[Federal Register Volume 68, Number 110 (Monday, June 9, 2003)]
[Rules and Regulations]
[Pages 34326-34332]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 03-14281]


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DEPARTMENT OF VETERANS AFFAIRS

38 CFR Part 21

RIN 2900-AK81


Veterans Education: Additional Opportunity To Participate in the 
Montgomery GI Bill and Other Miscellaneous Issues

AGENCY: Department of Veterans Affairs.

ACTION: Final rule.

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[[Page 34327]]

SUMMARY: This document amends the regulations governing the education 
programs the Department of Veterans Affairs (VA) administers in order 
to implement some provisions of the Veterans Benefits and Health Care 
Improvement Act of 2000 and the Veterans' Survivor Benefits 
Improvements Act of 2001. More specifically, it implements provisions 
that changed an eligibility criterion concerning the time for obtaining 
a high school diploma; repealed the requirement that eligibility for 
the Montgomery GI Bill--Active Duty be based on the initial obligated 
period of active duty; provided an additional opportunity for 
participants in the Post-Vietnam Era Veterans' Educational Assistance 
Program to participate in the Montgomery GI Bill--Active Duty instead; 
provided an opportunity for servicemembers to increase their monthly 
rate of benefits by contributing additional monies while on active 
duty; and revised the requirements that must be met before a veteran or 
eligible person can be paid during the break between terms. In 
addition, this document makes nonsubstantive changes in VA education 
regulations for purposes of clarity and to remove obsolete provisions.

DATES: Effective Date: This final rule is effective June 9, 2003.
    Applicability Date. The substantive changes made by this final rule 
are applied retroactively to November 1, 2000, to conform to statutory 
requirements.

FOR FURTHER INFORMATION CONTACT: William G. Susling, Jr., Assistant 
Director for Policy and Program Development, Education Service, 
Veterans Benefits Administration, Department of Veterans Affairs, 810 
Vermont Avenue, NW., Washington, DC, 20420, (202) 273-7187.

