A bill to amend section 484B of the Higher Education Act of 1965 to provide for tuition reimbursement and loan forgiveness to students who withdraw from an institution of higher education to serve in the uniformed services, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Veterans Education Tuition Support 
Act of 2009'' or the ``VETS Act of 2009''.

SEC. 2. TUITION RELIEF FOR POSTSECONDARY STUDENTS CALLED TO MILITARY 
              SERVICE.

    (a) In General.--Section 484B(b)(2) of the Higher Education Act of 
1965 (20 U.S.C. 1091b(b)(2)) is amended by adding at the end the 
following:
                    ``(F) Tuition relief for students called to 
                military service.--
                            ``(i) Tuition relief.--
                                    ``(I) In general.--Subject to 
                                subclause (II), whenever a student's 
                                withdrawal from an institution of 
                                higher education is necessitated by 
                                reason of service in the uniformed 
                                services, the institution shall refund 
                                to such student the tuition and fees 
                                paid by, or on behalf of, such student 
                                for the payment period or period of 
                                enrollment for which such student did 
                                not receive academic credit as a result 
                                of such withdrawal.
                                    ``(II) Exception.--Subclause (I) 
                                shall not apply to the tuition or fees 
                                paid on behalf of the student--
                                            ``(aa) from scholarships 
                                        awarded to the student by the 
                                        institution of higher 
                                        education; or
                                            ``(bb) through funds 
                                        awarded under this title.
                            ``(ii) Waiver of repayment by students 
                        called to military service.--In addition to the 
                        waivers authorized by subparagraphs (D) and 
                        (E), the Secretary shall waive the amounts that 
                        students are required to return under this 
                        section if the withdrawals on which the returns 
                        are based are withdrawals necessitated by 
                        reason of service in the uniformed services.
                            ``(iii) Loan forgiveness authorized.--
                        Whenever a student's withdrawal from an 
                        institution of higher education is necessitated 
                        by reason of service in the uniformed services, 
                        the Secretary shall, with respect to the 
                        payment period or period of enrollment for 
                        which such student did not receive academic 
                        credit as a result of such withdrawal, carry 
                        out a program--
                                    ``(I) through the holder of the 
                                loan, to assume the obligation to 
                                repay--
                                            ``(aa) the outstanding 
                                        principle and accrued interest 
                                        on any loan assistance awarded 
                                        to the student under part B 
                                        (including to a parent on 
                                        behalf of the student under 
                                        section 428B) for such payment 
                                        period or period of enrollment; 
                                        minus
                                            ``(bb) any amount of such 
                                        loan assistance returned by the 
                                        institution in accordance with 
                                        paragraph (1) of this 
                                        subsection for such payment 
                                        period or period of enrollment; 
                                        and
                                    ``(II) to cancel--
                                            ``(aa) the outstanding 
                                        principle and accrued interest 
                                        on the loan assistance awarded 
                                        to the student under part D or 
                                        E (including a Federal Direct 
                                        PLUS loan awarded to a parent 
                                        on behalf of the student) for 
                                        such payment period or period 
                                        of enrollment; minus
                                            ``(bb) any amount of such 
                                        loan assistance returned by the 
                                        institution in accordance with 
                                        paragraph (1) of this 
                                        subsection for such payment 
                                        period or period of enrollment.
                            ``(iv) Reimbursement for cancellation of 
                        perkins loans.--The Secretary shall pay to each 
                        institution for each fiscal year an amount 
                        equal to the aggregate of the amounts of 
                        Federal Perkins loans in such institution's 
                        student loan fund that are cancelled pursuant 
                        to clause (iii)(II) for such fiscal year, minus 
                        an amount equal to the aggregate of the amounts 
                        of any such loans so canceled which were made 
                        from Federal capital contributions to its 
                        student loan fund provided by the Secretary 
                        under section 468. None of the funds 
                        appropriated pursuant to section 461(b) shall 
                        be available for payments pursuant to this 
                        paragraph. To the extent feasible, the 
                        Secretary shall pay the amounts for which any 
                        institution qualifies under this paragraph not 
                        later than 3 months after the institution files 
                        an institutional application for campus-based 
                        funds.
                            ``(v) Loan eligibility and limits for 
                        students.--Any amounts that are returned by an 
                        institution in accordance with paragraph (1), 
                        or forgiven or waived by the Secretary under 
                        this subparagraph, with respect to a payment 
                        period or period of enrollment for which a 
                        student did not receive academic credit as a 
                        result of withdrawal necessitated by reason of 
                        service in the uniformed services, shall not be 
                        included in the calculation of the student's 
                        annual or aggregate loan limits for assistance 
                        under this title, or otherwise affect the 
                        student's eligibility for grants or loans under 
                        this title.
                            ``(vi) Definition.--In this subparagraph, 
                        the term `service in the uniformed services' 
                        has the meaning given such term in section 
                        484C(a).''.
    (b) Effective Date.--
            (1) In general.--The amendments made by this Act shall take 
        effect for periods of service in the uniformed services 
        beginning after the date of enactment of this Act.
            (2) Definition.--In this subsection, the term ``period of 
        service in the uniformed services'' means the period beginning 
        30 days prior to the date a student is required to report to 
        service in the uniformed services (as defined in section 
        484C(a) of the Higher Education Act of 1965 (20 U.S.C. 
        1091c(a))) and ending when such student returns from such 
        service.

Summary: Veterans Education Tuition Support Act of 2009 or the VETS Act of 2009 - Amends title IV of the Higher Education Act of 1965 to require institutions of higher education to refund to students the tuition and fees paid for education they will not receive due to their withdrawal from school to serve in the Armed Forces. Waives the application of any requirement that students return title IV funds upon withdrawing from school to students whose withdrawal is necessitated by service in the Armed Forces. Provides loan forgiveness under the Federal Family Education Loan, Direct Loan, and Perkins Loan programs to students whose withdrawal from school is necessitated by service in the Armed Forces.