A bill to amend titles 10 and 38 of the United States Code, to increase and index educational benefits for veterans under the Montgomery GI bill to ensure adequate and equitable benefits for active duty members and members of the selected Reserve, and to include certain servicemembers previously excluded from such benefits.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Armed Forces Education Benefits 
Improvement Act''.

SEC. 2. ADJUSTMENT AND ANNUAL DETERMINATION OF EDUCATIONAL ASSISTANCE 
              UNDER THE MONTGOMERY GI BILL FOR ACTIVE DUTY MEMBERS.

    (a) In General.--Section 3015 of title 38, United States Code, is 
amended--
            (1) in subsection (a), by amending paragraph (1) to read as 
        follows:
            ``(1) for an approved program of education pursued on a 
        full-time basis--
                    ``(A) $1,584 per month for months during fiscal 
                year 2005; and
                    ``(B) for months during fiscal year 2006 and each 
                subsequent fiscal year, the monthly amount under this 
                paragraph for the previous fiscal year multiplied by 
                the percentage increase calculated under subsection 
                (h); or'';
            (2) in subsection (b), by amending paragraph (1) to read as 
        follows:
            ``(1) for an approved program of education pursued on a 
        full-time basis--
                    ``(A) $1,267 per month for months during fiscal 
                year 2005; and
                    ``(B) for months during fiscal year 2006 and each 
                subsequent fiscal year, the monthly amount under this 
                paragraph for the previous fiscal year multiplied by 
                the percentage increase calculated under subsection 
                (h); or''; and
            (3) in subsection (h)(1), by striking ``all items'' and 
        inserting ``college tuition and fees''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on the first day of the first month beginning after the 
date of enactment of this Act.

SEC. 3. ANALYSIS OF IMPACT OF MONTGOMERY GI BILL EDUCATIONAL BENEFITS.

    (a) Findings.--Congress finds that--
            (1) the enhanced educational benefits provided under the 
        Ronald W. Reagan National Defense Authorization Act for Fiscal 
        Year 2005 are an important step in ensuring that members of the 
        Selected Reserve are thanked for their increasing role in the 
        modern warfare; and
            (2) when these members return from extended tours in Iraq, 
        Afghanistan, and other places, they should be provided with 
        immediate access to these enhanced educational benefits.
    (b) Cooperation.--The Secretary of Defense shall work expeditiously 
with the Secretary of Veterans Affairs to ensure that members of the 
Selected Reserve receive the educational benefits referred to in 
subsection (a) in a timely manner.
    (c) Studies.--
            (1) Secretary of defense.--The Secretary of Defense shall 
        conduct a study analyzing the effect of all Montgomery GI bill 
        educational benefits on recruitment and retention during the 
        12-month period beginning on the date on which the enhanced 
        benefits referred to in subsection (a) become available.
            (2) Secretary of veterans affairs.--The Secretary of 
        Veterans Affairs shall conduct a study analyzing the effect of 
        all Montgomery GI bill educational benefits on the readjustment 
        of veterans eligible for educational benefits under section 
        3015 of title 38, United States Code, and chapters 1606 and 
        1607 of title 10, United States Code, during the 12-month 
        period beginning on the date on which the enhanced benefits 
        referred to in subsection (a) become available.
            (3) Report.--Not later than 18 months after the date on 
        which the enhanced benefits referred to in subsection (a) 
        become available, the Secretary of Defense and the Secretary of 
        Veterans Affairs shall submit a report on the results of the 
        studies conducted under paragraphs (1) and (2) to--
                    (A) the Committee on Armed Services of the Senate;
                    (B) the Committee on Armed Services of the House of 
                Representatives;
                    (C) the Committee on Veterans' Affairs of the 
                Senate; and
                    (D) the Committee on Veterans' Affairs of the House 
                of Representatives.

SEC. 4. ADJUSTMENT AND ANNUAL DETERMINATION OF EDUCATIONAL ASSISTANCE 
              UNDER THE MONTGOMERY GI BILL FOR CERTAIN MEMBERS OF THE 
              SELECTED RESERVE.

    (a) Increase in Rates.--Section 16131(b) of title 10, United States 
Code, is amended--
            (1) in paragraph (1)--
                    (A) by striking ``at the following rates:'' and 
                inserting ``--''; and
                    (B) by striking subparagraphs (A) through (C) and 
                inserting the following:
            ``(A) for a program of education pursued on a full-time 
        basis--
                    ``(i) $475 per month for months during fiscal year 
                2005; and
                    ``(ii) for months during fiscal year 2006 and each 
                subsequent fiscal year, the monthly amount under this 
                subparagraph for the previous fiscal year multiplied by 
                the percentage increase calculated under paragraph (2);
            ``(B) for a program of education pursued on a three-
        quarter-time basis--
                    ``(i) $356 per month for months during fiscal year 
                2005; and
                    ``(ii) for months during fiscal year 2006 and each 
                subsequent fiscal year, the monthly amount under this 
                subparagraph for the previous fiscal year multiplied by 
                the percentage increase calculated under paragraph (2);
            ``(C) for a program of education pursued on a half-time 
        basis--
                    ``(i) $238 per month for months during fiscal year 
                2005; and
                    ``(ii) for months during fiscal year 2006 and each 
                subsequent fiscal year, the monthly amount under this 
                subparagraph for the previous fiscal year multiplied by 
                the percentage increase calculated under paragraph (2); 
                and''; and
            (2) in paragraph (2)--
                    (A) by inserting ``beginning on or after October 1, 
                2005'' after ``With respect to any fiscal year''; and
                    (B) in subparagraph (A), by striking ``all items'' 
                and inserting ``college tuition and fees''.
    (b) Effective Date.--The amendments made by subsection (a) shall 
take effect on the first day of the first month beginning after the 
date of enactment of this Act.

SEC. 5. OPPORTUNITY FOR CERTAIN ACTIVE-DUTY PERSONNEL TO ENROLL UNDER 
              THE MONTGOMERY GI BILL.

    (a) In General.--Chapter 30 of title 38, United States Code, is 
amended by inserting after section 3018C the following:
``Sec. 3018D. Opportunity for certain active-duty personnel to enroll
    ``(a)(1) Notwithstanding any other provision of this chapter, 
during the 1-year period beginning on the date of enactment of this 
section, a qualified individual (described in subsection (b)) may make 
an irrevocable election under this section to receive basic educational 
assistance under this chapter.
    ``(2) The Secretary of each military department shall provide for 
procedures for a qualified individual to make an irrevocable election 
under this section in accordance with regulations prescribed by the 
Secretary of Defense for the purpose of carrying out this section or 
which the Secretary of Homeland Security shall provide for such purpose 
with respect to the Coast Guard when it is not operating as a service 
in the Navy.
    ``(b) A qualified individual referred to in subsection (a) is an 
individual who meets each of the following requirements:
            ``(1) The individual first became a member of the Armed 
        Forces or first served on active duty as a member of the Armed 
        Forces before July 1, 1985.
            ``(2) The individual--
                    ``(A) has served on active duty without a break in 
                service since the date the individual first became such 
                a member or first served on active duty as such a 
                member; and
                    ``(B) continues to serve on active duty for some or 
                all of the 1-year period described in subsection (a).
            ``(3) The individual, before applying for benefits under 
        this section--
                    ``(A) completed the requirements of a secondary 
                school diploma (or equivalency certificate); or
                    ``(B) has successfully completed (or otherwise 
                received academic credit for) the equivalent of 12 
                semester hours in a program of education leading to a 
                standard college degree.
            ``(4) The individual, when discharged or released from 
        active duty, is discharged or released therefrom with an 
        honorable discharge.
    ``(c)(1) Subject to paragraph (2), with respect to a qualified 
individual who elects under this section to receive basic educational 
assistance under this chapter--
            ``(A) the basic pay of the qualified individual shall be 
        reduced (in a manner determined by the Secretary concerned) 
        until the total amount by which such basic pay is reduced is 
        $1,200; and
            ``(B) to the extent that basic pay is not reduced under 
        subparagraph (A) before the qualified individual's discharge or 
        release from active duty, an amount equal to the difference 
        between $1,200 and the total amount of reductions under 
        subparagraph (A), which shall be paid into the Treasury of the 
        United States as miscellaneous receipts, shall, at the election 
        of the qualified individual, be--
                    ``(i) collected from the qualified individual by 
                the Secretary concerned; or
                    ``(ii) withheld from the retired or retainer pay of 
                the qualified individual by the Secretary concerned.
    ``(2)(A) The Secretary concerned shall provide for an 18-month 
period, beginning on the date the qualified individual makes an 
election under this section, for the qualified individual to pay that 
Secretary the amount due under paragraph (1).
    ``(B) Nothing in subparagraph (A) shall be construed as modifying 
the period of eligibility for and entitlement to basic educational 
assistance under this chapter applicable under section 3031 of this 
title.
    ``(d) With respect to qualified individuals referred to in 
subsection (c)(1)(B), no amount of educational assistance allowance 
under this chapter shall be paid to the qualified individual until the 
earlier of the date on which--
            ``(1) the Secretary concerned collects the applicable 
        amount under subsection (c)(1)(B)(i); or
            ``(2) the retired or retainer pay of the qualified 
        individual is first reduced under subsection (c)(1)(B)(ii).
    ``(e) The Secretary, in conjunction with the Secretary of Defense, 
shall provide for notice of the opportunity under this section to elect 
to become entitled to basic educational assistance under this 
chapter.''.
    (b) Conforming Amendments.--Section 3017(b)(1) of title 38, United 
States Code, is amended--
            (1) in subparagraphs (A) and (C), by striking ``or 
        3018C(e)'' and inserting ``3018C(e), or 3018D(c)''; and
            (2) in subparagraph (B), by inserting ``or 3018D(c)'' after 
        ``under section 3018C(e)''.
    (c) Clerical Amendment.--The table of sections at the beginning of 
chapter 30 of title 38, United States Code, is amended by inserting 
after the item relating to section 3018C the following:

``3018D. Opportunity for certain active-duty personnel to enroll.''.

Summary: Armed Forces Education Benefits Improvement Act - Increases for FY2005 and thereafter the amount of monthly basic educational assistance under the Montgomery GI Bill (GI Bill) for veterans whose obligated period of active duty for such entitlement is three years. Increases such amounts, for FY2006 and thereafter, by the percentage increase in the Consumer Price Index.

Directs the Secretary of Defense to work expeditiously with the Secretary of Veterans Affairs to ensure that members of the Selected Reserve receive their educational benefits in a timely manner. Requires a study from the Secretary of: (1) Defense analyzing the effect of all GI Bill educational benefits on recruitment and retention; and (2) Veterans Affairs analyzing the effect of such benefits on the readjustment of veterans eligible for the increased benefits, above.

Increases for FY2005 and thereafter the amount of monthly educational assistance for members of the Selected Reserve who agree to remain members for at least six years. Increases such amounts, for FY2006 and thereafter, by the percentage increase in the Consumer Price Index.

Allows eligible members of the Armed Forces to make an irrevocable election to receive basic educational assistance under the GI Bill. Defines as eligible members those who: (1) first became a member or first served on active duty before July 1, 1985; (2) served on active duty without a break in service since such date; (3) continue to so serve during the one-year period following enactment of this Act; (4) have successfully completed the requirements of a secondary school diploma and the equivalent of 12 semester hours toward a standard college degree; and (5) when discharged or released, receive an honorable discharge.