‘‘(1) the Secretary of the Army with respect to 
matters concerning the Army; 
‘‘(2) the Secretary of the Navy with respect to 
matters concerning the Navy or the Marine Corps; 
‘‘(3) the Secretary of the Air Force with respect 
to matters concerning the Air Force; and 
‘‘(4) the Secretary of Defense with respect to 
matters concerning the Coast Guard, or the Sec-
retary of Homeland Security when it is not oper-
ating as a service in the Navy.’’. 
(b) CLERICAL AMENDMENT.—The table of sections 
at the beginning of chapter 30 of such title is amended 
by striking the item relating to section 3020 and inserting 
the following: 
‘‘3020. Transfer of entitlement to basic educational assistance’’. 
SEC. 102. APPLICATION OF ANNUAL ADJUSTMENT TO 
RATES OF EDUCATIONAL ASSISTANCE BASED 
ON AVERAGE COSTS OF HIGHER LEARNING. 
(a) IN GENERAL.—Section 3015(h) of title 38, 
United States Code, is amended to read as follows: 
‘‘(h)(1) With respect to any fiscal year, the Secretary 
shall provide a percentage increase (rounded to the near-
est dollar) in the rates payable under subsections (a)(1) 
and (b)(1) equal to the percentage (as determined by the 
Secretary) by which— 
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‘‘(A) the average monthly costs of tuition and 
expenses for commuter students at public institu-
tions of higher learning that award baccalaureate 
degrees for purposes of subsections (a)(1) and (b)(1) 
for the fiscal year involved, exceeds 
‘‘(B) such average monthly costs for the pre-
ceding fiscal year. 
‘‘(2) The Secretary shall make the determination 
under paragraph (1) after consultation with the Secretary 
of Education. 
‘‘(3) A determination made under paragraph (1) in 
a year shall take effect on October 1 of that year and 
apply with respect to basic educational assistance allow-
ances payable under this section for the fiscal year begin-
ning in that year. 
‘‘(4) Not later than September 30 each year, the Sec-
retary shall publish in the Federal Register the average 
monthly costs of tuition and expenses as determined under 
paragraph (1) in that year.’’. 
(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to payments for months begin-
ning after September 30, 2007. 
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SEC. 103. ADDITIONAL OPPORTUNITY FOR CERTAIN VEAP 
PARTICIPANTS TO ENROLL IN BASIC EDU-
CATIONAL 
ASSISTANCE 
UNDER 
MONT-
GOMERY GI BILL. 
(a) ADDITIONAL ONE-YEAR OPPORTUNITY TO EN-
ROLL.—Subsection (e) of section 3018C of title 38, United 
States Code, is amended by adding at the end the fol-
lowing new paragraph: 
‘‘(6) In addition to the one-year period applica-
ble under paragraph (1), a qualified individual (de-
scribed in paragraph (2)) may make an irrevocable 
election under this subsection during the one-year 
period beginning on the date of the enactment of 
this paragraph, except that in applying this sub-
section as modified by this paragraph, the reference 
in paragraph (2)(B) to ‘April, 1, 2000,’ is deemed 
to be a reference to ‘April, 1, 2007’.’’. 
(b) CONFORMING AMENDMENTS.—Subsection (e)(3) 
of such section is amended by striking ‘‘under paragraph 
(1)’’ both places it appears and inserting ‘‘under this sub-
section’’. 
SEC. 104. REIMBURSEMENT OF REDUCTIONS OF BASIC PAY. 
(a) REIMBURSEMENT FOR EXTENDED ACTIVE DUTY 
SERVICE.—Sections 3011(b) and 3012(c) of title 38, 
United States Code, are each amended by adding at the 
end the following new paragraph: 
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‘‘(4)(A) Subject to subparagraph (C), in the case of 
an individual who, after the date of completion of the con-
tinuous period of active duty service applicable to the indi-
vidual under this section, continues to serve on active duty 
service, the Secretary shall pay to the individual $100 for 
each consecutive 12-month period of active duty service 
served by the individual after such date. 
‘‘(B) In the case of an individual who was discharged 
or released from active duty for a condition described in 
section 3011(a)(1)(A)(i) of this title, the Secretary shall 
pay to such individual the aggregate amount of reductions 
in basic pay made under paragraph (1). 
‘‘(C) In no case may the amount of payments to an 
individual under subparagraph (A) exceed the amount of 
reductions made with respect to the individual under para-
graph (1).’’. 