SUPPLEMENTARY INFORMATION: This document amends the regulations in 38 
CFR Part 21 governing various aspects of the education programs the 
Department of Veterans Affairs (VA) administers in order to implement 
some provisions of the Veterans Benefits and Health Care Improvement 
Act of 2000 (Pub. L. 106-419) and the Veterans' Survivor Benefits 
Improvements Act of 2001 (Pub. L. 107-14) that affect those programs. 
This document includes changes affecting the following educational 
assistance programs: Montgomery GI Bill--Active Duty, Montgomery GI 
Bill--Selective Reserve, Survivors' and Dependents' Educational 
Assistance, and the Post-Vietnam Era Veterans' Educational Assistance 
Program.
    One of the criteria an individual has to meet in order to establish 
eligibility for the Montgomery GI Bill--Active Duty (MGIB) is receiving 
a high school diploma or its equivalent. Before the enactment of Public 
Law 106-419 on November 1, 2000, the time limit for earning that 
diploma (or its equivalent) varied according to the various ways for 
servicemembers to establish MGIB eligibility. Some had to earn the 
diploma before completion of their first obligated period of active 
duty. Others had to earn it before their release from active duty. 
Public Law 106-419 provided instead for all individuals the requirement 
that they must earn a high school diploma (or its equivalent) before 
applying to VA for educational assistance. For individuals who are 
enabled by that change to establish eligibility but who on October 31, 
2000, would have been unable to establish eligibility due to the time 
limits for obtaining a high school diploma (or its equivalent), Public 
Law 106-419 created a new ten-year period starting November 1, 2000, 
for commencing use of benefits. We are amending various paragraphs to 
make them conform to these statutory provisions. Our amendments reflect 
our interpretation that under the statute a veteran who unsuccessfully 
applies for educational assistance before meeting this requirement 
would be able to meet this requirement by applying again after 
obtaining a high school diploma or its equivalent.
    Since the inception of the MGIB, servicemembers have had to serve 
all or a major part of their initial obligated period of active duty in 
order to establish eligibility for the MGIB. Thus, an individual who 
failed to meet the length of service requirements for the initial 
period and subsequently re-enlisted could serve many years in the Armed 
Forces and have no education benefits. Public Law 106-419 and Public 
Law 107-14 contain provisions that allow an individual to meet the 
length of service requirements for eligibility by using any period of 
active duty of sufficient length. For individuals who are enabled by 
that change to establish eligibility but who on October 31, 2000, would 
have been unable to establish eligibility based on their initial 
obligated period of service, Public Law 106-419 created a new ten-year 
period starting November 1, 2000, for commencing use of benefits. We 
are amending various paragraphs to make them conform to these statutory 
provisions.
    Public Law 106-419 also gave some present and former participants 
in the Post-Vietnam Era Veterans' Educational Assistance Program (VEAP) 
the opportunity to establish eligibility for MGIB. Under that statute, 
these individuals must have elected MGIB before November 1, 2001, and 
must contribute $2,700 within the 18-month period beginning on the date 
the individual made the election. We are amending the rules for 
establishing MGIB eligibility to conform to these provisions of law.
    MGIB, Montgomery GI Bill--Selective Reserve (MGIB--SR), Survivors' 
and Dependents' Educational Assistance (DEA), and VEAP benefits may be 
paid to individuals during some intervals between terms. The 
requirements for deciding whether an individual qualifies for such an 
interval payment are found in statute. Public Law 106-419 revised those 
requirements to state that payments may be made for intervals between 
terms when those intervals are no longer than eight weeks and the terms 
before and after the interval are not shorter than the interval. We are 
amending the provisions of 38 CFR 21.4138(f) to make them conform to 
the statute.
    Moreover, VA has long had rules governing payment for short terms 
that occur during intervals. The rules were designed to insure that 
veterans were not discouraged by the interval pay provisions from 
enrolling in those terms. In our view, it was not Congress' intent that 
the new interval payment provisions discourage attendance during short 
terms. We are amending accordingly the regulations in Sec.  21.4138(f) 
governing payment for these short terms and the intervals that precede 
and follow them.
    This document's changes in provisions in Sec.  21.4138(f) 
concerning payment for intervals and for short terms that occur during 
intervals are applicable to MGIB, DEA, VEAP, and MGIB--SR benefits 
under applicability provisions in current regulations for each program, 
respectively. (The amended provisions in Sec.  21.4138(f) apply to MGIB 
benefits under Sec.  21.7140(c), to DEA benefits under Sec.  
21.3133(a), to VEAP benefits under Sec.  21.5130(c), and to MGIB--SR 
benefits under Sec.  21.7640(b)(1).)
    Public Law 106-419 (as amended by Public Law 107-14) contains 
provisions that allow some servicemembers who are eligible for the MGIB 
to increase their monthly rate of educational assistance by 
contributing $600 while on active duty. The statute prescribes that for 
every $20 contributed, the monthly rate payable to a full-time student 
will increase by $5. However, the statute does not state what the 
increase payable to a part-time student

[[Page 34328]]

will be. Instead, it requires VA to prescribe regulations detailing an 
appropriate reduced amount to be paid to these students.
    Since the first student became eligible for assistance under the 
MGIB in 1985, VA has paid three-quarter-time students and one-half-time 
students at 75% and 50% of the full-time institutional rate, 
respectively. Students pursuing a program of education at less than 
one-half but more than one-quarter-time have had their payments limited 
to 50% or less of the full-time institutional rate. Similarly, students 
pursuing a program of education at one-quarter-time or less have had 
their payments limited to 25% or less of the full-time institutional 
rate. In the absence of a convincing reason to do otherwise, VA has 
decided to follow this long-standing policy in establishing rates for 
individuals who increase their monthly rates by contributing additional 
amounts. Accordingly, changes are made consistent with the authority 
and formula described in this and the preceding paragraph.
    In addition, 38 U.S.C. 3032(c) requires that monthly rates payable 
to veterans in apprenticeship or other on-the-job training must be set 
at a given percentage of the full-time rate. Hence, we are amending the 
regulations to reflect the additional amounts payable for these 
increased contributions according to the percentages described in 38 
U.S.C. 3032(c).
    We are also making nonsubstantive changes for the purpose of 
clarity and to remove provisions that are obsolete because they concern 
provisions in the regulations that no longer exist.

