A bill to amend titles 10 and 38, United States Code, to enhance the Montgomery GI Bill, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Montgomery GI Bill Improvements Act 
of 2001''.

SEC. 2. REPEAL OF PAY REDUCTION AND ELECTION NOT TO ENROLL IN BASIC 
              EDUCATIONAL ASSISTANCE.

    (a) Pay Reduction.--(1) Section 3011 of title 38, United States 
Code, is amended by striking subsection (b).
    (2) Section 3012 of that title is amended by striking subsection 
(c).
    (b) Authority To Elect Not To Enroll.--(1) Section 3011(c) of that 
title is amended--
            (A) by striking paragraph (1); and
            (B) by redesignating paragraphs (2) and (3) as paragraphs 
        (1) and (2), respectively.
    (2) Section 3012(d) of that title is amended--
            (A) by striking paragraph (1); and
            (B) by redesignating paragraphs (2) and (3) as paragraphs 
        (1) and (2), respectively.
    (c) Opportunities To Withdraw Election Not To Enroll.--(1) Section 
3016(a)(1) of that title is amended by striking ``, and does not make 
an election under section 3011(c)(1) or section 3012(d)(1)''.
    (2) Sections 3018A and 3018B of that title are each amended by 
adding at the end the following new subsection:
    ``(e) Notwithstanding subsection (b), no reduction in the pay of an 
individual under this section shall be made for months beginning on or 
after the date that is six months after the date of the enactment of 
the Montgomery GI Bill Improvements Act of 2001. Any obligation of an 
individual under subsection (b) as of the commencement of such month 
shall be deemed to be fully satisfied as of the date of the 
commencement of such month.''.
    (3)(A) Section 3018C(e) of that title is amended--
            (i) by striking paragraphs (3) and (4); and
            (ii) by redesignating paragraph (5) as paragraph (3).
    (B) Section 3018C of that title is amended by adding at the end the 
following new subsection:
    ``(f) Notwithstanding subsection (b), no reduction in the pay of an 
individual under this section shall be made for months beginning on or 
after the date that is six months after the date of the enactment of 
the Montgomery GI Bill Improvements Act of 2001. Any obligation of an 
individual under subsection (b) as of the commencement of such month 
shall be deemed to be fully satisfied as of the date of the 
commencement of such month.''.
    (d) Effective Date.--The amendments made by subsections (a) and (b) 
shall take effect six months after the date of the enactment of this 
Act, and apply to individuals whose initial obligated period of active 
duty under section 3011 or 3012 of title 38, United States Code, as the 
case may be, begins on or after such date.
    (e) Termination of Pay Reductions in Progress.--Any reduction in 
the basic pay of an individual referred to in subsection (b) of section 
3011 of title 38, United States Code, by reason of such subsection, or 
of any individual referred to in subsection (c) of section 3012 of such 
title by reason of such subsection, shall cease commencing with months 
beginning on or after the date that is six months after the date of the 
enactment of this Act, and any obligation of such individual under such 
subsection (b) or (c), as the case may be, as of that date shall be 
deemed to be fully satisfied as of the date of the commencement of the 
first such month.

SEC. 3. TRANSFER OF ENTITLEMENT TO EDUCATIONAL ASSISTANCE BY MEMBERS 
              WITH 15 YEARS OF ACTIVE DUTY SERVICE.

    (a) Transfer of Entitlement.--Subchapter II of chapter 30 of title 
38, United States Code, is amended by adding at the end the following 
new section:
``Sec. 3020. Transfer of entitlement to basic educational assistance: 
              individuals with 15 years of active duty service
    ``(a) An individual described in subsection (b) who is entitled to 
basic educational assistance under this subchapter may transfer, in 
whole or in part, such individual's entitlement to such assistance to 
the dependents specified in subsection (c).
    ``(b) An individual described in this subsection is any individual 
entitled to basic educational assistance under this subchapter who has 
completed not less than 15 years of service on active duty as a member 
of the Armed Forces.
    ``(c) An individual may transfer entitlement under this section 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) An individual transferring entitlement to basic educational 
assistance under this section shall--
            ``(1) designate the dependent or dependents to whom such 
        entitlement is being transferred and the percentage of such 
        entitlement to be transferred to each such dependent; and
            ``(2) specify the period for which the transfer shall be 
        effective for each dependent designated under paragraph (1).
    ``(e)(1) Subject to the time limitation for use of entitlement 
under section 3031 of this title, an individual may transfer 
entitlement under this section at any time 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 the Secretary.
    ``(f)(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 
paragraph (4), a dependent to whom entitlement is transferred under 
this section is entitled to basic educational assistance under this 
subchapter in the same manner and at the same rate as the individual 
from whom the entitlement was transferred.
    ``(3) The death of an individual transferring an entitlement under 
this section shall not affect the use of the entitlement by the 
individual to whom the entitlement is transferred.
    ``(4) The administrative provisions of this chapter (including the 
provisions set forth in section 3034(a)(1) of this 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.
    ``(5) 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).
    ``(f) 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 this 
title.
    ``(g) The Secretary 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 (e)(4) to a 
dependent to whom entitlement is transferred under this section.''.
    (b) Clerical Amendment.--The table of sections at the beginning of 
such chapter is amended by inserting after the item relating to section 
3019 the following new item:

``3020. Transfer of entitlement to basic educational assistance: 
                            individuals with 15 years of active duty 
                            service.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect six months after the date of the enactment of this Act.