(b) CONFORMING AMENDMENT.—Paragraph (2) of 
section 3017(b) of such title is amended— 
(1) by striking ‘‘and’’ at the end of paragraph 
(1); 
(2) by striking the period at the end of para-
graph (2) and inserting ‘‘; and’’ ; and 
(3) by adding at the end the following new 
paragraph: 
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‘‘(C) the amount paid to the individual 
under section 3011(b)(4) or 3012(c)(4) of this 
title (as the case may be).’’. 
(c) EFFECTIVE DATE.—The amendments made by 
this section shall apply to periods of active duty served 
on or after the date of the enactment of this Act. 
TITLE II—SELECTED RESERVE 
SEC. 201. TRANSFER OF ENTITLEMENT TO EDUCATIONAL 
ASSISTANCE UNDER THE RESERVE MONT-
GOMERY GI BILL. 
(a) SELECTED RESERVE.—(1) Chapter 1606 of title 
10, United States Code, is amended by adding at the end 
the following new section: 
‘‘§ 16138. Transfer of entitlement to educational as-
sistance 
‘‘(a) IN GENERAL.—An individual described in sub-
section (b) who is entitled to educational assistance under 
this chapter may elect to transfer to one or more of the 
dependents specified in subsection (c) a portion of such 
individual’s entitlement to such assistance. An individual 
transferring entitlement under this section shall submit 
written notice to the Secretary concerned not later than 
the expiration date of the period described in section 
16133 of this title that is applicable to such individual. 
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‘‘(b) ELIGIBLE
INDIVIDUALS.—An individual re-
ferred to in subsection (a) is any member of the Armed 
Forces who, at the time of the approval by the Secretary 
concerned of the member’s request to transfer entitlement 
to basic educational assistance under this section— 
‘‘(1) has completed six years of service in the 
Selected Reserve; and 
‘‘(2) enters into an agreement to remain a 
member of the Selected Reserve for a period of not 
less than four years. 
‘‘(c) ELIGIBLE DEPENDENTS.—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 chil-
dren. 
‘‘(3) To a combination of the individuals re-
ferred to in paragraphs (1) and (2). 
‘‘(d) DESIGNATION OF TRANSFEREE.—An individual 
transferring entitlement 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 depend-
ent; and 
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‘‘(3) specify the period for which the transfer 
shall be effective for each such dependent. 
‘‘(e) REVOCATION
AND MODIFICATION.—An indi-
vidual transferring entitlement under this section may 
modify or revoke at any time the transfer of any unused 
portion of the entitlement so transferred. The modification 
or revocation of the transfer of entitlement under this sub-
section shall be made by the submittal of written notice 
of the action to both the Secretary concerned and the Sec-
retary of Veterans Affairs. 
‘‘(f) COMMENCEMENT OF USE.—If the dependent to 
whom entitlement is transferred under this section is a 
child, the use of the transferred entitlement may not com-
mence until the child— 
‘‘(1) completes the requirements of a secondary 
school diploma (or equivalency certificate); or 
‘‘(2) attains 18 years of age. 
‘‘(g) TIME LIMITATION FOR USE OF ELIGIBILITY 
AND ENTITLEMENT.—Notwithstanding section 16133 of 
this title, and subject to subsection (d)(3), a dependent 
to whom entitlement is transferred under this section may 
use such entitlement until the later of— 
‘‘(1) the expiration date of a 15-year period be-
ginning on the commencement date of the period 
prescribed by section 16133(a)(1) that is applicable 
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to the individual who transferred such entitlement to 
the dependent; or 
‘‘(2) the date that is 10 years after the date the 
individual who transferred such entitlement to the 
dependent is separated from the Selected Reserve, 
whichever occurs first. 
‘‘(h) ADDITIONAL ADMINISTRATIVE MATTERS.—(1) 
The use of any entitlement 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 paragraphs (2) and 
(3) of subsection (d) and subsection (g), and subject to 
paragraph (5), a dependent to whom entitlement is trans-
ferred under this section is entitled to educational assist-
ance under this chapter in the same manner as the indi-
vidual from whom entitlement was transferred. 
‘‘(3) The monthly rate of educational assistance pay-
able to a dependent to whom entitlement is transferred 
under this section shall be the monthly amount payable 
under section 16131 of this title to the individual making 
the transfer. 
‘‘(4) The death of an individual transferring entitle-
ment under this section shall not affect the use of the 
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transferred entitlement by the dependent to whom entitle-
ment is transferred. 
