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                                                       Calendar No. 222
106th Congress                                                   Report
                                 SENATE
 1st Session                                                    106-114

======================================================================



 
ALL-VOLUNTEER FORCE EDUCATIONAL ASSISTANCE PROGRAMS IMPROVEMENTS ACT OF 
                                  1999

                                _______
                                

                 July 20, 1999.--Ordered to be printed

                                _______


  Mr. Specter, from the Committee on Veterans' Affairs, submitted the 
                               following

                              R E P O R T

                         [To accompany S. 1402]

    The Committee on Veterans' Affairs reported an original 
bill (S. 1402), to amend title 38, United States Code, to 
enhance programs providing education benefits for veterans, and 
for other purposes, and recommends that the bill do pass.

                              Introduction

    On May 19, 1999, Committee Chairman Arlen Specter 
introduced S. 1076, the proposed ``Veterans Benefits Act of 
1999.'' S. 1076 would have provided for a December 1, 1999, 
cost-of-living adjustment (COLA), equal to the December 1, 
1999, COLA in Social Security benefits, in the rates of 
compensation for veterans who have service-connected 
disabilities and in the rates of dependency and indemnity 
compensation (DIC) for the survivors of those who died from 
service-connected causes. In addition, S. 1076 would have, 
among other things: reauthorized, modified, and enhanced 
certain programs providing health care, education, and other 
benefits for veterans; authorized major medical facility 
projects; reformed eligibility for burial in Arlington National 
Cemetery; granted fund raising and borrowing authorities to 
facilitate the construction of a World War II Memorial; and 
modified provisions of law relating to the retirement of judges 
on the United States Court of Appeals for Veterans' Claims.

                           Committee Hearings

    On January 29, 1999, the Committee held a hearing on the 
findings and recommendations of the Commission on 
Servicemembers and Veterans Transition Commission, a commission 
established by Public Law 104-275. The Committee received 
testimony from former Senator Robert J. Dole, the sponsor of 
legislation first calling for the creation of the Commission; 
from Anthony J. Principi, the Chairman of the Commission; and 
from representatives of the Department of Veterans Affairs (VA) 
and the Department of Defense (DOD).
    On May 20, 1999, the Committee held a hearing on a number 
of bills pending before the Committee, including S. 1076. The 
Committee received testimony from Senator Kent Conrad; from 
representatives of VA and the Department of Army; and from 
representatives of The American Legion, the Veterans of Foreign 
Wars, the Disabled American Veterans, the Paralyzed Veterans of 
America, AMVETS, and the Vietnam Veterans of America. In 
addition, the Committee received written statements for the 
record from the Chief Judge of the United States Court of 
Appeals for Veterans Claims; and from representatives of the 
American Federation of Government Employees, AFL-CIO, the 
National Association of Government Employees, the National 
Association of VA Physicians and Dentists, the Nurses 
Organization of Veterans Affairs, and National Coalition for 
Homeless Veterans.

                           Committee Meeting

    On June 23, 1999, the Committee met in open session to 
consider S. 1076, as amended, and other legislation pending 
before the Committee. Among the measures so considered was S. 
1402 (hereinafter, the ``Committee bill''), an original bill 
which was derived from Title II of S. 1076, as introduced. The 
Committee voted by unanimous voice vote to report the Committee 
bill favorably to the Senate.

               Summary of the Committee Bill as Reported

    The Committee bill contains amendments to Title 38, United 
States Code, and freestanding provisions that would: (a) 
authorize All-Volunteer Force Educational Assistance Program 
benefits (commonly referred to as ``Montgomery GI Bill'' or 
``MGIB'' benefits) for students taking preparatory courses for 
standardized tests utilized for admissions to colleges or 
graduate schools; (b) increase the basic benefit of MGIB 
recipients by 13.6%--e.g., from $528 to $600 per month for 3-
year enlistees; (c) increase survivors' and dependents' 
educational assistance benefits by 13.6%--e.g., from $485 to 
$550 permonth for full-time students; (d) increase MGIB 
benefits paid to beneficiaries who elect to make additional 
contributions of up to $600; (e) authorize continued MGIB eligibility 
in cases where an enlisted service member's initial term of service is 
interrupted for the purpose of accepting a commission; (f) authorize 
service members who had ``opted out'' of MGIB participation (by 
electing not to receive MGIB benefits and whose basic pay during the 
first 12 months of service, therefore, had not been reduced by $100 per 
month for 12 months) to regain eligibility for MGIB benefits by making 
a payment of $1,500 during service; (g) authorize VA to make 
accelerated MGIB benefits payments (on a beginning-of-semester or 
beginning-of-enrollment basis); (h) require that VA submit an annual 
report to Congress on education benefits provided to veterans by the 
States; and (i) express the sense of Congress that the States should 
provide tuition waivers to veterans attending State-supported post-
secondary educational institutions after service.

                               Discussion


                               Background

    The Congress first afforded educational benefits to 
veterans in 1944. The World War II ``GI Bill'' was called, in 
retrospect, the most successful government program since the 
Homestead Act because it opened doors to post-secondary 
education opportunities for millions of Americans who might not 
otherwise been able to gain a higher education. The World War 
II GI Bill was succeeded by veterans' education benefits 
programs enacted for wartime veterans of the Korean Conflict 
and, later still, the Vietnam War. In 1976, the first veterans' 
education benefit program for peacetime veterans of an all-
volunteer military, the Post-Vietnam Era Veterans Educational 
Assistance, or ``VEAP,'' Program, 38 U.S.C. Chapter 32, was 
enacted. VEAP created, in summary, a matching fund account 
system into which service members could deposit contributions 
of up to $2,700 which DOD would ``match'' on a 2 to 1 basis. 
Thus, service members could accumulate a ``college fund'' worth 
as much as $8,100 while in service.
    VEAP was succeeded in 1984 by the All-Volunteer Force 
Educational Assistance Program, 38 U.S.C. Chapter 30, commonly 
referred to as the ``Montgomery GI Bill'' or ``MGIB'' Program. 
MGIB retained the service member contribution feature of VEAP, 
though at the reduced level of $1,200. Under MGIB, service 
members who do not opt out of the program, see 38 U.S.C. 
Sec. Sec. 3011(c)(1), 3012(c), accept a reduction in their base 
pay of $100 per month for 12 months (or a total pay reduction 
of $1,200) and, in exchange, they become entitled to 36 months 
of education benefits (to be used within 10 years of release 
from active duty) so long as they (with some exceptions) 
complete their initial obligated period of service and receive 
an honorable discharge. Veterans who served at least 36 months, 
and who are enrolled in a post-secondary school or training 
program on a full time basis, currently receive $528 per month 
while they are in school.
    The MGIB program is intended to assist former service 
members in readjusting to civilian life; to make a higher 
education opportunities available to qualified men and women 
who might not otherwise be able to afford post-secondary 
schooling; to restore educational opportunities lost as the 
result of the veteran's decision to serve in the military; to 
assist the Armed Forces in recruiting and retaining the high 
quality individuals they need to attract to a modern military; 
and to enhance the Nation's competitiveness by helping to 
develop a more highly educated and productive workforce. 38 
U.S.C. Sec. 3001.
    The Committee believes that if these goals are to be met, 
Federal policy must both encourage high quality young people to 
enlist in the Armed Forces and encourage them to pursue a post-
secondary education after they are released from active duty. 
Unfortunately, according to a VA MGIB Enrollment and Usage Data 
report dated September 12, 1998, only 48.7 percent of eligible 
veterans utilized their benefits during the first 13 years in 
which MGIB was in force. The Committee infers that this is 
true, at least in part, because benefits have not kept pace 
with increasing education costs. As was reported by DOD, in 
1995-1996, MGIB benefits covered only 65 per cent of the 
tuition and fees, and 36 per cent of the total cost of 
attendance, at an average four year college. See Assistant 
Secretary of Defense (Force Management Policy), Biennial Report 
to Congress on the Montgomery GI Bill Education Benefits 
Program, May 1998, at 9. Despite the enactment in 1998 of a 20% 
increase in MGIB's basic educational assistance benefit rates, 
see Sec. 8203 of Public Law 104-178, MGIB benefits still cover 
only 55% of the cost of attendance at a public four year 
college.
    As is noted above, the Committee held a hearing on January 
29, 1999, on the findings and recommendations of the Commission 
on Servicemembers and Veterans Transition (hereafter, the 
``Commission''). It received testimony from former Senator 
Robert J. Dole (the sponsor of legislation creating the 
Commission); from Anthony J. Principi, the Chairman of the 
Commission; and from representatives of VA and DOD.
    Among the findings made by the Commission were the 
following:
    1. MGIB benefits cover a fraction of the cost of a 
contemporary education at an average four year college. Current 
benefit levels reduce the ability of the program to assist 
separating veterans in theirreadjustment to civilian life by 
constraining their access to an education.
    2. College-bound youth and their parents see a tour of 
military service as a detour from college plans, rather than as 
a way to achieve a higher education. The MGIB is losing its 
effectiveness in providing college-caliber high school 
graduates with an incentive to join the Armed Forces.
    3. Veterans are increasingly rare in the leadership ranks 
of American institutions, including government, business, 
academia, and the clergy. If America's leaders are to include 
veterans of military service, it will be necessary for more 
veterans to have the means to attend the schools from which the 
leadership of America's institutions are drawn.
    4. Military service is America's most fundamental form of 
national service. An MGIB ensuring that the only constraints on 
veterans' education are their ability and ambition would 
attract the best and the brightest of America's youth to their 
Nation's service.
    5. A more financially attractive MGIB would enable the 
Nation to fully capitalize on the unique national resource of 
veterans' skills, training, experience, and character.
    Based on these, and other, findings, the Commission 
recommended, among other things, that legislation be enacted 
to:
    1. For persons who prospectively enlist or reenlist for a 
period of service of 48 months or more--
          (a) Pay qualifying veterans the full costs of 
        tuition, fees, books, and supplies, as well as a 
        subsistence allowance of $400 per month for up to 36 
        months (4 school years). The subsistence allowance 
        would be indexed for inflation. Benefits would also be 
        payable for non-institutional training (e.g., on-the-
        job/apprenticeship training and flight training);
          (b) Provide this enhanced benefit without a $1,200 
        payroll reduction;
          (c) Provide the Services with discretionary authority 
        to fund the transfer of this education benefit from the 
        servicemember who earned them (sic) to a member of the 
        servicemember's immediate family (i.e., spouse or 
        children);
          (d) Allow veterans 10 years from the date of 
        separation to use this benefit; and
          (e) Specify that the subsistence allowance for this 
        benefit would not count as income for the purposes of 
        determining eligibility for federal educational grants 
        and loans; and
    2. For persons who have enlisted or will enlist for fewer 
than 48 months--
          (a) Absolve any balance of the $1,200 payroll 
        deduction owed by active duty members effective the 
        date of enactment;
          (b) Increase the basic monthly benefit amount for 
        full-time institutional training to $600; and
          (c) Allow, at the beneficiary's discretion, payment 
        of accelerated ``lump sum'' benefits for an entire 
        term, semester, or quarter at colleges and for the 
        entire course for courses not leading to a college 
        degree.

