To provide that members of the Armed Forces and Selected Reserve may transfer certain educational assistance benefits to dependents, and for other purposes.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Servicemembers' Flexible Educational 
Assistance Act''.

SEC. 2. TRANSFER OF ENTITLEMENT TO BASIC EDUCATIONAL ASSISTANCE.

    (a) All-Volunteer Force Educational Assistance Program.--Chapter 30 
of title 38, United States Code, is amended--
            (1) in the table of contents by striking the item relating 
        to section 3020 and inserting the following:

``3020. Transfer of entitlement to basic educational assistance.'';
            (2) in section 3018--
                    (A) in subsection (c) by inserting ``or (e)'' after 
                ``subsection (b)(1)''; and
                    (B) by adding at the end the following new 
                subsection:
    ``(e) An individual who made an election under section 3011(c)(1) 
or 3012(d)(1) may withdraw such election not later than one year after 
the date of enactment of this subsection if--
            ``(1) the period described in section 3031 that is 
        applicable to such individual has not expired; and
            ``(2) such individual elects to transfer entitlement to 
        educational assistance under section 3020.'';
            (3) by amending section 3020 to read as follows:
``Sec. 3020. Transfer of entitlement to basic educational assistance
    ``(a) In General.--An individual who is entitled to basic 
educational assistance under this subchapter may elect to transfer to 
one or more of the dependents specified in subsection (b) 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 3031 that is applicable to such individual.
    ``(b) 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 children.
            ``(3) To a combination of the individuals referred to in 
        paragraphs (1) and (2).
    ``(c) 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 dependent; and
            ``(3) specify the period for which the transfer shall be 
        effective for each such dependent.
    ``(d) Revocation and Modification.--An individual 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 
subsection shall be made by the submittal of written notice of the 
action to both the Secretary concerned and the Secretary of Veterans 
Affairs.
    ``(e) 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 commence until the child--
            ``(1) completes the requirements of a secondary school 
        diploma (or equivalency certificate); or
            ``(2) attains 18 years of age.
    ``(f) Time Limitation for Use of Eligibility and Entitlement.--
Notwithstanding section 3031, and subject to subsection (c)(3), a 
dependent to whom entitlement is transferred under this section may use 
such entitlement not later than the expiration date of a 20-year period 
beginning on the commencement date of the period described in section 
3031 that is applicable to the individual who transferred such 
entitlement to the dependent.
    ``(g) 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 subsections (c)(2) and (3) and (f), 
and subject to paragraph (5) of this subsection, a dependent to whom 
entitlement is transferred under this section is entitled to basic 
educational assistance under this subchapter in the same manner as the 
individual from whom entitlement was transferred.
    ``(3)(A) Subject to subparagraph (B), the monthly rate of 
educational assistance payable to a dependent to whom entitlement is 
transferred under this section shall be the monthly amount payable 
under sections 3015 and 3022 to the individual making the transfer.
    ``(B) The monthly rate of assistance payable to a dependent under 
subparagraph (A) shall be subject to the provisions of section 3032, 
except that the provisions of subsection (a)(1) of that section shall 
not apply even if the individual making the transfer to the dependent 
under this section is on active duty during all or any part of 
enrollment period of the dependent in which such entitlement is used.
    ``(4) The death of an individual transferring entitlement under 
this section shall not affect the use of the transferred entitlement by 
the dependent to whom entitlement is transferred.
    ``(5) Notwithstanding subsection (f) and section 3031, a child to 
whom entitlement is transferred under this section may not use any 
entitlement so transferred after attaining the age of 26 years.
    ``(6) Except as provided in subsection (e), the purposes for which 
a dependent to whom entitlement is transferred under this section may 
use such entitlement shall include the pursuit and completion of the 
requirements of a secondary school diploma (or equivalency 
certificate).
    ``(h) 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.
    ``(i) Regulations.--The Secretaries concerned shall prescribe 
regulations for purposes of this section.
    ``(j) Annual Report.--Not later than January 31 of each calendar 
year (beginning in 2006), the Secretary of Defense, in consultation 
with the other Secretaries concerned, shall submit to the Committee on 
Armed Services and the Committee on Veterans' Affairs of the House of 
Representatives and the Committee on Armed Services and the Committee 
on Veterans' Affairs of the Senate a report on the number of 
individuals transferring entitlement to educational assistance under 
this section during the preceding fiscal year.
    ``(k) Secretary Concerned Defined.--Notwithstanding section 
101(25), in this section the term `Secretary concerned' means--
            ``(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 Secretary of Homeland 
        Security when it is not operating as a service in the Navy.''; 
        and
            (4) in section 3031(a) by inserting ``in section 3020 and'' 
        after ``Except as provided''.
    (b) Educational Assistance for Members of the Selected Reserve.--
Chapter 1606 of title 10, United States Code, is amended--
            (1) in the table of sections by adding at the end the 
        following new item:

``16138. Transfer of entitlement to educational assistance.'';
            (2) in section 16133(a) by inserting ``and section 16138'' 
        after ``subsection (b)'';
            (3) in section 16137 by inserting ``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.''; and
            (4) by adding at the end the following new section:
``Sec. 16138. Transfer of entitlement to educational assistance
    ``(a) In General.--An individual who is entitled to educational 
assistance under this chapter may elect to transfer to one or more of 
the dependents specified in subsection (b) 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 that is applicable to such individual.
    ``(b) 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 children.
            ``(3) To a combination of the individuals referred to in 
        paragraphs (1) and (2).
    ``(c) 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 dependent; and
            ``(3) specify the period for which the transfer shall be 
        effective for each such dependent.
    ``(d) Revocation and Modification.--An individual 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 
subsection shall be made by the submittal of written notice of the 
action to both the Secretary concerned and the Secretary of Veterans 
Affairs.
    ``(e) 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 commence until the child--
            ``(1) completes the requirements of a secondary school 
        diploma (or equivalency certificate); or
            ``(2) attains 18 years of age.
    ``(f) Time Limitation for Use of Eligibility and Entitlement.--
Notwithstanding section 16133, and subject to subsection (c)(3), a 
dependent to whom entitlement is transferred under this section may use 
such entitlement not later than--
            ``(1) the expiration date of a 20-year period beginning on 
        the commencement date of the period prescribed by section 
        16133(a)(1) that is applicable 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.
    ``(g) 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 subsections (c)(2) and (3) and (f), 
and subject to paragraph (5) of this subsection, a dependent to whom 
entitlement is transferred under this section is entitled to 
educational assistance under this chapter in the same manner as the 
individual from whom entitlement was transferred.
    ``(3) The monthly rate of educational assistance payable to a 
dependent to whom entitlement is transferred under this section shall 
be the monthly amount payable under section 16131 to the individual 
making the transfer.
    ``(4) The death of an individual transferring entitlement under 
this section shall not affect the use of the transferred entitlement by 
the dependent to whom entitlement is transferred.
    ``(5) Notwithstanding subsection (f) and section 16133, a child to 
whom entitlement is transferred under this section may not use any 
entitlement so transferred after attaining the age of 26 years.
    ``(6) Except as provided in subsection (e), the purposes for which 
a dependent to whom entitlement is transferred under this section may 
use such entitlement shall include the pursuit and completion of the 
requirements of a secondary school diploma (or equivalency 
certificate).
    ``(h) 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.
    ``(i) Regulations.--The Secretaries concerned shall prescribe 
regulations for purposes of this section.
    ``(j) Secretary Concerned Defined.--Notwithstanding section 
101(a)(9), in this section the term `Secretary concerned' means--
            ``(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 Secretary of Homeland 
        Security when it is not operating as a service in the Navy.''.

SEC. 3. PROGRAM OF EDUCATION.

    (a) All-Volunteer Force Educational Assistance Program.--Chapter 30 
of title 38, United States Code, is amended--
            (1) in section 3014(a) by striking ``an approved program of 
        education'' and inserting ``a program of education of the 
        individual's choosing''; and
            (2) in sections 3014A(b)(1), 3015(a)(1), 3015(a)(2), 
        3015(b)(1), 3015(b)(2), 3015(g)(1), 3015(g)(2), 3016(b), 
        3016(c), 3022(a)(1), 3022(a)(2), and 3034(a)(3) by striking 
        ``an approved program'' each place it appears and inserting ``a 
        program''.
    (b) Educational Assistance for Members of the Selected Reserve.--
Section 16131 of title 10, United States Code, is amended--
            (1) in subsection (b)(1) by inserting ``of the person's 
        choosing'' after ``pursuing a program of education'';
            (2) by amending subsection (c)(1) to read as follows:
    ``(c)(1) Educational assistance shall be provided to each person 
entitled to educational assistance under this chapter for pursuit of 
any program of education of the person's choosing that is a program of 
education for purposes of chapter 30 of title 38.''; and
            (3) in subsection (g)(2)(B)(i) by striking ``an approved 
        program'' and inserting ``a program''.

SEC. 4. SERVICE IN THE SELECTED RESERVE.

    (a) Credit for 24 Months of Active Duty Service.--Subsection 3012 
of title 38, United States Code, is amended--
            (1) in subsection (a)--
                    (A) in paragraph (1)(A)(i) by striking ``an 
                obligated period'' and all that follows through ``in 
                the Armed Forces'' and inserting ``for a cumulative 
                period of at least 24 months of obligated active duty 
                in the Armed Forces during any 6-year period'';
                    (B) in paragraphs (1)(B)(i) and (1)(C)(iii)(I) by 
                striking ``at least two years of continuous active duty 
                in the Armed Forces'' each place it appears and 
                inserting ``for a cumulative period of at least 24 
                months of active duty in the Armed Forces during any 6-
                year period''; and
                    (C) in paragraphs (1)(B)(ii) and (1)(C)(iii)(II) by 
                striking ``two years'' each place it appears and 
                inserting ``24 months''; and
            (2) in subsection (b)(1)(A)--
                    (A) by striking ``two years of service'' and 
                inserting ``24 months of service''; and
                    (B) by striking ``during such two years'' and 
                inserting ``during such service''.
    (b) Conforming Amendment.--Section 3013(b) of title 38, United 
States Code, is amended by striking ``continuous''.

Summary: Servicemembers' Flexible Educational Assistance Act - Allows members of the Armed Forces and Selected Reserve who are entitled to educational assistance under the Montgomery GI Bill to transfer a portion of their entitlement to their dependents.

 States that a child's use of such transferred entitlement may not commence until the child completes secondary school or attains 18 years of age.

Extends the time period for use of such transferred entitlements.

Requires the Secretary of Defense to: (1) submit annual reports to specified congressional committees on the number of individuals transferring their entitlement to educational assistance under this Act; and (2) include such information pertaining to the Selected Reserve in biennial reports to Congress.

Allows service members and their dependents to choose the program of education for which educational assistance will be used.

Redefines the qualifying period of active duty service for members of the Selected Reserve to receive educational assistance as a cumulative period of at least 24 months during any six-year period.