A bill to amend the Servicemembers Civil Relief Act to provide for reimbursement to servicemembers of tuition for programs of education interrupted by military service, for deferment of students loans and reduced interest rates for servicemembers during periods of military service, and for other purposes.

SECTION 1. SHORT TITLE.

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

SEC. 2. FINDINGS AND PURPOSES.

    (a) Findings.--Congress makes the following findings:
            (1) There is no more important cause than the defense of 
        the United States.
            (2) Since 2003, nearly 1,300,000 members of the Armed 
        Forces have served in Iraq or Afghanistan and over 420,000 
        members of the Armed Forces in the National Guard and Reserve 
        have been called to active duty.
            (3) The men and women of the Armed Forces put their lives 
        on hold, leave their families, jobs, and postsecondary 
        education in order to serve the United States, and do so with 
        distinction.
            (4) In 2005, 500,000 veterans claimed education benefits 
        from the Department of Veterans Affairs and approximately 
        47,000 of those veterans are members of the National Guard or 
        Reserve and recently returned from serving in the Armed Forces 
        in Iraq or Afghanistan.
            (5) Many members of the Armed Forces depend on various 
        forms of financial aid in addition to their Montgomery GI Bill 
        benefits to help fund their college education.
            (6) The 6 percent interest rate cap on all debts of members 
        of the Armed Forces called to active duty guaranteed by the 
        Servicemembers Civil Relief Act (50 U.S.C. App. 501 et seq.) 
        has been interpreted narrowly by the Secretary of Education not 
        to apply to Federal student loans.
            (7) Members of the Armed Forces who return from deployment 
        overseas in the Armed Forces and who are unable to continue 
        immediately a program of education that they were forced to 
        discontinue because of such deployment are being forced to 
        begin making payments on their private students loans only 1 
        month after such return.
            (8) The transition from service in the Armed Forces in a 
        combat theater to a classroom is a difficult challenge and 
        should not be rushed merely to avoid paying back student loans.
            (9) As of the date of the enactment of this Act, colleges 
        are not required to make reasonable accommodations for students 
        who are called to active duty in the Armed Forces, such as 
        tuition reimbursement and relaxation of requirements for 
        reenrollment.
            (10) Members of the Armed Forces who return from deployment 
        overseas and attempt to reenroll in a program of education are 
        overwhelmed with bureaucracy.
            (11) Studies have shown that symptoms of post-traumatic 
        stress disorder (PTSD) and other non-apparent injuries may take 
        up to a year to manifest.
            (12) Members of the Armed Forces deserve to have at least a 
        full academic year to reintegrate into society before they are 
        required to begin paying back student loans.
            (13) Members of the Armed Forces who fight to protect the 
        United States deserve a Government that fights to protect them.
    (b) Purposes.--The purposes of this Act are--
            (1) to assist members of the Armed Forces who return from a 
        deployment to transition from military service to civilian life 
        and to undertake programs of education they were forced to 
        discontinue because of such deployment;
            (2) to provide a 13-month transition period for such 
        members to reenroll in such a program of education and to begin 
        paying back student loans undertaken for such program of 
        education;
            (3) to institute a 6 percent interest rate cap on student 
        loans of a member of the Armed Forces while such member is 
        deployed on active duty; and
            (4) to require providers of programs of education to 
        provide reasonable accommodations to their students who are 
        members of the Armed Forces and who discontinue a program of 
        education because of a deployment.

SEC. 3. RELIEF FOR STUDENTS WHO DISCONTINUE EDUCATION BECAUSE OF 
              MILITARY SERVICE.

    (a) In General.--Title VII of the Servicemembers Civil Relief Act 
(50 U.S.C. App. 591 et seq.) is amended by adding at the end the 
following new section:

``SEC. 707. TUITION, REENROLLMENT, AND STUDENT LOAN RELIEF FOR 
              POSTSECONDARY STUDENTS CALLED TO MILITARY SERVICE.