                             Committee Bill

Section 3. Availability of Montgomery GI Bill benefits for preparatory 
        courses for college and graduate school entrance exams

    Under current law, MGIB participants may utilize their 
benefits while they take courses leading to an educational, 
professional or vocational objective. 38 U.S.C. Sec. Sec. 3002, 
3452(b). Many schools offering courses that lead to an 
educational, professional or vocational objective, most notably 
colleges and graduate schools, require that applicants take 
entrance exams--e.g., the Scholastic Aptitude Test (SAT) and 
the Graduate Record Exam (GRE)--on which colleges, particularly 
relatively selective colleges, and graduate schools rely 
heavily in evaluating candidates for admission. Preparatory 
courses have emerged that are designed to assist students in 
achieving higher entrance exam scores. Prospective students 
taking such courses--unlike those taking, e.g., post-graduate 
preparatory courses for bar and certified public accountant 
exams--cannot receive MGIB benefits while taking such courses. 
Without adding to the overall benefit to which MGIB 
participants are entitled, section 3 of the Committee bill 
would allow MGIB participants to draw benefits while taking 
such courses.

Section 4. Increase in basic benefit of active duty educational 
        assistance

    When MGIB was enacted in 1984, the monthly rate of basic 
educational benefits covered approximately 66% of the cost of 
attendance at a public four year college. As is noted above, by 
1995-1996, MGIB benefits had shrunk to 36 percent of the total 
cost of attendance at an average four year college. Despite the 
enactment in 1998 of a 20% increase in MGIB's basic educational 
assistance benefit rates, see Sec. 8203 of Public Law 104-178, 
MGIB benefits still cover only 55% of the cost of attendance at 
a public four year college.
    The Committee believes that the failure of the benefit rate 
to keep up with the ever-increasing cost of post-secondary 
education gradually erodes, and could ultimately eliminate, 
educational opportunities available to veterans. The Committee 
believes that education is acritical prerequisite to a 
veteran's readjustment to civilian life and his or her success in the 
information-based 21st century economy. The Commission on 
Servicemembers and Veterans Transition Assistance concurs; it 
recommended the same increase in monthly rates for current service 
members, and recommended a far more generous, tuition-reimbursement 
based, system for prospective service members. The Committee will 
explore that proposal further. In the meantime, it concludes that a 
significant increase in benefits afforded to current service members is 
fully warranted. Accordingly, the Committee bill would increase 
benefits by 13.6 percent, from $528 to $600 per month for full time 
veteran-students who served at least three years, and from $429 to $488 
per month for full time veteran-students whose initial active duty 
commitment was two years.

Section 5. Increase in rates of survivors and dependents educational 
        assistance

    Survivors and Dependents Educational Assistance (DEA) 
benefits are provided by VA to the surviving spouse and 
dependent children of an individual who dies either on active 
duty or due to a service- connected cause. See 38 U.S.C. 
Chapter 35. The same benefits are provided to the spouse and 
dependent children of veterans who are permanently and totally 
disabled due to a service-connected injury or illness. In both 
cases, the benefit's purpose, with respect to dependent 
children is to ``provid[e] opportunities for education to 
children whose education would otherwise be impeded or 
interrupted by reason of the disability or death of a parent 
from a disease or injury incurred or aggravated in the Armed 
Forces.'' 38 U.S.C. Sec. 3500. With respect to the spouse of 
the deceased service member or permanently and totally disabled 
veteran, the purpose of the benefit is to assist spouses ``in 
preparing to support themselves and their families at a 
standard of living level which the veteran, but for the 
veteran's death or service disability, could have expected to 
provide for the veteran's family.'' Id. In 1998, 42,706 
beneficiaries received education benefits through this program.
    Currently, the DEA benefit is set at $485 per month for 
full time students, and $365 and $242 for students carrying 
three-quarter and half-time loads respectively. In 1985, DEA 
benefits to full time students paid 83% of the average cost of 
attendance at a four-year public college. Current benefits, 
however, cover only 51% of the cost of a four-year public 
college education. The benefit afforded to full time students 
would have to be increased to $971 to achieve parity with the 
1985 benefit's educational purchasing power.
    The Committee bill would increase the full time student DEA 
benefit by 13.6 percent (the same percentage increase to be 
afforded to veteran-students under section 4 of the Committee 
bill) from $485 to $550 per month, and make parallel increases 
in the benefit rates afforded to three-quarter time, and half-
time, students. The Committee believes the rate increase 
provided by section 5 is a necessary minimum step toward 
accomplishing the above-quoted purposes stated in section 3500 
of title 38, United States Code.