SEC. 4. EXTENSION OF TIME LIMITATION FOR USE OF ELIGIBILITY AND 
              ENTITLEMENT.

    (a) All Volunteer Force Program.--Section 3031 of title 38, United 
States Code, is amended--
            (1) by striking ``10-year period'' each place it appears 
        (other than subsection (g)) and inserting ``20-year period''; 
        and
            (2) in subsection (g), by striking ``the last day'' and all 
        that follows through ``Act'' and inserting ``November 30, 
        2019,''.
    (b) Educational Assistance for Selected Reserve.--Section 16133(a) 
of title 10, United States Code, is amended by striking ``10-year 
period'' and inserting ``20-year period''.

SEC. 5. BENEFIT FOR MEMBERS OF SELECTED RESERVE CALLED TO ACTIVE DUTY 
              FOR MORE THAN ONE YEAR FOR CONTINGENCY OPERATION.

    (a) Increased Benefit Under Educational Assistance for Selected 
Reserve.--Section 16131 of title 10, United States Code, is amended by 
adding at the end the following:
    ``(j) In the case of a member of the Selected Reserve entitled to 
educational assistance under this chapter who, during the period 
referred to in subsection (a) with respect to the member, is called or 
ordered to, or retained on, active duty for or in support of a 
contingency operation, the rate of the educational assistance allowance 
applicable to the member is as follows:
            ``(1) If the member's aggregate period on active duty for 
        or in support of a contingency operation is more than one year 
        but less than two years--
                    ``(A) for each month of full-time pursuit of a 
                program of education, an amount equal to the average of 
                the amount otherwise applicable to the person under 
                subsection (b)(1)(A) and the amount applicable to an 
                individual under section 3015(b)(1) of title 38;
                    ``(B) for each month of three-quarter-time pursuit 
                of a program of education, an amount equal to three-
                quarters of the amount determined under subparagraph 
                (A);
                    ``(C) for each month of half-time pursuit of a 
                program of education, an amount equal to three-quarters 
                of the amount determined under subparagraph (A); and
                    ``(D) for each month of less than half-time pursuit 
                of a program of education, an appropriately reduced 
                amount, as determined under regulations prescribed 
                under subsection (b)(1)(D), subject to the limitation 
                specified in that subsection.
            ``(2) If the member's aggregate period on active duty for 
        or in support of a contingency operation is more than two years 
        but less than three years, the amount that would be applicable 
        to the member under section 3015(b) of title 38 were the member 
        an individual described by that section.
            ``(3) If the member's aggregate period on active duty for 
        or in support of a contingency operation is more than three 
        years, the amount that would be applicable to the member under 
        section 3015(a) of title 38 were the member an individual 
        described by that section.''.
    (b) Effect of Active Duty on Entitlement for Basic Assistance for 
Service in Selected Reserve.--(1) Clause (ii) of section 3012(a)(1)(A) 
of title 38, United States Code, is amended to read as follows:
                            ``(ii) subject to subsection (b) of this 
                        section and beginning within one year after 
                        completion of the service on active duty 
                        described in clause (i) of this clause--
                                    ``(I) serves at least four years of 
                                continuous duty in the Selected Reserve 
                                during which the individual 
                                participates satisfactorily in training 
                                as required by the Secretary concerned; 
                                or
                                    ``(II) during continuous duty in 
                                the Selected Reserve during which the 
                                individual participates satisfactorily 
                                in training as required by the 
                                Secretary concerned, serves on active 
                                duty for or in support of a contingency 
                                operation (as that term is defined in 
                                section 101(a) of title 10) for an 
                                aggregate period of not less than one 
                                year; or''.
    (2) Section 3015(c) of that title is amended--
            (A) in paragraph (1), by striking ``paragraph (1)'' and 
        inserting ``paragraph (1) or (2)''; and
            (B) by adding at the end the following new paragraph:
    ``(3) Paragraph (1) of this subsection also applies to an 
individual entitled to an educational assistance allowance under 
section 3012 of this title who is described in subsection 
(a)(1)(A)(ii)(II) of that section.''.

Summary: Montgomery GI Bill Improvements Act of 2001 - Amends Federal basic educational assistance provisions to eliminate the pay reduction currently required of service members as a precondition to eligibility for benefits Permits certain service members to transfer their entitlement to benefits to their spouses or dependent children. Extends the period after discharge during which former service members may utilize their benefits. Increases benefits available to members of the Selected Reserve called to active duty as part of a contingency operation.