Administrative Procedure Act

    Changes made by this final rule merely reflect revised statutory 
requirements or VA's interpretation of statutory provisions, or are 
nonsubstantive. Accordingly, there is a basis for dispensing with prior 
notice and comment and delayed effective date provisions of 5 U.S.C. 
552 and 553.

Executive Order 12866

    This final rule has been reviewed by the Office of Management and 
Budget under Executive Order 12866.

Paperwork Reduction Act

    This document contains no provisions constituting a collection of 
information under the Paperwork Reduction Act (44 U.S.C. 3501-3521).

Regulatory Flexibility Act

    The initial and final regulatory flexibility analyses requirements 
of sections 603 and 604 of the Regulatory Flexibility Act, 5 U.S.C. 
601-612, are not applicable to this rule, because the agency is not 
required to publish a notice of proposed rulemaking for this rule. Even 
so, the Secretary of Veterans Affairs hereby certifies that this final 
rule will not have a significant economic impact on a substantial 
number of small entities as they are defined in the Regulatory 
Flexibility Act. This final rule directly affects only individuals and 
does not directly affect small entities. Therefore, this final rule is 
also exempt pursuant to 5 U.S.C. 605(b) from the initial and final 
regulatory flexibility analyses requirements of sections 603 and 604.

Unfunded Mandates

    The Unfunded Mandates Reform Act requires, at 2 U.S.C. 1532, that 
agencies prepare an assessment of anticipated costs and benefits before 
developing any rule that may result in an expenditure by State, local, 
or tribal governments, in the aggregate, or by the private sector, of 
$100 million or more in any given year. This rule would have no 
consequential effect on State, local, or tribal governments.

Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance numbers for programs 
affected by this final rule are 64.117, 64.120, and 64.124. This 
document also affects the Montgomery GI Bill--Selective Reserve 
program, for which there is no Catalog of Federal Domestic 
Assistance program number.

List of Subjects in 38 CFR Part 21

    Administrative practice and procedure, Armed forces, Civil rights, 
Claims, Colleges and universities, Conflict of interests, Defense 
Department, Education, Employment, Grant programs-education, Grant 
programs-veterans, Health care, Loan programs-education, Loan programs-
veterans, Manpower training programs, Reporting and recordkeeping 
requirements, Schools, Travel and transportation expenses, Veterans, 
Vocational education, Vocational rehabilitation.

    Approved: March 18, 2003.
Anthony J. Principi,
Secretary of Veterans Affairs.

0
For the reasons set out above, 38 CFR part 21 (subparts D and K) is 
amended as set forth below.

PART 21--VOCATIONAL REHABILITATION AND EDUCATION

Subpart D--Administration of Educational Assistance Programs

0
1. The authority citation for part 21, subpart D, continues to read as 
follows:

    Authority: 10 U.S.C. 2141 note, ch. 1606; 38 U.S.C 501(a), chs. 
30, 32, 34, 35, 36, unless otherwise noted.


0
2. Section 21.4138 is amended by:
0
a. In paragraph (f) introductory text, removing ``(4)'' and adding, in 
its place, ``(3)''.
0
b. In paragraph (f)(2) introductory text, removing ``subdivision'' and 
adding, in its place, ``paragraph and paragraph (f)(3) of this 
section''.
0
c. Revising paragraphs (f)(2)(iii) and (f)(2)(iv).
0
d. Removing paragraph (f)(3).
0
e. Redesignating paragraph (f)(4) as new paragraph (f)(3).
    The revisions read as follows:


Sec.  21.4138  Certifications and release of payments.