Section 6. Increased active duty educational assistance benefit for 
        contributing members

    As is noted above, MGIB benefits have not kept pace with 
the spiraling costs of post-secondary education. When MGIB was 
enacted in 1984, the monthly rate of basic educational benefits 
covered approximately 66% of the cost of attendance at a public 
four year college. Today, even after the 20% increase enacted 
last year, basic educational benefits cover only 55% of the 
cost of attendance at a public four year college.
    Section 4 of the Committee bill would increase MGIB's basic 
educational assistance benefit--but, even so, benefits would 
cover only two-thirds of the cost of a public college 
education, and far, far less of the costs students incur in 
attending private colleges, universities, and training schools. 
As is noted above, the Committee will consider further the 
recommendation of the Commission on Servicemembers and Veterans 
Transition Assistance that, for future beneficiaries, VA 
convert to a system of benefits that would reimburse the full 
costs of tuition and fees plus provide book, supply, and 
subsistence allowances. In the interim, current service members 
need assistance over and above the basic educational benefit--
even as increased by section 4 of the Committee bill--if they 
are, practically speaking, going to be able to attend college 
on a full time basis after service. Thus, the Committee bill 
would provide additional benefits to service members who choose 
to ``buy up'' their benefit by making additional contributions 
from their basic pay during service.
    Section 6 of the Committee bill would allow service members 
who have not opted out of MGIB participation to increase the 
monthly rate of educational benefits they will receive after 
service by making contributions, during service, over and above 
the $1,200 basic pay reduction necessary to establish MGIB 
eligibility. Under section 6, a service member could contribute 
up to an additional $600 in multiples of $4. The monthly rate 
of basic educational assistance would be increased by one 
dollar for each $4 so contributed. Thus, MGIB participants who 
``use up'' their full 36 months of MGIB benefits would receive 
a nine to one return on their additional contribution 
investment. In more immediately practical terms, full time 
veteran-students who would otherwise be entitled to receive 
$600 per month(or $5,400 per nine month academic year) under 
section 4 would be able to boost their monthly benefit check by $150 to 
$750 month (or by $1,350 to $6,750 per 9-month academic year). Such an 
increase, to a total academic year benefit of $6,750, would still not 
fully cover the tuition, fee and living costs of attending a public 
college (and, of course, would still fall far, far short of private 
college costs). It would, however, approach the level of assistance 
necessary to permit veteran-students to attend college on a full time 
basis.

Section 7. Continuing eligibility for educational assistance of members 
        of the Armed Forces attending officers training school

    Under current law, MGIB participants must complete their 
initial obligated period of service in order to receive MGIB 
benefits. 38 U.S.C. Sec. 3011(a). Exceptions to this 
requirement are limited to individuals whose service is cut 
short due to disability or hardship, the convenience of the 
service (if the individual has completed 30 months of a three 
year enlistment or 20 months of a two year enlistment), or due 
to a reduction in force by the service.
    The Committee has learned of instances in which VA has 
denied MGIB benefits to individuals who were discharged 
prematurely from, and therefore did not ``complete,'' their 
initial enlistment to accept an officer's commission. These 
denials were based on the fact that, technically, such veterans 
did not complete their initial obligation, even though their 
service was uninterrupted and they fully and honorably 
completed the active duty service requirements of their 
officer's commission. The Committee believes that the service 
of such individuals fully meets the intent of the MGIB's 
qualifying service requirements.
    Section 7 of the Committee bill would create an additional 
exception to the requirement that enlistees complete their 
initial obligated period of service in order to be eligible for 
MGIB benefits: individuals who are discharged from service so 
that they may accept a commission will remain eligible for MGIB 
benefits if they complete the service obligation incurred in 
accepting the commission. This provision would ensure that 
service members are not penalized for committing themselves to 
service as commissioned or warrant officers, and would assist 
the services in attracting enlisted members into the officers' 
ranks by removing a significant deterrent to accepting a 
commission.

Section 8. Eligibility of members of the Armed Forces to withdraw 
        elections not to receive Montgomery GI Bill basic educational 
        assistance

    All service members, except those who affirmatively ``opt 
out'' by waiving eligibility by declining to permit their basic 
pay to be reduced by $100 per month for 12 months, participate 
in MGIB. By placing the burden of an affirmative election on 
those who would opt out, the positive result of overwhelming 
participation has been achieved. Currently, fewer than 5% of 
recruits elect to forego their opportunity for post-service 
education benefits. Even so, the Committee believes that at 
least some service members who opt out of the program come to 
regret that decision as their circumstances, plans for the 
future, and, most importantly, their maturity levels, change. 
Such veterans--and society--are disadvantaged when veterans who 
have opted out of MGIB and later want to go to school are 
unable to do so for financial reasons.
    Section 8 of the Committee bill would allow such service 
members an opportunity to reverse their decision to waive MGIB 
participation by accepting a $100 per month pay reduction for 
15 months or by ``buying into'' participation by making a lump 
sum $1,500 payment. The $300 differential between the $1,200 
pay reduction accepted by recruits when they enter active 
service and the $1,500 pay reduction necessary to qualify later 
is intended to strike a balance between two competing 
interests: the Committee does not wish to make the ``buy- back-
in'' opportunity so onerous that it will not be used by the 5 
percent of recruits who have opted out; but it also wants to 
make it onerous enough relative to the $1,200 pay reduction to 
discourage new recruits from waiving MGIB eligibility in the 
first place.

Section 9. Accelerated payments of basic educational assistance

    MGIB benefits, e.g., $600 per month under section 4 of the 
Committee bill for full-time students, are currently paid on a 
monthly basis. Most schools, however, impose substantial ``up-
front'' costs at the beginning of a term or semester. Colleges, 
for example, generally require that tuition be paid in full at 
the beginning of each term. Similarly, short-term, highly-
focused, and often highly technical courses of study generally 
require the payment of substantial tuition and fees ``up 
front.''
    The Committee believes that the current method of spreading 
MGIB payments out on a month-by-month basis over the duration 
of the course can impose a financial burden on some MGIB-
participating veteran-students. Section 9 of the Committee bill 
would authorize VA to make accelerated payments under the terms 
of regulations that VA would promulgate to allow MGIB 
participants to receive on request asemester's, a quarter's, or 
a term's worth of benefits at the beginning of the semester, quarter or 
term. For courses not so organized, VA could make an accelerated 
payment up to a limit established by VA regulation, not to exceed the 
cost of the course. In either case, the student's entitlement would be 
reduced by the same amount as it would have been charged had payments 
been made on a monthly basis. The Committee notes that the Commission 
on Servicemembers and Veterans Transition Assistance recommended that 
the Congress enact legislation providing for accelerated payments.

Section 10. Veterans education and vocational training benefits 
        provided by the States

    Section 10 of the Committee bill would require that VA, in 
consultation with the Departments of Defense, Education, and 
Labor, report annually to the Congress on veterans' education 
and vocational training benefits provided by the States. The 
first such report would be due not later than six months after 
enactment of section 10. In addition, section 10 expresses the 
sense of the Senate that the States should admit qualified 
veterans to State-supported educational institutions without 
payment of tuition.
    At least one State, Illinois, already provides veterans a 
State university tuition waiver benefit. Tuition and fees at 
the State of Illinois college system range from $2,496 to 
$4,338 per year. When all United States colleges are ranked in 
terms of number of veterans enrolled, those ranking 3rd, 14th 
and 21st are publicly-funded schools in Illinois.
    The Committee commends the State of Illinois for its long-
standing tuition waiver program. It is time for the other 
States to follow Illinois' example. The people and taxpayers of 
every State--not just Illinois--benefit from the security and 
peace preserved through the service of our military members. 
And every State would benefit from attracting veterans who seek 
a higher education to their borders--as Illinois has. The 
Committee hopes that annual reports will signal to veterans the 
identity of States that appreciate their service and recognize 
their value. It hopes as well that such reports will highlight 
to non-participating States the opportunities that they are 
missing by not attempting to attract educated veterans to their 
borders.

                             Cost Estimate

    In compliance with paragraph 11(a) of rule XXVI of the 
Standing Rules of the Senate, the Committee, based on 
information supplied by the Congressional Budget Office (CBO), 
estimates that enactment of the Committee bill, as compared to 
costs under current law and as scored against the current CBO 
baseline, would increase Federal direct spending by $297 
million in fiscal year 2000, and by approximately $1.4 billion 
over the fiscal year 2000-2004 period. Enactment of the 
Committee bill would not affect the budget of State and local 
governments.
    The cost estimate provided by CBO, setting forth a detailed 
breakdown of costs, follows:

                                     U.S. Congress,
                               Congressional Budget Office,
                                     Washington, DC, June 30, 1999.
Hon. Arlen Specter,
Chairman, Committee on Veterans' Affairs,
U.S. Senate, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office (CBO) 
has prepared the enclosed cost estimate for the All-Volunteer 
Force Educational Assistance Programs Improvements Act of 1999.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Sarah T. 
Jennings.
            Sincerely,
                                          Dan L. Crippen, Director.
    Enclosure.

               CONGRESSIONAL BUDGET OFFICE COST ESTIMATE

All-Volunteer Force Educational Assistance Programs Improvements Act of 
        1999

    Summary: The bill contains several provisions that would 
enhance educational benefits under the Montgomery GI Bill. The 
enhancements would include increased benefit levels and 
expanded eligibility and participation options. CBO estimates 
that enacting the bill would cost $297 million in 2000 and 
about $1.4 billion over the 2000-2004 period.In 2009, costs 
would total about $353 million. Because the bill would affect direct 
spending, pay-as-you-go procedures would apply.
    Section 4 of the Unfunded Mandates Reform Act excludes from 
application of that act any legislative proposals that are 
necessary for national security. That exclusion might apply to 
provisions of the bill that relate to the Montgomery GI Bill. 
In any case, the bill contains no intergovernmental or private-
sector mandates.
    Estimated cost to the Federal Government: The estimated 
budgetary impact of the bill is shown in the following table. 
The costs of this legislation fall within budget function 700 
(veterans' affairs).
    Basis of estimate: The bill contains seven provisions that 
would raise direct spending for veterans' readjustment 
benefits, specifically the Montgomery GI Bill (MGIB) and 
Survivors' and Dependents' Educational Assistance.

    TABLE 1.--BUDGETARY IMPACT OF THE ALL-VOLUNTEER FORCE EDUCATIONAL ASSISTANCE PROGRAMS IMPROVEMENTS ACT OF 1999, AS ORDERED REPORTED BY THE SENATE
                                                             COMMITTEE ON VETERANS' AFFAIRS
                                                        [By fiscal year, in millions of dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   1999    2000    2001    2002    2003    2004    2005    2006    2007    2008    2009
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     DIRECT SPENDING

Spending Under Current Law for Veterans' Readjustment Benefits:
    Estimated Budget Authority..................................   1,340   1,313   1,332   1,340   1,355   1,352   1,357   1,366   1,382   1,405   1,431
    Estimated Outlays...........................................   1,372   1,342   1,352   1,358   1,370   1,365   1,366   1,371   1,384   1,406   1,432

                        Proposed Changes

Additional Contribution and Benefit:
    Estimated Budget Authority..................................       0     -23      12      51      71     107     111     118     129     140     153
    Estimated Outlays...........................................       0     -23      12      51      71     107     111     118     129     140     153
Rates of Assistance:
    Estimated Budget Authority..................................       0      98     100     101     103     104     105     106     108     110     113
    Estimated Outlays...........................................       0      98     100     101     103     104     105     106     108     110     113
MGIB Participation:
    Estimated Budget Authority..................................       0      67      78      91      65      73      78      75      71      67      66
    Estimated Outlays...........................................       0      67      78      91      65      73      78      75      71      67      66
Survivors' and Dependents' Assistance:
    Estimated Budget Authority..................................       0      18      18      18      18      18      18      18      18      18      18
    Estimated Outlays...........................................       0      18      18      18      18      18      18      18      18      18      18
Accelerated Payments:
    Estimated Budget Authority..................................       0     134      27       0       0       0       0       0       0       0       0
    Estimated Outlays...........................................       0     134      27       0       0       0       0       0       0       0       0
MGIB Eligibility of Certain Officers:
    Estimated Budget Authority..................................       0       2       2       2       3       3       2       2       2       2       2
    Estimated Outlays...........................................       0       2       2       2       3       3       2       2       2       2       2
Preparatory Courses:
    Estimated Budget Authority..................................       0       1       1       1       1       1       1       1       1       1       1
    Estimated Outlays...........................................       0       1       1       1       1       1       1       1       1       1       1
Subtotal-Proposed Changes:
    Estimated Budget Authority..................................       0     297     239     264     261     305     316     320     329     339     353
    Estimated Outlays...........................................       0     297     239     264     261     305     316     320     329     339     353
Total Spending Under the Bill for Veterans' Readjustment
 Benefits:
    Estimated Budget Authority..................................   1,340   1,610   1,571   1,604   1,616   1,657   1,673   1,686   1,711   1,744   1,784
    Estimated Outlays...........................................   1,372   1,639   1,591   1,622   1,631   1,670   1,682   1,691   1,713   1,745   1,785
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Additional contribution and benefit. Section 6 would offer 
personnel on active duty the opportunity to increase their MGIB 
benefits by making an additional, after-tax contribution. Under 
current law, members wishing to participate in MGIB contribute 
$1,200 during their first year of service. Under section 6 
members could contribute up to an additional $600 at any time 
during their service on active duty. In return, they would 
receive an increment to their monthly benefit in an amount 
equal to one quarter of their contribution for every month of 
training. CBO assumes that 60 percent of MGIB participants 
would make an average contribution of $500, which would result 
in an average additional benefit of $125 a month for, on 
average, 20 months. Because contributions would precede the 
payment of benefits, this provision would decrease net 
expenditures the first year after it takes effect. Net costs 
would occur in the second year of the program, and CBO 
estimates that annual costs would rise to about $153 million by 
2009.
    Rates of assistance. Section 4 would raise the rate of 
educational assistance to certain veterans with service on 
active duty. Participating veterans who served at least three 
years on active duty would receive as much as $600 a month 
instead of $528 a month as under current law. Similar veterans 
with at least two years of active duty would be eligible for a 
maximum benefit of $488 a month, an increase of $59 dollars a 
month. Under section 4, the cost-of-living allowance scheduled 
for 2000 would not occur. CBO estimates that this section would 
increase direct spending by $98 million in 2000 and by 
increasing amounts in subsequent years, based on current rates 
of participation in this program.
    MGIB participation. Section 8 would allow individuals on 
active duty to begin participating in the MGIB program at any 
time during their service. Currently, a member must make the 
decision to participate upon joining the military and 
contribute $1,200 during the first year of service. This 
proposal would allow members to make thatdecision later in 
their service, but would require a contribution of $1,500 for those who 
choose that option. The contribution would be either a lump-sum 
payment, or a monthly payment of $100 with any residual being paid at 
separation.
    Currently, more than 50 percent of those who contribute 
never use MGIB benefits. CBO expects that many of these 
individuals would take advantage of an opportunity to postpone 
the decision to invest in MGIB. After a six-year phase-in 
period, CBO expects that 50 percent of those who would have 
contributed under current law would contribute $1,200 during 
the first year. Of the remaining 50 percent, half would choose 
to contribute $1,500 later in their enlistment, and half would 
not contribute at all. The net cost of the provision would stem 
from forgone contributions. CBO estimates that the average 
annual cost of section 8 would be approximately $70 million. 
The annual cost would be higher in the first few years, 
however, because of the postponed contributions.
    Survivors' and dependents' assistance. Section 5 would 
increase educational assistance to survivors and dependents by 
an average of 13.4 percent. Based on current rates of 
participation in this program, CBO estimates that this 
provision would increase direct spending by $18 million a year 
over the next 10 years.
    Accelerated payments. Section 9 would permit veterans to 
receive a lump-sum payment for benefits they would receive 
monthly over a term of their training--for example, a semester 
in college or, for other forms of training, the period of a 
course's instruction. CBO estimates that this provision would 
increase direct spending by $134 million in 2000 and by $27 
million in 2001. Increased costs would occur initially as 
payments from one fiscal year are made instead in the preceding 
year. There would be no net effect in each subsequent year 
because payments shifted to the preceding year would be offset 
by payments shifted from the following year. CBO estimates that 
about 50 percent of MGIB beneficiaries would elect to receive 
an accelerated payment in 2000 and that 60 percent would make 
that election in 2001 and later years. The estimate is based on 
current rates of participation in this program.
    MGIB eligibility of certain officers. Section 7 would 
extend MGIB eligibility to those veterans who lost it because 
they ended their initial enlistment to attend an officer 
training school. To maintain eligibility under this provision, 
the member would have to either complete the resulting 
obligated period of duty as an officer or serve the remaining 
time on the initial enlistment. Based on information from the 
Department of Defense, CBO expects the number of potential MGIB 
participants to increase by 300 annually. In addition, about 
950 current veterans would gain MGIB eligibility under this 
section. CBO estimates this provision would cost $2 million to 
$3 million a year over the 2000-2009 period.
    Preparatory courses. Section 3 would extend MGIB benefits 
to cover preparatory courses for college or graduate school 
entrance exams. Veterans who would otherwise consume their 
entire entitlement would forgo a payment at the end of their 
training if they use the benefit under this section, but for 
all other veterans, section 3 would add to spending. CBO 
estimates that this provision would increase direct spending by 
about $1 million a year. The estimate assumes that about 2,000 
participants would receive an average benefit of about $400 for 
these courses.
    Pay-as-you-go considerations: Section 252 of the Balanced 
Budget and Emergency Deficit Control Act sets up pay-as-you-go 
procedures for legislation affecting direct spending or 
receipts. The net changes in outlays that are subject to pay-
as-you-go procedures are shown in the following table. For the 
purposes of enforcing pay-as-you-go procedures, only the 
effects in the current year, the budget year, and the 
succeeding four years are counted.

----------------------------------------------------------------------------------------------------------------
                                                      By fiscal years, in millions of dollars--
                                    ----------------------------------------------------------------------------
                                      1999   2000   2001   2002   2003   2004   2005   2006   2007   2008   2009
----------------------------------------------------------------------------------------------------------------
Changes in outlays.................      0    297    239    264    261    305    316    320    329    339    353
Changes in receipts................                                 Not applicable.
----------------------------------------------------------------------------------------------------------------

    Intergovernmental and private-sector impact: Section 4 of 
the Unfunded Mandates Reform Act excludes from application of 
that act any legislative proposals that are necessary for 
national security. That exclusion might apply to provisions of 
the bill that relate to the Montgomery GI Bill. In any case, 
the bill contains no intergovernmental or private-sector 
mandates.
    Previous CBO estimate: On February 12, 1999, CBO prepared a 
cost estimate for S. 4, the Soldiers', Sailors', Airmen's, and 
Marines' Bill of Rights Act of 1999, as reported by the Senate 
Committee on Armed Services. On March 17, 1999, CBO prepared a 
cost estimate for S. 4, as passed by the Senate.
    Section 3 of this bill would have the same effect as 
section 305 of S. 4 as passed by the Senate. Sections 4 and 9 
of this bill would have the same effects as sections 301 and 
303, respectively, in the reported version of S. 4. The CBO 
cost estimates for the corresponding provisions are identical.
    Estimate prepared by: Federal costs: Sarah T. Jennings. 
Impact on State, local, and tribal governments: Susan Seig. 
Impact on the private sector: Rachel Schmidt.
    Estimate approved by: Robert A. Sunshine, Deputy Assistant 
Director for Budget Analysis.

                      Regulatory Impact Statement

    In compliance with paragraph 11(b) of rule XXVI of the 
Standing Rules of the Senate, the Committee on Veterans' 
Affairs has made an evaluation of the regulatory impact that 
would be incurred in carrying out the Committee bill. The 
Committee finds that the Committee bill would not entail any 
regulation of individuals or businesses or result in any impact 
on the personal privacy of any individuals and that the 
paperwork resulting from enactment would be minimal.

                 Tabulation of Votes Cast in Committee

    In compliance with paragraph 7 of rule XXVI of the Standing 
Rules of the Senate, the following is a tabulation of votes 
cast in person or by proxy by members of the Committee on 
Veterans' Affairs at its June 23, 1999, meeting. On that date, 
the Committee, by unanimous voice vote, ordered S.     , an 
original bill to enhance programs providing education benefits 
for veterans, and for other purposes, reported favorably to the 
Senate.

                             Agency Report

    On January 29, 1999, VA Under Secretary for Benefits, 
Joseph Thompson, and the Under Secretary of Defense (Personnel 
and Readiness), Rudy De Leon, appeared before the Committee and 
submitted testimony on the findings and recommendations of the 
Commission on Servicemembers and Veterans Transition 
Commission. On May 20, 1999, the Honorable Togo D. West, Jr., 
Secretary of Veterans Affairs, appeared before the Committee 
and submitted testimony on, among other things, certain 
provisions of S. 1076. Excerpts from these statements are 
reprinted below:

    Statement of Mr. Joseph Thompson, Under Secretary for Benefits, 
                     Department of Veterans Affairs

    Mr. Chairman and members of the committee, we appear before 
you today to discuss the report of the Commission on 
Servicemembers and Veterans Transition Assistance and funding 
issues on the committee's agenda.
    Mr. Chairman, let me start my comments by saying that it 
was a pleasure and an honor for me to serve as an ex-officio 
member of the Commission of Servicemembers and Veterans 
Transition Assistance. Upon my confirmation as Under Secretary 
for Benefits in late 1997, one of my first tasks was to 
familiarize myself with the mission and scope of the Commission 
and to advise Chairman Principi and the Commissioners on the 
state of veterans' benefits delivery today and our plans for 
the future. I was immediately impressed with the mandate and 
potential of the Commission and its opportunity to recommend 
significant changes to the legislatively mandated transition 
benefits our nation provides its servicemembers and veterans--
changes more sweeping than any envisioned or attempted since 
those proposed by General Omar Bradley nearly one-half century 
ago. The Commission made over 100 separate recommendations 
addressing 31 specific issues, and I am proud to have been 
associated with this endeavor.
    To that end, I want to thank Senator Dole for facilitating 
the creation of this Commission and especially thank Chairman 
Anthony Principi for providing dynamic and focused leadership 
to the Commission throughout its deliberations. I also want to 
thank the many VA staff members who were detailed to the 
Commission and provided expert staff support to Chairman 
Principi throughout the Commission's efforts.
    Mr. Chairman, the questions this Commission asked were in 
areas that needed review. Do we enable servicemembers and 
veterans to improve themselves and their country by continuing 
their education? Do we adequately prepare servicemembers for 
life after a career in uniform? Are we doing enough to assist 
veterans in their pursuit of gainful employment? These 
questions and more were the focus of this Commission, and we 
look forward to reviewing these its findings and 
recommendations. The report of the Commission on Servicemembers 
and Veterans Transition Assistance has given those of us whose 
careers are dedicated to serving America's veterans much to 
consider, analyze and, if enacted by Congress, to implement.
    During the next 60 days, I will be working in concert with 
Dr. Kizer and Secretary West, our counterparts in the 
Departments of Defense, Labor, the Small Business 
Administration, and other federal agencies, as well as Veterans 
Service Organizations, to thoroughly review the findings and 
recommendations of the Commission and report back to Congress 
with our assessment. We will assess the Commission's 
recommendations from the perspective of the servicemember and 
the veteran, and as stewards of good public policy, ensuring 
that our analyses and plans are integrated and seamless. 
Although I cannot, at this time, comment in any greater detail 
regarding the specific findings and recommendations of the 
Commission, I can say that we at VA look forward to working 
with you, the Congress, and our partners in veterans' service 
to take full advantage of the opportunity that this report 
presents.
    This concludes my statement. I would be pleased to respond 
to your questions.

 Statement of Rudy De Leon, Under Secretary of Defense, (Personnel and 
                               Readiness)

    Mr. Chairman and members of the Committee, it is a 
privilege to appear before you to discuss the report of the 
Commission on Servicemembers and Veterans Transition 
Assistance. I am accompanied today by Dr. Sue Bailey, the 
Assistant Secretary of Defense for Health Affairs, and by Mr. 
Frank Rush, Acting Assistant Secretary of Defense for Force 
Management Policy.
    We would like to take this opportunity to thank Senator 
Dole for urging the creation of this Commission, Mr. Principi 
for chairing it, and the commissioners and their staff for 
engaging in two years of intensive work that produced over 100 
recommendations addressing 31 specific issues.
    The Commission, at the outset of its report, recognized two 
challenges: the challenge of addressing veterans' needs in 
transitioning to civilian life as well as a second challenge 
the Military Services face in recruiting and retaining the 
highest quality individuals to serve. To address this second 
challenge, the Administration is proposing important pay and 
retirement improvements to ensure that the men and women of our 
armed forces are compensated fairly for their outstanding 
performance and dedicated service to our nation. We believe 
these pay and retirement improvements will enhance recruiting 
and retention, and we welcome today's dialogue on ways we can 
improve our efforts with respect to veterans making the 
transition to civilian life.
    During the coming months, we will review the report in 
detail so that, in the spring, the Secretary of Defense, in 
consultation with the Secretaries of Veterans Affairs and 
Labor, can submit to the Congress his comments on the 
Commission's recommendations. These recommendations fall 
principally into three areas: education, employment and 
training, and health care--the areas the Commission found of 
most concern to the servicemembers and veterans interviewed 
during the Commission's work.
    In the area of education, the Commission has proposed an 
enhanced education benefit that would pay a monthly living 
allowance and full tuition and fees at the best school to which 
a servicemember or veteran can gain admission. The Commission 
sees this as a powerful incentive for recruiting young 
Americans from all segments of our society into our Armed 
Forces and a way to provide them with the means to truly ``be 
all that they can be.''