‘‘(5) Notwithstanding subsection (g) and section 
16133 of this title, a child to whom entitlement is trans-
ferred under this section may not use any entitlement so 
transferred after attaining the age of 26 years. 
‘‘(6) Except as provided in subsection (f), the pur-
poses for which a dependent to whom entitlement is trans-
ferred under this section may use such entitlement shall 
include the pursuit and completion of the requirements of 
a secondary school diploma (or equivalency certificate). 
‘‘(i) 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. 
‘‘(j) REGULATIONS.—The Secretaries concerned shall 
prescribe regulations for purposes of this section. 
‘‘(k) SECRETARY CONCERNED DEFINED.—Notwith-
standing section 101(a)(9), in this section the term ‘Sec-
retary concerned’ means— 
‘‘(1) the Secretary of the Army with respect to 
matters concerning the Army; 
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‘‘(2) the Secretary of the Navy with respect to 
matters concerning the Navy or the Marine Corps; 
‘‘(3) the Secretary of the Air Force with respect 
to matters concerning the Air Force; and 
‘‘(4) the Secretary of Defense with respect to 
matters concerning the Coast Guard, or the Sec-
retary of Homeland Security when it is not oper-
ating as a service in the Navy.’’. 
(2) 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 educational assistance’’. 
(b) 
CONFORMING
AMENDMENTS.—(1) 
Section 
16133(a) of such title is amended by inserting ‘‘and sec-
tion 16138’’ after ‘‘subsection (b)’’. 
(2) Section 16137 of such title is amended by insert-
ing ‘‘Each such report shall also include the number of 
members of the Selected Reserve of the Ready Reserve of 
each armed force transferring entitlement to educational 
assistance under section 16138.’’ after ‘‘those fiscal 
years.’’. 
SEC. 202. CREDIT FOR CUMULATIVE ACTIVE DUTY SERVICE 
IN THE SELECTED RESERVE. 
(a) ENTITLEMENT.—Section 3012(a)(1) of title 38, 
United States Code, is amended— 
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(1) in subparagraph (B), by striking ‘‘or’’ at 
the end; 
(2) in subparagraph (C), by adding ‘‘or’’ at the 
end; and 
(3) by inserting after subparagraph (C) the fol-
lowing new subparagraph (D): 
‘‘(D) while in the Selected Reserve— 
‘‘(i) is first ordered to serve on active 
duty in the Armed Forces under section 
12301(a), 12301(d), 12301(g), 12302, or 
12304 of title 10, during the period begin-
ning on September 11, 2001, and ending 
December 31, 2007; and 
‘‘(ii) serves on active duty in the 
Armed Forces for one or more periods 
(whether continuous or otherwise) aggre-
gating not less than two years of service on 
active duty during a five period beginning 
on the date the individual is first ordered 
to serve on active duty during the period 
referred to in clause (i);’’. 
(b) DURATION OF ASSISTANCE.—Subsection (b) of 
section 3013 of such title is amended by striking ‘‘is enti-
tled to’’ and all that follows and inserting the following: 
‘‘is entitled to— 
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‘‘(1) one month of educational assistance bene-
fits under this chapter— 
‘‘(A) in the case of an individual described 
in section 3012(a)(1)(A) of this title, for each 
month of continuous active duty served by such 
individual after June 30, 1985, as part of the 
obligated period of active duty on which such 
entitlement is based; 
‘‘(B) in the case of an individual described 
in 
section 
3012(a)(1)(B) 
or 
section 
3012(a)(1)(C) of this title, for each month of 
continuous active duty served by such individual 
after June 30, 1985; 
‘‘(C) in the case of an individual described 
in section 3012(a)(1)(D) of this title, for each 
month of active duty served by such individual 
after September 11, 2001, as part of the aggre-
gate period of active duty on which such entitle-
ment is based; and 
‘‘(2) one month of educational assistance bene-
fits under this chapter for each four months served 
by such individual in the Selected Reserve after the 
applicable date specified in paragraph (1) (other 
than any month in which the individual served on 
active duty).’’. 
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(c) AMOUNT OF ASSISTANCE.—Section 3015 of such 
title is amended by adding at the end the following new 
subsection: 
‘‘(i) In the case of an individual entitled to an edu-
cational assistance allowance under section 3012(a)(1)(D) 
of this title, the amount of the basic educational assistance 
allowance payable under this chapter is the amount deter-
mined under subsection (b).’’. 