* * * * *
    (f) * * *
    (2) * * *
    (iii) If the veteran or eligible person remains enrolled at the 
same educational institution, VA may make payment for an interval which 
does not exceed 8 weeks and which occurs between:
    (A) Semesters or quarters as defined in Sec.  21.4200(b);
    (B) A semester or quarter and a term that is at least as long as 
the interval;
    (C) A semester or quarter and a summer term that is at least as 
long as the interval;
    (D) Consecutive terms (other than semesters or quarters as defined 
in Sec.  21.4200(b)) provided that both terms are at least as long as 
the interval; or
    (E) A term and a summer term provided that both the term and the 
summer term are at least as long as the interval.
    (iv) If the veteran or eligible person remains enrolled at the same 
educational institution, VA may make payment for an interval which does 
not exceed 30 days and which occurs between summer sessions within a 
summer term.

(Authority: 38 U.S.C. 3680)
* * * * *

Subpart K--All Volunteer Force Educational Assistance Program 
(Montgomery GI Bill--Active Duty)

0
3. The authority citation for part 21, subpart K, continues to read as 
follows:

    Authority: 38 U.S.C. 501(a), chs. 30, 36, unless otherwise 
noted.


0
4. Section 21.7020 is amended by:
0
a. In paragraphs (b)(6)(iii) introductory text and (b)(6)(iv) 
introductory text, removing ``his or her initial'' and adding, in its 
place, ``an''.

[[Page 34329]]

0
b. In paragraph (b)(6)(iv) introductory text, removing ``the initial'' 
and adding, in its place, ``the earlier''.
0
c. In paragraph (b)(6)(vi), removing ``initial'' both places that it 
appears and adding, in its place, ``earlier''.

0
5. Section 21.7042 is amended by:
0
a. Revising the introductory text.
0
b. Revising paragraph (a)(2), paragraph (a)(3) introductory text, and 
the authority citation following paragraph (a)(3).
0
c. In paragraph (a)(5)(ii), removing ``(July 1, 1985)''.
0
d. In paragraphs (a)(5)(iv)(A) and (a)(5)(iv)(B), removing ``if his or 
her initial'' and adding, in its place, ``of an''; and by removing 
``is'' and adding, in its place, ``that is''.
0
e. Revising the authority citation following paragraph (a)(5).
0
f. Removing paragraph (a)(6).
0
g. Redesignating paragraph (a)(7) as new paragraph (a)(6).
0
h. Revising paragraph (b)(2) introductory text.
0
i. In paragraphs (b)(6)(ii) and (b)(7)(i)(B), removing ``(July 1, 
1985)''.
0
j. In paragraph (b)(7)(ii)(B), removing ``(Oct. 1, 1987)''.
0
k. Removing paragraph (b)(11).
0
l. In paragraph (c)(4), removing ``completing the service he or she was 
obligated to serve on December 1, 1988'' and adding, in its place, 
``applying for educational assistance''.
0
m. In paragraph (d)(1), removing ``initial''.
    The revisions read as follows:


Sec.  21.7042  Basic eligibility requirements.

    An individual must meet the requirements of this section, Sec.  
21.7044, or Sec.  21.7045 in order to be eligible for basic educational 
assistance. This section requires an individual to complete certain 
academic requirements before applying for educational assistance. If 
the individual applies before completing those requirements, VA will 
disallow the application. However, the individual's premature 
application will not prevent the individual from establishing 
eligibility at a later time by applying for educational assistance 
again after having completed those academic requirements. In 
determining whether an individual has met the service requirements of 
this section, VA will exclude any period during which the individual is 
not entitled to credit for service for the periods of time specified in 
Sec.  3.15.

(Authority: 38 U.S.C. 3011, 3012, 3018(b), 3018A)

    (a) * * *
    (2) Except as provided in paragraph (a)(5) of this section, the 
individual must--
    (i) If his or her obligated period of active duty is three years or 
more, serve at least three years of continuous active duty in the Armed 
Forces; or
    (ii) If his or her obligated period of active duty is less than 
three years, serve at least two years of continuous active duty in the 
Armed Forces;
    (3) The individual, before applying for educational assistance, 
must either--
* * * * *
(Authority: 38 U.S.C. 3011, 3016)
* * * * *
    (5) * * *

(Authority: 38 U.S.C. 3011)
* * * * *
    (b) * * *
0
(2) The individual, before applying for educational assistance, must 
either--
* * * * *

0
6. Section 21.7044 is amended by:
0
a. Revising the introductory text, and paragraphs (a)(3) and (b)(3).
0
b. Removing paragraph (b)(13).
    The revisions read as follows:


Sec.  21.7044  Persons with eligibility under 38 U.S.C. chapter 34.

    Certain individuals with 38 U.S.C. chapter 34 eligibility may 
establish eligibility for educational assistance under 38 U.S.C. 
chapter 30. This section requires an individual to complete certain 
academic requirements before applying for educational assistance. If 
the individual applies before completing those requirements, VA will 
disallow the application. However, the individual's premature 
application will not prevent the individual from establishing 
eligibility at a later time by applying for educational assistance 
again after having completed those academic requirements. In 
determining whether an individual has met the service requirements of 
this section, VA will exclude any period during which the individual is 
not entitled to credit for service for periods of time specified in 
Sec.  3.15.
    (a) * * *
    (3) The individual, before applying for educational assistance, 
must:
    (i) Complete the requirements for a secondary school diploma or an 
equivalency certificate; or
    (ii) Successfully complete (or otherwise receive academic credit 
for) 12 semester hours (or the equivalent) in a program of education 
leading to a standard college degree;
* * * * *
    (b) * * *
    (3) The individual, before applying for educational assistance, 
must:
    (i) Complete the requirements for a secondary school diploma or an 
equivalency certificate; or
    (ii) Successfully complete (or otherwise receive academic credit 
for) 12 semester hours (or the equivalent) in a program of education 
leading to a standard college degree.
* * * * *

0
7. Section 21.7045 is amended by:
0
a. In the introductory text, removing ``(d)'' and adding, in its place, 
``(d) or (e)''.
0
b. Adding paragraph (e).
    The addition reads as follows:


Sec.  21.7045  Eligibility based on involuntary separation, voluntary 
separation, or participation in the Post-Vietnam Era Veterans' 
Educational Assistance Program.

* * * * *
    (e) Alternate eligibility requirements for former participants in 
the Post-Vietnam Era Veterans' Educational Assistance Program. (1) 
Definition. For the purpose of this paragraph a participant is a 
veteran or servicemember who:
    (i) Had enrolled in the Post-Vietnam Era Veterans' Educational 
Assistance Program, contributed to the fund described in Sec.  
21.5021(f), and either--
    (A) Is making contributions by monthly payroll deduction to that 
fund;
    (B) Has some or all of the contributions remaining in that fund;
    (C) Has disenrolled, and received a refund of contributions; or
    (D) Has used all of his or her entitlement to benefits under the 
Post-Vietnam Era Veterans' Educational Assistance Program; or
    (ii) Had enrolled in the Post-Vietnam Era Veterans' Educational 
Assistance Program, and has had the Secretary of Defense make 
contributions to the fund described in Sec.  21.5021(f) for him or her.
    (2) Making an election. To receive educational assistance under 
authority of this paragraph, a veteran or servicemember must:
    (i) Have elected before November 1, 2001, to receive educational 
assistance payable under 38 U.S.C. chapter 30 in lieu of educational 
assistance payable under the Post-Vietnam Era Veterans' Educational 
Assistance Program;
    (ii) Have been a participant in the Post-Vietnam Era Veterans' 
Educational Assistance Program on or before October 9, 1996;
    (iii) Have served continuously on active duty since October 9, 
1996, through at least April 1, 2000;
    (iv) Receive an honorable discharge when discharged or released 
from the period of active duty during which the servicemember made the 
election described in paragraph (e)(3) of this section.
    (3) Election. The election to receive educational assistance 
payable under 38

[[Page 34330]]

