bers discharged or released who subsequently reen-
list or re-enter on a period of active duty) who 
serves the periods of active duty referred to in such 
paragraph shall be deemed to have served a contin-
uous period of active duty the length of which is the 
aggregate length of the periods of active duty re-
ferred to in such paragraph. 
‘‘(C) Subsections (g) and (h) of section 3011 of 
this title (relating to assignment full time at a civil-
ian institution for courses of education and to com-
mencement of courses of education at a service acad-
emy, respectively) apply with respect to an eligible 
individual under this section in the same manner as 
they apply to an individual under section 3011 of 
this title. 
‘‘(d) ELECTION
OF BASIC EDUCATIONAL ASSIST-
ANCE.—(1) An eligible individual entitled to enhanced 
educational assistance under this subchapter may elect (in 
a form and manner prescribed by the Secretary) to receive 
basic educational assistance under subchapter II in lieu 
of such enhanced educational assistance for an enrollment 
period. Such an election shall be made by not later than 
30 days before the beginning of the enrollment period. 
‘‘(2) An eligible individual may revoke an election 
made pursuant to paragraph (1), but in no case may such
revocation be made later than 30 days before the begin-
ning of the enrollment period. 
‘‘§ 3042. Duration of enhanced educational assistance 
‘‘(a) IN GENERAL.—Subject to section 3695 of this 
title and except as provided in subsection (b), each indi-
vidual entitled to enhanced educational assistance under 
section 3041 of this title is entitled to a monthly enhanced 
educational assistance allowance under this subchapter for 
a period or periods not to exceed a total of 36 months 
(or the equivalent thereof in part-time enhanced edu-
cational assistance). 
‘‘(b) SPECIAL RULE FOR CERTAIN EARLY SEPARA-
TIONS.—Subject to section 3695 of this title, in the case 
of an individual described in subclause (I) or (III) of sec-
tion 3041(c)(1)(B)(ii) of this title (relating to individuals 
discharged for service-connected disabilities or medical 
conditions or whose service is involuntarily terminated for 
the convenience of the Government as a result of a reduc-
tion in force, respectively) who does not serve a continuous 
period of active duty of at least four years in the Armed 
Forces (as described in section 3041(c)(1)(B)(i) of this 
title), the individual is entitled to one month of enhanced 
educational assistance benefits under this subchapter (not 
to exceed a total of 36 months (or the equivalent thereof 
in part-time enhanced educational assistance)) for each
month of continuous active duty served by the individual 
beginning with the date on which the entry on active duty, 
reenlistment, enlistment extension, or continuation appli-
cable to that individual under section 3041(c)(1)(A) of 
this title begins. 
‘‘§ 3043. Payment of educational expenses 
‘‘(a) IN GENERAL.—(1) Subject to paragraph (2), the 
Secretary shall pay to the educational institution providing 
a course under an approved program of education to an 
eligible individual under this subchapter who is enrolled 
in the course the actual cost of tuition and fees otherwise 
payable by the individual. 
‘‘(2) Such cost may not exceed the amount charged 
to nonveterans in similar circumstances. 
‘‘(b) STIPEND; COSTS OF BOOKS AND SUPPLIES.— 
The Secretary shall pay to each eligible individual under 
this subchapter who is pursuing an approved program of 
education— 
‘‘(1) a stipend as provided in section 3044 of 
this title; and 
‘‘(2) in accordance with regulations prescribed 
by the Secretary, an amount equal to the average 
cost, for the year involved, of books and supplies 
payable by individuals pursuing courses of education 
at educational institutions.
‘‘§ 3044. Amount of stipend 
‘‘(a) IN GENERAL.—Except as provided in section 
3042 of this title, the stipend under this subchapter shall 
be paid at a monthly rate (as that rate may be increased 
pursuant to subsection (b)) as follows: 
‘‘(1) At the monthly rate of $900 for an ap-
proved program of education pursued on a full-time 
basis. 
‘‘(2) At the monthly rate of $700 for an ap-
proved program of education pursued on a three- 
quarter-time basis. 
‘‘(3) At the monthly rate of $500 for an ap-
proved program of education pursued on a half-time 
basis. 
‘‘(4) At the monthly rate of $300 for an ap-
proved program of education pursued on less than a 
half-time basis. 
‘‘(b) ADJUSTMENT FOR INFLATION.—With respect to 
any fiscal year beginning after fiscal year 2006, the Sec-
retary shall provide a percentage increase (rounded to the 
nearest dollar) in the rates payable under subsection (a) 
equal to the percentage by which— 
‘‘(1) the Consumer Price Index (all items, 
United States city average) for the 12–month period 
ending on the June 30 preceding the beginning of
the fiscal year for which the increase is made, ex-
ceeds 
‘‘(2) such Consumer Price Index for the 12– 
month period preceding the 12-month period de-
scribed in paragraph (1).’’. 
(b) CONFORMING AMENDMENTS.—(1) Section 3002 
of such title is amended by inserting at the end the fol-
lowing new paragraph: 
‘‘(9) The term ‘enhanced educational assistance’ 
means educational assistance provided under subchapter 
V.’’. 
(2) Section 3011 of such title is amended in sub-
section (f)(1) and (g) by striking ‘‘chapter’’ each place it 
appears and inserting ‘‘subchapter’’. 
(3) Section 3018A(a) of such title is amended by 
striking ‘‘education assistance under this chapter’’ and in-
serting ‘‘educational assistance under this subchapter’’. 
(4) Section 3018B of such title is amended by strik-
ing ‘‘education assistance under this chapter’’ each place 
it appears and inserting ‘‘educational assistance under 
this subchapter’’. 
(5) Section 3018C of such title is amended by strik-
ing ‘‘educational assistance under this chapter’’ each place 
it appears and inserting ‘‘educational assistance under 
this subchapter’’.
(6) Section 3019 of such title is amended by striking 
‘‘chapter’’ each place it appears and inserting ‘‘sub-
chapter’’. 
(7) Section 3032(e)(3) of such title is amended by 
inserting ‘‘, or section 3044(a)(1)’’ after ‘‘section 3015’’. 
(c) CLERICAL AMENDMENT.—The table of sections 
at the beginning of chapter 30 of title 38, United States 
Code, is amended by adding at the end the following new 
items: 
‘‘SUBCHAPTER V—ENHANCED EDUCATIONAL ASSISTANCE 
‘‘3041. Enhanced educational assistance entitlement. 
‘‘3042. Duration of enhanced educational assistance. 
‘‘3043. Payment of educational expenses. 
‘‘3044. Amount of stipend.’’. 
SEC. 502. INCREASE IN RATES OF BASIC EDUCATIONAL AS-
SISTANCE 
UNDER 
THE 
MONTGOMERY 
GI 
BILL. 
(a) RATES FOR BASIC EDUCATIONAL ASSISTANCE.— 
Section 3015 of title 38, United States Code, is amend-
ed— 
(1) in subsection (a)(1)— 
(A) in subparagraph (C), by striking 
‘‘and’’ at the end; 
(B) by redesignating subparagraph (D) as 
subparagraph (F); and 
(C) by inserting after subparagraph (C) 
the following new subparagraphs: