To amend the Higher Education Act of 1965 to allow soldiers to serve their country without being disadvantaged financially by Federal student aid programs.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Fairness for America's Servicemen 
and Women in Higher Education Act of 2003''.

SEC. 2. REFUND POLICY.

    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:
                    ``(D) Students on active duty during a war or 
                national emergency.--Notwithstanding subparagraphs (A), 
                (B), and (C), a student who withdraws from an 
                institution of higher education to serve on active duty 
                during a war or national emergency shall not be 
                required to repay any grant assistance that is 
                otherwise required to be repayed under this section.''.

SEC. 3. DEFERMENT DURING ACTIVE DUTY.

    (a) FFEL Subsidized Loans.--Section 428(b)(1)(M) of the Higher 
Education Act of 1965 (20 U.S.C. 1078(b)(1)(M)) is amended--
            (1) in clause (ii), by striking ``or'' after the semicolon;
            (2) in clause (iii), by inserting ``or'' after the 
        semicolon; and
            (3) by inserting after clause (iii) the following:
                            ``(iv) during which the borrower--
                                    ``(I) is a member of a regular 
                                component on active duty during a war 
                                or during a national emergency declared 
                                by the President or Congress, and 
                                receives compensation described in 
                                section 112(a) of the Internal Revenue 
                                Code of 1986;
                                    ``(II) is on active duty under 
                                section 688, 12301(a), 12301(d), 
                                12301(g), 12302, 12304, 12306, 12307, 
                                or 12406, or chapter 15 of title 10, 
                                United States Code, or any other 
                                provision of law, during a war or 
                                during a national emergency declared by 
                                the President or Congress, regardless 
                                of the location at which such active 
                                duty service is performed; or
                                    ``(III) in the case of a member of 
                                the National Guard, is on full-time 
                                National Guard duty (as defined in 
                                section 101(d)(5) of title 10, United 
                                States Code) under a call to active 
                                service authorized by the President or 
                                the Secretary of Defense for a period 
                                of more than 30 consecutive days under 
                                section 12402 of title 10, United 
                                States Code, or section 502(f) of title 
                                32, United States Code, for purposes of 
                                responding to a national emergency 
                                declared by the President and supported 
                                by Federal funds.''.
    (b) Direct Subsidized Loans.--Section 455(f)(2) of such Act (20 
U.S.C. 1087e(f)(2)) is amended--
            (1) by striking the period at the end of subparagraph (C) 
        and inserting ``; and''; and
            (2) by adding at the end the following new subparagraph:
                    ``(D) during which the borrower--
                            ``(i) is a member of a regular component on 
                        active duty during a war or during a national 
                        emergency declared by the President or 
                        Congress, and receives compensation described 
                        in section 112(a) of the Internal Revenue Code 
                        of 1986;
                            ``(ii) is on active duty under section 688, 
                        12301(a), 12301(d), 12301(g), 12302, 12304, 
                        12306, 12307, or 12406, or chapter 15 of title 
                        10, United States Code, or any other provision 
                        of law, during a war or during a national 
                        emergency declared by the President or 
                        Congress, regardless of the location at which 
                        such active duty service is performed; or
                            ``(iii) in the case of a member of the 
                        National Guard, is on full-time National Guard 
                        duty (as defined in section 101(d)(5) of title 
                        10, United States Code) under a call to active 
                        service authorized by the President or the 
                        Secretary of Defense for a period of more than 
                        30 consecutive days under section 12402 of 
                        title 10, United States Code, or section 502(f) 
                        of title 32, United States Code, for purposes 
                        of responding to a national emergency declared 
                        by the President and supported by Federal 
                        funds.''.
    (c) Consolidation Loans.--Section 428C(b)(4)(C)(ii) of the Higher 
Education Act of 1965 (20 U.S.C. 1078-3(b)(4)(C)(ii)) is amended--
            (1) in subclause (II), by striking ``or'' after the 
        semicolon;
            (2) in subclause (III), by striking ``or (II)'' and 
        inserting ``, (II) or (III)'';
            (3) by redesignating subclause (III) (as so amended) as 
        subclause (IV); and
            (4) by inserting after subclause (II) the following:
                    ``(III) by the Secretary, in the case of a 
                consolidation loan of a student who is on an active 
                duty deferment under section 428(b)(1)(M)(iv); or''.
    (d) FFEL Unsubsidized Loans.--Section 428H(e) of the Higher 
Education Act of 1965 (20 U.S.C. 1078-8(e)) is amended by adding at the 
end the following:
            ``(C) Notwithstanding subparagraph (A), interest on loans 
        made under this section for which payments of principal are 
        deferred because the student is on an active duty deferment 
        under section 428(b)(1)(M)(iv) shall be paid by the 
        Secretary.''.
    (e) Direct Unsubsidized Loans.--Section 455(f) of such Act (20 
U.S.C. 1087e(f)) is amended by adding at the end the following:
            ``(5) Interest during active duty deferments.--
        Notwithstanding paragraph (1)(B), interest on loans under this 
        part for which payments of principal are deferred because the 
        student is on an active duty deferment under paragraph (2)(D) 
        shall be paid by the Secretary.''.
    (f) Perkins Loans.--Section 464(c)(2)(A) of the Higher Education 
Act of 1965 (20 U.S.C. 1087dd(c)(2)(A)) is amended--
            (1) in clause (iii), by striking ``or'' after the 
        semicolon;
            (2) in clause (iv), by inserting ``or'' after the 
        semicolon; and
            (3) by inserting after clause (iv) the following:
                            ``(v) during which the borrower--
                                    ``(I) is a member of a regular 
                                component on active duty during a war 
                                or during a national emergency declared 
                                by the President or Congress, and 
                                receives compensation described in 
                                section 112(a) of the Internal Revenue 
                                Code of 1986;
                                    ``(II) is on active duty under 
                                section 688, 12301(a), 12301(d), 
                                12301(g), 12302, 12304, 12306, 12307, 
                                or 12406, or chapter 15 of title 10, 
                                United States Code, or any other 
                                provision of law, during a war or 
                                during a national emergency declared by 
                                the President or Congress, regardless 
                                of the location at which such active 
                                duty service is performed; or
                                    ``(III) in the case of a member of 
                                the National Guard, is on full-time 
                                National Guard duty (as defined in 
                                section 101(d)(5) of title 10, United 
                                States Code) under a call to active 
                                service authorized by the President or 
                                the Secretary of Defense for a period 
                                of more than 30 consecutive days under 
                                section 12402 of title 10, United 
                                States Code, or section 502(f) of title 
                                32, United States Code, for purposes of 
                                responding to a national emergency 
                                declared by the President and supported 
                                by Federal funds.''.
    (g) Effective Date.--The amendments made by this section shall 
apply with respect to loans for which the first disbursement is made on 
or after July 1, 1993, to an individual who is a new borrower (within 
the meaning of section 103 of the Higher Education Act of 1965 (20 
U.S.C. 1003)) on or after such date.

Summary: Fairness for America's Servicemen and Women in Higher Education Act of 2003 - Amends the Higher Education Act of 1965 (HEA) to revise title IV student loan and grant assistance repayment provisions with respect to individuals who serve on active duty during a war or national emergency.Exempts students who withdraw from higher education institutions to serve on active duty during a war or national emergency from requirements to repay certain title IV grant assistance.Defers repayments of principal, and directs the Secretary of Education to make interest payments, on specified types of student loans during a war or national emergency when a borrower is: (1) a member of a regular component on active duty, and receives specified compensation; (2) on active duty, regardless of the location at which such active duty service is performed; or (3) on full-time National Guard duty under a call to active service for a period of more than 30 consecutive days to respond to a national emergency.