the applicable requirements of such 
sections.''.

SEC. 7. REQUIREMENT FOR THE SECRETARY OF VETERANS AFFAIRS TO REPORT TO 
              CONGRESS ON TRANSFERS OF ENTITLEMENT BY MEMBERS OF THE 
              SELECTED RESERVE ENTITLED TO RETIRED PAY.

    (a) 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. Annual report on transfers of entitlement to basic 
              educational assistance by members of the Selected Reserve 
              entitled to retired pay
    ``(a) Inclusion in Annual Report.--As part of the annual report 
submitted to the Congress under section 529 of this title, the 
Secretary shall include a description of the operation of the program 
for transfer of entitlement to basic educational assistance by members 
of the selected reserve entitled to retired pay under section 16138 of 
title 10.
    ``(b) Specific Information Required.--The Secretary shall include 
in the description required under subsection (a) the following 
information:
            ``(1) The aggregate number of transfers of entitlement made 
        during the preceding year.
            ``(2) The type of programs of education pursued by 
        dependents to whom entitlement was so transferred.
            ``(3) The number of spouses to whom entitlement was so 
        transferred.
            ``(4) The number of dependent children to whom entitlement 
        was so transferred.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by adding at the end the following new item:

Summary: National Guard and Reserve Education Act of 2004 - Increases the monthly rate of educational assistance for members of the Selected Reserve who pursue full-time studies. Requires the Secretary of Veterans Affairs to prescribe by regulation the rate of assistance for less than full-time studies. Establishes an educational assistance benefit for reservists and National Guard members who, on or after September 11, 2001, serve at least 180 days within a five-year period of active duty in a contingency operation. Authorizes such persons to use their educational assistance entitlement during a 14-year period beginning on the last day of duty. Authorizes members of the Selected Reserve who are entitled to retired pay and basic educational assistance to transfer a portion of their educational entitlement to eligible dependents. Requires the Secretary to report on such transfers in the Secretary's annual report to Congress.