           *       *       *       *       *       *       *

    While we need to study the Commission's recommendations in 
more detail, we can say unequivocally now that we agree with 
the assessment of the Commission that our servicemembers and 
veterans ``represent a unique and invaluable human resource for 
America's society and economy'' and that our nation has an 
obligation to provide them ``with the means to take advantage 
of the opportunities protected and preserved through their 
service.'' These words echo those we have used in testimony to 
this and other Congressional committees throughout the years. 
We will be pleased to study the Commission's recommendations, 
especially in light of the obligation that we owe the veterans 
of the armed forces who have served their country honorably and 
well.
    Again, in closing, we thank the Commission for its hard 
work and insight and this Committee for its continued interest 
in and commitment to the men and women who serve and have 
served in the armed forces.
                                ------                                


     Statement of Togo D. West, Jr., Secretary of Veterans Affairs

    Good afternoon, Mr. Chairman and Members of the Committee.
    It is a pleasure for me to appear before you to provide our 
Department's views on the various proposals that comprise 
today's agenda. These include S. 555 and S. 695, which deal 
with education and burial benefits, respectively, and S. 940, 
an Administration bill you introduced on our behalf which we 
view as critical to our having an organizational structure 
needed to accomplish VA's mission as we enter the next 
millennium. You also asked that we testify on the provisions of 
a draft omnibus Committee bill you plan to introduce.

           *       *       *       *       *       *       *

Omnibus draft bill
    Turning now to the draft Committee bill, I want to provide 
the following comments on selected provisions that I will 
identify by their associated section numbers and headings as 
they appear in the draft summary we were furnished.

           *       *       *       *       *       *       *

Section 202. Increase in basic benefit of active duty educational 
        assistance
    Section 202, which tracks a recommendation of the 
Congressional Commission on Servicemembers and Veterans 
Transition Assistance, would enhance the MGIB by providing for 
an increase in the rates of educational assistance allowance 
paid by that program. The basic benefit rates under the MGIB-
Active Duty program would be increased from $528 to $600 a 
month for a 3-year enlistee, and from $429 to $488 a month for 
a 2-year enlistee.
    We note that educational assistance benefit rates for the 
Montgomery GI Bill (MGIB) only recently were increased by 20% 
effective October 1, 1998, by the Veterans Benefits Act of 
1998. That rate increase has not erased the disparity between 
college costs, which have quadrupled in the last 20 years. 
However, MGIB continues to be one of the most popular 
mechanisms for attracting high-quality enlisted members. The 
Department of Defense (DOD) indicates that the new recruits to 
the Armed Forces cite ``money for college'' as the major reason 
given for enlisting. As you know, about 96% of new recruits 
sign up to participate in MGIB. For this reason, DOD has 
encouraged Congress to keep MGIB viable and we join in that 
position.
    Although VA believes that an increase in monthly stipends 
would make the current benefit more consistent with increases 
in the cost of education, other related issues need to be 
considered. As you may know, we are currently evaluating the 
MGIB program in an effort to improve its value to veterans. 
Thus we believe further analysis is needed to determine the 
appropriate amount of the benefit along with appropriate 
delivery methods.
    VA estimates that enactment of section 202 would result in 
benefit costs of approximately $500 million for the 5-year 
period from FY 2000 to FY 2004. Because this section would 
increase direct spending, it is subject to the pay-as-you-go 
(paygo) requirements of the Omnibus Budget Reconciliation Act 
of 1990.
Section 203. Increase in rates of survivors and dependents educational 
        assistance
    This section proposes an increase in chapter 35 Survivors' 
and Dependents' Educational Assistance program rates similar in 
percentage to that proposed in the previous section for GI Bill 
participants. The rates under this program also were increased 
twenty percent effective October 1, 1998, but these benefits 
have lagged behind escalating educational costs. While we 
believe an increase would make the benefit more consistent with 
the current cost of education, we believe the amount of 
increase bears further analysis.
    VA estimates that enactment of section 203 would result in 
benefit costs of approximately $18.3 million for FY 2000 and 
$98 million for the 5-year period from FY 2000 to FY 2004. 
Because this section would increase direct spending, it is 
subject to the pay-as-you-go (paygo) requirements of the 
Omnibus Budget Reconciliation Act of 1990.
Section 204. Eligibility of members of the Armed Forces to withdraw 
        elections not to receive Montgomery GI Bill basic educational 
        assistance
    This section would provide another opportunity to establish 
entitlement under the chapter 30 Montgomery GI Bill--Active 
Duty (MGIB) program for those service members who previously 
opted not to participate. Under existing law, an individual, 
upon initially entering active duty after June 30, 1985, 
``automatically'' becomes a participant in the MGIB unless he 
or she submits an election not to participate. Generally, such 
an election is irrevocable, although prior laws have permitted 
certain individuals in specific situations to withdraw the 
election in order to qualify for chapter 30 educational 
assistance allowance. A distinguishing feature of this 
proposal, however, is that the ``second chance'' opportunity 
comes with a cost; that is, instead of the required $1200 basic 
pay reduction otherwise required to participate in the program, 
an individual taking advantage of this opportunity must agree 
to a total $1500 pay reduction.
    We are currently analyzing this for purposes of developing 
our position and are working with DoD to obtain data needed to 
make an accurate cost estimate concerning it.
Section 205. Accelerated payments of basic educational assistance
    This section would allow an individual to request an 
accelerated payment of educational assistance allowances in 
lieu of monthly payments. The accelerated payment for 
enrollment in a course leading to a standard college degree 
would be made in a lump sum for the amount otherwise payable 
for the entire quarter, semester or term. For other course 
enrollments, the accelerated payment could be any requested 
amount, within limits prescribed by VA by regulation, not to 
exceed the amount of benefits otherwise payable for pursuit of 
the course.
    Under the proposal, entitlement would be charged at the 
rate of one month for each month of full-time payment made as 
an accelerated payment. Further, an individual who receives an 
accelerated payment would not be entitled to any rate increase 
that may take effect during the period for which the payment 
was made.
    VA supports the concept of accelerated payments in order to 
make the program more responsive to today's students' needs. 
Further analysis is needed to determine appropriate 
administrative guidelines for such a proposal and to consider 
the paygo implications. From a 5-year budgeting perspective, 
this would increase our payout in the first year, which we 
estimate would be $240 million.

