To amend title 38, United States Code, to authorize the use of educational assistance under the Montgomery GI Bill to pay Federal student loans.

April 21, 2005

Mr. ANDREWS introduced the following bill; which was referred to the Committee on Veterans' Affairs, and in addition to the Committee on Armed Services, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend title 38, United States Code, to authorize the use of educational assistance under the Montgomery GI Bill to pay Federal student loans.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `GI Bill Flexibility Act'.

SEC. 2. USE OF EDUCATIONAL ASSISTANCE UNDER THE MONTGOMERY GI BILL TO PAY FEDERAL STUDENT LOANS.

(a) In General- Subchapter II of chapter 30 of title 38, United States Code, is amended by inserting after section 3020 the following new section:

`Sec. 3020A. Use of educational assistance benefits for the repayment of Federal student loans

`(a) In General- Notwithstanding any other provision of this chapter, upon completion of an approved course of education, an individual entitled to educational assistance under this subchapter may apply amounts of educational assistance otherwise available to the individual under section 3015 of this title to repay some or all of any Federal student loan balance owed by the individual.

`(b) Payment Methodology- The Secretary shall make payments in such form (whether lump-sum or monthly payments) and in such amounts as the individual may elect for the repayment of a Federal student loan of such an individual.

`(c) Limitation on Payments- In no event shall payment of educational assistance under this section exceed the amount of the individual's available entitlement under this chapter.

`(d) Arrangements to Make Payments- The Secretary shall enter into such arrangements, and shall prescribe such regulations, as may be necessary to carry out this section.

`(e) Federal Student Loan Defined- In this section, the term `Federal student loan' means any loan made under title IV of the Higher Education Act of 1965 (20 U.S.C. 1070 et seq.). '.

(b) Clerical Amendment- The table of sections of subchapter II of chapter 30 of such title is amended by inserting after the item relating to section 3020 the following new item:

`3020A. Use of educational assistance benefits for the repayment of Federal student loans.'.

(c) Effective Date- The amendments made by this section shall apply to educational assistance paid for months beginning on or after the date of the enactment of this Act.

END