U.S.C. chapter 30 in lieu of educational assistance payable under the 
Post-Vietnam Era Veterans' Educational Assistance Program is 
irrevocable. The election must have been made before November 1, 2001, 
pursuant to procedures provided by the Secretary of the military 
department concerned.
    (4) $2,700 collection. (i) An individual who has made the election 
described in paragraph (e)(3) of this section must have his or her 
basic pay reduced by $2,700 in a manner prescribed by the Secretary of 
the military department concerned. To the extent that basic pay is not 
so reduced before the individual's discharge or release from active 
duty, the Secretary of the military department concerned will collect 
from the individual an amount equal to the difference between $2,700 
and the amount that the individual's basic pay has been reduced. The 
individual may choose how the $2,700 is to be collected. The Secretary 
of the military department concerned, according to the choice the 
individual makes, will collect this amount--
    (A) From the individual; or
    (B) By reducing the individual's retired or retainer pay.
    (ii) The individual must pay $2,700 to the Secretary of the 
military department concerned, as provided for by that Secretary, 
during an 18-month period beginning on the date the individual made the 
election described in paragraph (e)(3) of this section.
    (iii) Educational assistance under authority of paragraph (e) of 
this section to an individual who was discharged or released from 
active duty before the Secretary of the military department concerned 
had collected the full $2,700 described in paragraph (e)(4) of this 
section is not payable until that Secretary either--
    (A) Collects in full the $2,700; or
    (B) Has made the first reduction in retired or retainer pay for the 
purpose of the $2,700 payment described in paragraph (e)(4) of this 
section. Thus, a veteran who is making the $2,700 payment through 
having retired or retainer pay reduced may be eligible before the 
Secretary of the military department concerned collects the full 
$2,700.
    (5) Educational requirement. Before applying for benefits that may 
be payable as the result of making a valid election, an individual must 
have--
    (i) Completed the requirements of a secondary school diploma (or 
equivalency certificate); or
    (ii) Successfully completed the equivalent of 12 semester hours in 
a program of education leading to a standard college degree.

(Authority: 38 U.S.C. 3018C(e))


0
8. Section 21.7050 is amended by:
0
a. In paragraph (a)(1), removing ``(c) or (d)'' and adding, in its 
place, ``(c), (d), and (e)''.
0
b. Redesignating paragraphs (e) and (f) as paragraphs (f) and (g), 
respectively.
0
c. Adding new paragraph (e).
    The addition reads as follows:


Sec.  21.7050  Ending dates of eligibility.

* * * * *
    (e) Some veterans have a later ending date. (1) The ending date of 
the eligibility period of a veteran described in paragraph (e)(2) of 
this section is the later of:
    (i) November 1, 2010; or
    (ii) 10 years after the date of the veteran's last discharge from a 
period of active duty of 90 days or more.
    (2) The ending date of a veteran's eligibility period will be the 
date described in paragraph (e)(1) of this section if the veteran would 
have been prevented from establishing eligibility by one or more of the 
former requirements described in paragraphs (e)(2)(i) through 
(e)(2)(iv) of this section and the veteran is enabled to establish 
eligibility by the removal of the statutory bases for those 
requirements. (For the purposes of this paragraph, the applicable 
provisions of those former requirements appear in the July 1, 2002 
revision of the Code of Federal Regulations, title 38.)
    (i) A period of active duty other than the initial period was used 
to establish eligibility. The veteran was enabled to establish 
eligibility by the removal of the former eligibility requirement in 38 
CFR 21.7042(a)(2)(ii), 21.7042(a)(5)(iv)(A), and 21.7042(a)(5)(iv)(B), 
revised as of July 1, 2002, that a veteran had to use his or her 
initial period of active duty to establish eligibility for educational 
assistance;
    (ii) High school education eligibility criterion met after the 
qualifying period of active duty. The veteran was enabled to establish 
eligibility by the removal of the former eligibility requirement in 38 
CFR 21.7042(a)(3), 21.7042(b)(2), and 21.7042(c)(4), revised as of July 
1, 2002, that before completing the period of active duty used to 
establish eligibility for educational assistance, a veteran had to 
complete the requirements for a secondary school diploma (or an 
equivalency certificate) or successfully complete (or otherwise receive 
academic credit for) 12 semester hours (or the equivalent) in a program 
of education leading to a standard college degree;
    (iii) High school education eligibility criterion met after October 
29, 1994. The veteran was enabled to establish eligibility by the 
removal of the former eligibility requirement in 38 CFR 21.7042(a)(6), 
21.7042(b)(11), and 21.7044(b)(13), revised as of July 1, 2002, that 
certain veterans meet the requirements for a secondary school diploma 
(or an equivalency certificate) before October 29, 1994, in order to 
establish eligibility for educational assistance;
    (iv) High school education eligibility criterion for veterans 
formerly eligible under 38 U.S.C. chapter 34 met after January 1, 1990. 
The veteran was enabled to establish eligibility by the removal of the 
former eligibility requirement in 38 CFR 21.7044(a)(3) and 
21.7044(b)(3), revised as of July 1, 2002, that, as one of the two ways 
that certain veterans could meet the educational criteria for 
establishing eligibility for educational assistance, the veteran must 
before January 1, 1990, meet the requirements for a secondary school 
diploma (or equivalency certificate).