(d) CONTRIBUTION.—Paragraph (1) of section 
3012(c) of such title is amended by inserting ‘‘or sub-
section (a)(1)(D)’’ after ‘‘subsection (a)(1)(A)’’. 
(e) ELECTION TO OPT OUT.—Paragraph (1) of sec-
tion 3012(d) of such title is amended— 
(1) by inserting ‘‘(A)’’ after ‘‘(d)(1)’’; 
(2) by designating the last sentence as subpara-
graph (C); 
(3) in subparagraph (C), as so designated, by 
striking ‘‘such an election’’ and inserting ‘‘an elec-
tion under this paragraph’’; and 
(4) by inserting before subparagraph (C), as so 
designated, the following new subparagraph (B): 
‘‘(B) An individual described in subsection (a)(1)(D) 
may make an election not to receive educational assistance 
under this chapter. Any such election shall be made at 
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the time the individual completes the aggregate period of 
active duty service required under such subsection.’’. 
(f) OUTREACH.—(1) The Secretaries concerned shall 
take actions to inform members of the Selected Reserve 
who are or may become entitled to basic educational as-
sistance benefits under chapter 30 of title 38, United 
States Code, as a result of section 3012(a)(1)(D) of such 
title (as amended by subsection (a) of this section) of the 
minimum service requirements for entitlement to such 
benefits under that chapter and of the scope and nature 
of such benefits. 
(2) In this subsection: 
(A) The term ‘‘Secretary concerned’’ has the 
meaning given such term in section 101(25) of title 
38, United States Code. 
(B) The term ‘‘Selected Reserve’’ has the 
meaning given such term in section 3002(4) of title 
38, United States Code. 
SEC. 203. INCREASE IN RATES OF EDUCATIONAL ASSIST-
ANCE UNDER THE RESERVE MONTGOMERY 
GI BILL. 
(a) IN GENERAL.—Section 16131(b) of title 10, 
United States Code, is amended to read as follows: 
‘‘(b) Except as provided in subsections (d) through 
(f), each educational assistance program established under 
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subsection (a) shall provide for payment by the Secretary 
concerned, through the Secretary of Veterans Affairs, to 
each person entitled to educational assistance under this 
chapter who is pursuing a program of education of an edu-
cational assistance allowance at the following monthly 
rates: 
‘‘(1) For such a program of education pursued 
on a full-time basis, at the monthly rate equal to 40 
percent of the rate that applies for the month under 
section 3015(a)(1) of title 38. 
‘‘(2)(A) Subject to subparagraph (B), for such 
a program of education pursued on a less than a 
full-time basis, at an appropriately reduced rate, as 
determined under regulations which the Secretaries 
concerned shall prescribe. 
‘‘(B) No payment may be made to a person for 
less than half-time pursuit of such a program of 
education if tuition assistance is otherwise available 
to the person for such pursuit from the military de-
partment concerned.’’. 
(b) EFFECTIVE DATE.—The amendments made by 
subsection (a) shall apply with respect to educational as-
sistance allowances under section 16131(b) of such title 
paid for months occurring on or after the date of the en-
actment of this Act. 
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(c) CONFORMING INCREASE TO EDUCATIONAL AS-
SISTANCE RATES UNDER CHAPTER 1607.—Paragraph 
(4) of section 16162(c) of title 10, United States Code, 
is amended— 
(1) by striking ‘‘40 percent’’ in subparagraph 
(A) and inserting ‘‘50 percent’’; and 
(2) by striking ‘‘60 percent’’ in subparagraph 
(B) and inserting ‘‘65 percent’’. 
TITLE III—SURVIVORS’ AND DE-
PENDENTS’ EDUCATIONAL AS-
SISTANCE 
SEC. 301. APPLICATION OF ANNUAL ADJUSTMENT TO 
RATES OF EDUCATIONAL ASSISTANCE BASED 
ON AVERAGE COSTS OF HIGHER LEARNING. 
(a) IN GENERAL.—Subsection (a) of section 3564 of 
title 38, United States Code, is amended to read as fol-
lows: 
‘‘(a) With respect to any fiscal year, the Secretary 
shall provide for the same percentage increase in the rates 
payable under sections 3532, 3534(b), and 3542(a) of this 
title as the Secretary applies under subsection (h)(1) of 
section 3015 of this title to the rates applicable under sub-
sections (a)(1) and (b)(1) of such section.’’. 
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(b) EFFECTIVE DATE.—The amendment made by 
subsection (a) shall apply to payments for months begin-
ning after September 30, 2007. 
Æ 
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