           *       *       *       *       *       *       *


    Changes in Existing Law Made by the Committee Bill, as Reported

    In compliance with paragraph 12 of Rule XXVI of the 
Standing Rules of the Senate, changes in existing law made by 
the Committee bill, as reported, are shown as follows (existing 
law proposed to be omitted is enclosed in black brackets, new 
matter is printed in italic, existing law in which no change is 
proposed is shown in roman):

TITLE 38--UNITED STATES CODE

           *       *       *       *       *       *       *



              PART III--READJUSTMENT AND RELATED BENEFITS


     CHAPTER 30--ALL-VOLUNTEER FORCE EDUCATIONAL ASSISTANCE PROGRAM


Subchapter I--Purposes; Definitions

           *       *       *       *       *       *       *



Sec. 3002. Definitions

    For the purposes of this chapter--
    (1) * * *

           *       *       *       *       *       *       *

    (3) The term ``program of education''--
      (A) has the meaning given such term in section 3452(b) of 
this title, [and]
         (B) includes--
                  (i) a preparatory course for a test that is 
                required or utilized for admission to an 
                institution of higher education; and
                  (ii) a preparatory course for a test that is 
                required or utilized for admission to a 
                graduate school; and
          [(B)] (C) * * *

           *       *       *       *       *       *       *


              Subchapter II--Basic Educational Assistance


Sec. 3011. Basic educational assistance entitlement for service on 
                    active duty

    (a) Except as provided in subsection (c) of this section, 
each individual--
          (1) who
                  (A) after June 30, 1985, first becomes a 
                member of the Armed Forces or first enters on 
                active duty as a member of the Armed Forces 
                and--
                          (i) * * *
                          (ii) who serves in the Armed Forces 
                        and is discharged or released from 
                        active duty (I) for a service connected 
                        disability, for a medical condition 
                        which preexisted such service on active 
                        duty and which the Secretary determines 
                        is not service connected, for hardship, 
                        or for a physical or mental condition 
                        that was not characterized as a 
                        disability and did not result from the 
                        individual's own willful misconduct but 
                        did interfere with the individual's 
                        performance of duty, as determined by 
                        the Secretary of each military 
                        department in accordance with 
                        regulations prescribed by the Secretary 
                        of Defense or by the Secretary of 
                        Transportation with respect to the 
                        Coast Guard when it is not operating as 
                        a service in the Navy; (II) for 
                        the convenience of the Government, in the 
                        case of an individual who completed not less 
                        than 20 months of continuous active duty, 
                        if the initial obligated period of active 
                        duty of the individual was less than 
                        three years, or in the case of an individual 
                        who completed not less than 30 months of 
                        continuous active duty if the initial obligated 
                        period of active duty of the individual was at 
                        least three years; [or (III)] (III) 
                        involuntarily for the convenience of the 
                        Government as a result of a reduction in force, 
                        as determined by the Secretary of the military 
                        department concerned in accordance with 
                        regulations prescribed by the Secretary of 
                        Defense or by the Secretary of Transportation 
                        with respect to the Coast Guard when it is not 
                        operating as a service in the Navy or (IV) for 
                        immediate reenlistment to accept a commission as an 
                        officer and subsequently completes the resulting 
                        obligated period of active duty service as a 
                        commissioned officer; or
                  (B) as of December 31, 1989, is eligible for 
                educational assistance benefits under chapter 
                34 of this title and was on active duty at any 
                time during the period beginning on October 19, 
                1984, and ending on July 1, 1985, continued on 
                active duty without a break in service and--
                          (i) * * *
                          (ii) after June 30, 1985, is 
                        discharged or released from active duty 
                        (I) for a service-connected disability, 
                        for a medical condition which 
                        preexisted such service on active duty 
                        and which the Secretary determines is 
                        not service connected, for hardship, or 
                        for a physical or mental condition that 
                        was not characterized as a disability, 
                        as described in subparagraph (A)(ii)(I) 
                        of this paragraph; (II) for the 
                        convenience of the Government, if the 
                        individual completed not less than 30 
                        months of continuous active duty after 
                        that date[, or (III)]; (III) 
                        involuntarily for the convenience of 
                        the Government as a result of a 
                        reduction in force, as determined by 
                        the Secretary of the military 
                        department concerned in accordance with 
                        regulations prescribed by the Secretary 
                        of Defense or by the Secretary of 
                        Transportation with respect to the 
                        Coast Guard when it is not operating as 
                        a service in the Navy or (IV) for 
                        immediate reenlistment to accept a 
                        commission as an officer and 
                        subsequently completes the resulting 
                        obligated period of active duty service 
                        as a commissioned officer; 

           *       *       *       *       *       *       *

    (c)(1) * * *

           *       *       *       *       *       *       *

    (4)(A) An individual who makes an election under paragraph 
(1) may withdraw the election at any time before the discharge 
or release of the individual from active duty in the Armed 
Forces. An individual who withdraws such an election may become 
entitled to basic educational assistance under this chapter.
    (B) The withdrawal of an election under this paragraph 
shall be made in accordance with regulations prescribed by the 
Secretary of Defense or by the Secretary of Transportation with 
respect to the Coast Guard when it is not operating as a 
service in the Navy.
    (C)(i) In the case of an individual who withdraws an 
election under this paragraph--
          (I) the basic pay of the individual shall be reduced 
        by $100 for each month after the month in which the 
        election is made until the total amount of such 
        reductions equals $1,500; or
          (II) to the extent that basic pay is not so reduced 
        before the individual's discharge or release from 
        active duty in the Armed Forces, the Secretary, before 
        authorizing the payment of educational assistance under 
        this chapter, shall ensure that an amount equal to the 
        difference between $1,500 and the total amount of 
        reductions under subclause (I) was paid before the 
        discharge or release of the individual from active duty 
        in the Armed Forces.
    (ii) An individual described in clause (i) may pay the 
Secretary at any time before discharge or release from active 
duty in the Armed Forces an amount equal to the total amount of 
the reduction in basic pay otherwise required with respect to 
the individual under that clause minus the total amount of 
reductions of basic pay of the individual under that clause at 
the time of the payment under this clause.
    (iii) The second sentence of subsection (b) shall apply to 
any reductions in basic pay under clause (i)(I).
    (iv) Amounts paid under clauses (i)(II) and (ii) shall be 
deposited into the Treasury as miscellaneous receipts.
    (D) The withdrawal of an election under this paragraph is 
irrevocable.

           *       *       *       *       *       *       *

    (h) * * *
    (i)(1) Any individual eligible for educational assistance 
under this section who does not make an election under 
subsection (c)(1) may contribute amounts for purposes of 
receiving an increased amount of basic educational assistance 
as provided for under section 3015(g) of this title. Such 
contributions shall be in addition to any reductions in the 
basic pay of such individual under subsection (b).
    (2) An individual covered by paragraph (1) may make the 
contributions authorized by that paragraph at any time while on 
active duty.
    (3) The total amount of the contributions made by an 
individual under paragraph (1) may not exceed $600. Such 
contributions shall be made in multiples of $4.
    (4) Contributions under this subsection shall be made to 
the Secretary. The Secretary shall deposit any amounts received 
by the Secretary as contributions under this subsection into 
the Treasury as miscellaneous receipts.
    [(i)] (j) * * *

Sec. 3012. Basic educational assistance entitlement for service in the 
                    Selected Reserve

    (a) * * *

           *       *       *       *       *       *       *

    (d)(1) * * *

           *       *       *       *       *       *       *

    (4)(A) An individual who makes an election under paragraph 
(1) may withdraw the election at any time before the discharge 
or release of the individual from the Armed Forces. An 
individual who withdraws such an election may become entitled 
to basic educational assistance under this chapter.
    (B) The withdrawal of an election under this paragraph 
shall be made in accordance with regulations prescribed by the 
Secretary of Defense or by the Secretary of Transportation with 
respect to the Coast Guard when it is not operating as a 
service in the Navy.
    (C)(i) In the case of an individual who withdraws an 
election under this paragraph--
          (I) the basic pay or compensation of the individual 
        shall be reduced by $100 for each month after the month 
        in which the election is made until the total amount of 
        such reductions equals $1,500; or
          (II) to the extent that basic pay or compensation is 
        not so reduced before the individual's discharge or 
        release from the Armed Forces, the Secretary, before 
        authorizing the payment of educational assistance under 
        this chapter, shall ensure that an amount equal to the 
        difference between $1,500 and the total amount of 
        reductions under subclause (I) was paid before the 
        discharge or release of the individual from the Armed 
        Forces.
    (ii) An individual described in clause (i) may pay the 
Secretary at any time before discharge or release from the 
Armed Forces an amount equal to the total amount of the 
reduction in basic pay or compensation otherwise required with 
respect to the individual under that clause minus the total 
amount of reductions of basic pay or compensation of the 
individual under that clause at the time of the payment under 
this clause.
    (iii) The second sentence of subsection (c) shall apply to 
any reductions in basic pay or compensation under clause 
(i)(I).
    (iv) Amounts paid under clauses (i)(II) and (ii) shall be 
deposited into the Treasury as miscellaneous receipts.
    (D) The withdrawal of an election under this paragraph is 
irrevocable.