(Authority: 38 U.S.C. 3031 note; secs. 102(e), 103(e), Pub. L. 106-
419, 114 Stat. 1825; 1826-27)
* * * * *

0
9. Section 21.7072 is amended by:
0
a. In paragraph (a), removing ``(c) and (d)'' and adding, in its place, 
``(c), and (d) of this section''.
0
b. In paragraph (b)(1) introductory text, removing ``initial'' and 
adding, in its place, ``qualifying''.
0
c. Revising paragraphs (b)(1)(ii) and (c)(1).
    The revisions read as follows:


Sec.  21.7072  Entitlement to basic educational assistance.

* * * * *
    (b) * * *
    (1) * * *
    (ii) Serves less than 36 months of continuous active duty service 
after June 30, 1985 (or less than 24 continuous months of a qualifying 
obligated period of active duty service after June 30, 1985, if his or 
her qualifying obligated period of active duty is less than 3 years), 
and
* * * * *
    (c) Entitlement based on service in the Selected Reserve. (1) 
Except as provided in Sec.  21.7073, when the provisions of paragraph 
(c) of this section are met, an individual is entitled to one month of 
basic educational assistance (or the equivalent thereof in part-time 
basic educational assistance) for each month of the individual's active 
duty service that is after June 30, 1985, and that, in the case of an 
individual who had no previous eligibility under 38 U.S.C.

[[Page 34331]]

chapter 34, is part of the individual's qualifying obligated period of 
active duty. An individual is entitled to one month of basic 
educational assistance (or the equivalent thereof in part-time basic 
educational assistance) for each four months served by the individual 
in the Selected Reserve after June 30, 1985 (other than a month in 
which the individual serves on active duty). Except as provided in 
Sec.  21.7073, VA will apply the provisions of paragraph (c) of this 
section when the individual--
    (i) Establishes eligibility through meeting the eligibility 
requirements of Sec.  21.7042 or Sec.  21.7044, and
    (ii) Bases his or her eligibility upon a combination of service on 
active duty and service in the Selected Reserve as described in Sec.  
21.7042(b) and Sec.  21.7044(b).

(Authority: 38 U.S.C. 3013(b))
* * * * *

0
10. Section 21.7131 is amended by:
0
a. Revising paragraph (a)(1)(iii).
0
b. Adding paragraphs (a)(1)(iv) and (a)(1)(v).
0
c. Revising the authority citation for paragraph (a).
0
d. In paragraph (b)(2), removing ``Except as provided in paragraphs 
(b)(3), (b)(4) and (b)(5) of this section when'' and adding, in its 
place, ``When'' and removing ``enrolled'' and adding, in its place, 
``enrolled, except as provided in paragraphs (b)(3), (b)(4), and (b)(5) 
of this section''.
0
e. Adding paragraphs (j), (o), and (p).
    The revisions and additions read as follows:


Sec.  21.7131  Commencing dates.