    ``(a) Tuition and Reenrollment.--In the case of a servicemember who 
because of military service discontinues a program of education at an 
institution of higher education that administers a Federal financial 
aid program, such institution of higher education shall--
            ``(1) refund to such servicemember the tuition and fees 
        paid by such servicemember from personal funds, or from a loan, 
        for the portion of the program of education for which such 
        servicemember did not receive academic credit because of such 
        military service; and
            ``(2) provide such servicemember an opportunity to reenroll 
        in such program of education with the same educational and 
        academic status such servicemember had when such servicemember 
        discontinued such program of education because of such military 
        service.
    ``(b) Deferment of Repayment of Loans.--In the case of a 
servicemember who because of military service discontinues a program of 
education at an institution of higher education, the following rules 
shall apply to a provider of student loans who has provided a student 
loan to such servicemember that is not in payment status on the date 
the period of military service begins:
            ``(1) If such servicemember reenrolls in the program of 
        education (or a comparable program) within 13 months following 
        the period of military service, the provider shall disregard 
        the entire period the program of education was discontinued in 
        determining the date on which repayment of the student loan is 
        to begin.
            ``(2) If such servicemember does not so reenroll, the 
        provider shall not require repayment of the student loan to 
        begin before the later of the last day of such 13-month period 
        or the date the repayment was to begin without regard to this 
        subsection.
    ``(c) Interest Rate Limitation on Student Loans.--
            ``(1) In general.--Except as provided in paragraph (2) of 
        this subsection, a student loan shall be considered an 
        obligation or liability for the purposes of section 207.
            ``(2) Exception.--Subsection (c) of section 207 shall not 
        apply to a student loan.
    ``(d) Definitions.--In this section:
            ``(1) The term `Federal financial aid program' means a 
        program providing loans made, insured, or guaranteed under part 
        B, D, or E of title IV of the Higher Education Act of 1965 (20 
        U.S.C. 1077 et seq., 1087a et seq., 1087aa et seq.).
            ``(2) The term `institution of higher education' means a 2-
        year or 4-year institution of higher education as defined in 
        section 102 of the Higher Education Act of 1965 (20 U.S.C. 
        1002).
            ``(3) The term `student loan' means any loan, whether 
        Federal, State, or private, to assist an individual to attend 
        an institution of higher education, including a loan made, 
        insured, or guaranteed under part B, D, or E of title IV of the 
        Higher Education Act of 1965 (20 U.S.C. 1077 et seq., 1087a et 
        seq., 1087aa et seq.).''.
    (b) Clerical Amendment.--The table of contents in section (1)(b) of 
such Act is amended by adding at the end the following new item:

``Sec. 707. Tuition, reenrollment, and student loan relief for 
                            postsecondary students called to military 
                            service.''.
    (c) Effective Date.--The amendments made by this section shall take 
effect for periods of military service beginning after the date of the 
enactment of this section.

Summary: Veterans Education Tuition Support Act or VETS Act - Amends the Servicemembers Civil Relief Act to require an institution of higher education, in the case of a servicemember who because of military service discontinues a program of education at an institution that administers a federal financial aid program, to: (1) refund to the servicemember tuition and other fees paid for the portion of the program of education for which the servicemember did not receive academic credit because of such military service; and (2) provide the servicemember an opportunity to reenroll at the institution with the same educational and academic status that the servicemember had when the program was discontinued because of the military service.

Requires a provider of a student loan with respect to such a servicemember: (1) if the servicemember reenrolls in the program of education (or a comparable program) within 13 months following the period of military service, to disregard the entire period that the education was discontinued in determining the date on which student loan repayment is to begin; or (2) if the servicemember does not reenroll, to not require loan repayment to begin before the later of the last day of such 13-month period or the date the repayment was otherwise required to begin.

Prohibits a court from granting a creditor relief from the 6% limit on interest charged against student loan indebtedness.