           *       *       *       *       *       *       *

    (f) * * *
    (g)(1) Any individual eligible for educational assistance 
under this section who does not make an election under 
subsection (d)(1) may contribute amounts for purposes of 
receiving an increased amount of basic educational assistance 
as provided for under section 3015(g) of this title. Such 
contributions shall be in addition to any reductions in the 
basic pay of such individual under subsection (c).
    (2) An individual covered by paragraph (1) may make the 
contributions authorized by that paragraph at any time while on 
active duty.
    (3) The total amount of the contributions made by an 
individual under paragraph (1) may not exceed $600. Such 
contributions shall be made in multiples of $4.
    (4) Contributions under this subsection shall be made to 
the Secretary. The Secretary shall deposit any amounts received 
by the Secretary as contributions under this subsection into 
the Treasury as miscellaneous receipts.
    [(g)] (h)(1) * * *

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Sec. 3014. Payment of basic educational assistance

    (a) The Secretary shall pay to each individual entitled to 
basic educational assistance who is pursuing an approved 
program of education a basic educational assistance allowance 
to help meet, in part, the expenses of such individual's 
subsistence, tuition, fees, supplies, books, equipment, and 
other educational costs.
    (b)(1) The Secretary may make payments of basic educational 
assistance under this subchapter on an accelerated basis.
    (2) The Secretary may pay basic educational assistance on 
an accelerated basis under this subsection only to an 
individual entitled to payment of such assistance under this 
subchapter who has made a request for payment of such 
assistance on an accelerated basis.
    (3) In the event an adjustment under section 3015(g) of 
this title in the monthly rate of basic educational assistance 
will occur during a period for which a payment of such 
assistance is made on an accelerated basis under this 
subsection, the Secretary shall pay on an accelerated basis the 
amount of such assistance otherwise payable under this 
subchapter for the period without regard to the adjustment 
under that section.
    (4) For each accelerated payment made to an individual, the 
individual's entitlement under this subchapter shall be charged 
as if the individual had received a monthly educational 
assistance allowance for the period of educational pursuit 
covered by the accelerated payment.
    (5) Basic educational assistance shall be paid on an 
accelerated basis under this subsection as follows:
          (A) In the case of assistance for a course leading to 
        a standard college degree, at the beginning of the 
        quarter, semester, or term of the course in a lump-sum 
        amount equivalent to the aggregate amount of monthly 
        assistance otherwise payable under this subchapter for 
        the quarter, semester, or term, as the case may be, of 
        the course.
          (B) In the case of assistance for a course other than 
        a course referred to in subparagraph (A)--
                  (i) at the later of (I) the beginning of the 
                course, or (II) a reasonable time after the 
                request for payment by the individual 
                concerned; and
                  (ii) in any amount requested by the 
                individual concerned within the limit, if any, 
                specified in the regulations prescribed by the 
                Secretary under paragraph (6), with such limit 
                not to exceed the aggregate amount of monthly 
                assistance otherwise payable under this 
                subchapter for the period of the course.
    (6) The Secretary shall prescribe regulations for purposes 
of making payments of basic educational assistance on an 
accelerated basis under this subsection. Such regulations shall 
include requirements relating to the request for, making and 
delivery of, and receipt and use of such payments and may 
include a limit on the amount payable for a course under 
paragraph (5)(B)(ii).

Sec. 3015. Amount of basic educational assistance

    (a) The amount of payment of educational assistance under 
this chapter is subject to section 3032 of this title. Except 
as otherwise provided in this section, a basic educational 
assistance allowance under this subchapter shall be paid--
          (1) at the monthly rate of [$528] $600 (as increased 
        from time to time under [subsection (g)] subsection 
        (h)) for an approved program of education pursued on a 
        full-time basis; or
          (2) * * *
    (b) In the case of an individual entitled to an educational 
assistance allowance under section 3011 or 3018 of this title 
and whose initial obligated period of active duty is two years, 
a basic educational assistance allowance under this chapter 
shall (except as provided in the succeeding subsections of this 
section) be paid--
          (1) at the monthly rate of [$429] $488 (as increased 
        from time to time under [subsection (g)] subsection 
        (h)) for an approved program of education pursued on a 
        full-time basis; or

           *       *       *       *       *       *       *

    (f) * * *
    (g) In the case of an individual who has made contributions 
authorized by section 3011(i) or 3012(g) of this title, the 
monthly amount of basic educational assistance allowance 
applicable to such individual under subsection (a), (b), or (c) 
shall be the monthly rate otherwise provided for under the 
applicable subsection increased by--
          (1) an amount equal to $1 for each $4 contributed by 
        such individual under section 3011(i) or 3012(g), as 
        the case may be, for an approved program of education 
        pursued on a full-time basis; or
          (2) an appropriately reduced amount based on the 
        amount so contributed, as determined under regulations 
        which the Secretary shall prescribe, for an approved 
        program of education pursued on less than a full-time 
        basis.
    [(g)] (h) * * *

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     CHAPTER 35--SURVIVORS' AND DEPENDENTS' EDUCATIONAL ASSISTANCE

           *       *       *       *       *       *       *



Subchapter IV--Payments to Eligible Persons

           *       *       *       *       *       *       *



Sec. 3532. Computation of educational assistance allowance

    (a)(1) The educational assistance allowance on behalf of an 
eligible person who is pursuing a program of education 
consisting of institutional courses shall be paid at the 
monthly rate of [$485] $550 for full-time, [$365] $414 for 
three-quarter-time, or [$242] $274 for half-time pursuit.
    (2) The educational assistance allowance on behalf of an 
eligible person pursuing a program of education on less than a 
half-time basis shall be paid at the rate of (A) the 
established charges for tuition and fees that the educational 
institution involved requires similarly circumstanced 
nonveterans enrolled in the same program to pay, or (B) [$485] 
$550 per month for a full-time course, whichever is the lesser.
    (b) The educational assistance allowance to be paid on 
behalf of an eligible person who is pursuing a full-time 
program of education which consists of institutional courses 
and alternate phases of training in a business or industrial 
establishment with the training in the business or industrial 
establishment being strictly supplemental to the institutional 
portion, shall be computed at the rate of [$485] $550 per 
month.
    (c)(1) * * *
    (2) The monthly educational assistance allowance to be paid 
on behalf of an eligible person pursuing a farm cooperative 
program under this chapter shall be [$392] $445 for full-time, 
[$294] $333 for three-quarter-time, and [$196] $222 for half-
time pursuit.

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Sec. 3534. Apprenticeship or other on-job training; correspondence 
                    courses

    (a) * * *
    (b) Any eligible spouse or surviving spouse shall be 
entitled to pursue a program of education exclusively by 
correspondence and be paid an educational assistance allowance 
as provided in section 3686 (other than subsection (a)(2)) of 
this title and the period of such spouse's entitlement shall be 
charged with one month for each [$485] $550 which is paid to 
the spouse as an educational assistance allowance for such 
course.

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               Subchapter V--Special Restorative Training

           *       *       *       *       *       *       *



Sec. 3542. Special training allowance

    (a) While the eligible person is enrolled in and pursuing a 
full-time course of special restorative training, the parent or 
guardian shall be entitled to receive on behalf of such person 
a special training allowance computed at the basic rate of 
[$485] $550 per month. If the charges for tuition and fees 
applicable to any such course are more than [$152] $172 per 
calendar month, the basic monthly allowance may be increased by 
the amount that such charges exceed [$152] $172 a month, upon 
election by the parent or guardian of the eligible person to 
have such person's period of entitlement reduced by one day for 
each [$16.16] $18.35 that the special training allowance paid 
exceeds the basic monthly allowance.

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          CHAPTER 36--ADMINISTRATION OF EDUCATIONAL BENEFITS

           *       *       *       *       *       *       *



Subchapter II--Miscellaneous Provisions

           *       *       *       *       *       *       *



Sec. 3687. Apprenticeship or other on-job training

    (a) * * *
    (b)(1) * * *
    (2) The monthly training assistance allowance of an 
eligible person pursuing a program described under subsection 
(a) shall be [$353] $401 for the first six months, [$264] $299 
for the second six months, [$175] $198 for the third six 
months, and [$88] $99 for the fourth and any succeeding six-
month periods of training.

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