* * * * *
    (a) * * *
    (1) * * *
    (iii) The effective date of the approval of the course;
    (iv) One year before the date VA receives approval notice for the 
course; or
    (v) November 1, 2000, if paragraph (p) of this section applies to 
the individual.
* * * * *
    (Authority: 38 U.S.C. 3014, 3023, 3034, 3672)
* * * * *
    (j) Increase due a servicemember due to monetary contributions. (1) 
If a servicemember is contributing additional amounts as provided in 
Sec.  21.7136(h), and is enrolled in an educational institution 
operated on a term, quarter, or semester basis, the monthly rate 
payable to the servicemember will increase on the first day of the 
term, quarter, or semester following the term, quarter, or semester in 
which the servicemember made the contribution(s).
    (2) If a servicemember is contributing additional amounts as 
provided in Sec.  21.7136(h), and is enrolled in an educational 
institution not operated on a term, quarter, or semester basis, the 
monthly rate payable to the servicemember will increase on the first 
day of the enrollment period following the enrollment period in which 
the servicemember made the contribution.


(Authority: 38 U.S.C. 3011(e), 3012(f))

* * * * *
    (o) Eligibility established under Sec.  21.7045(e). This paragraph 
must be used to establish the effective date of an award of educational 
assistance when the veteran or servicemember has established 
eligibility under Sec.  21.7045(e). The commencing date of an award of 
educational assistance for such a veteran or servicemember is the later 
of the following:
    (1) The commencing date as determined by paragraphs (a) through (c) 
and (f) through (k) of this section; or
    (2) The date on which--
    (i) The servicemember's basic pay is reduced by $2,700;
    (ii) The Secretary of the military department concerned collected 
the difference between $2,700 and the amount by which the military 
department concerned reduced the veteran's basic pay following the 
veteran's election under Sec.  21.7045(e), provided that this 
collection was accomplished through a method other than reducing the 
veteran's retired or retainer pay; or
    (iii) The Secretary of the military department concerned first 
reduced the veteran's retired or retainer pay in order to collect the 
difference between $2,700 and the amount by which the military 
department concerned reduced the veteran's basic pay following the 
election under Sec.  21.7045(e).


(Authority: 38 U.S.C. 3018C(e))


    (p) Eligibility established due to changes to Sec. Sec.  21.7042 
and 21.7044. The commencing date of educational assistance will be no 
earlier than November 1, 2000, if a veteran would have been prevented 
from establishing eligibility by one or more of the former requirements 
described in paragraphs (p)(1) through (p)(4) of this section and the 
veteran is enabled to establish eligibility due to the removal of the 
statutory bases for those requirements. (For the purposes of this 
paragraph, the applicable provisions of those former requirements 
appear in the July 1, 2002 revision of the Code of Federal Regulations, 
title 38.)
    (1) A period of active duty other than the initial period was used 
to establish eligibility. The veteran was enabled to establish 
eligibility by the removal of the former eligibility requirement in 38 
CFR 21.7042(a)(2)(ii), 21.7042(a)(5)(iv)(A), and 21.7042(a)(5)(iv)(B), 
revised as of July 1, 2002, that a veteran had to use his or her 
initial period of active duty to establish eligibility for educational 
assistance.


(Authority: Sec. 102(e), Pub. L. 106-419, 114 Stat. 1825)


    (2) High school education eligibility criterion met after the 
qualifying period of active duty. The veteran was enabled to establish 
eligibility by the removal of the former eligibility requirement in 38 
CFR 21.7042(a)(3), 21.7042(b)(2), and 21.7042(c)(4), revised as of July 
1, 2002, that before completing the period of active duty used to 
establish eligibility for educational assistance, a veteran had to 
complete the requirements for a secondary school diploma (or an 
equivalency certificate) or successfully complete (or otherwise receive 
academic credit for) 12 semester hours (or the equivalent) in a program 
of education leading to a standard college degree.


(Authority: Sec. 103(e), Pub. L. 106-419, 114 Stat. 1826-27)


    (3) High school education eligibility criterion met after October 
29, 1994. The veteran was enabled to establish eligibility by the 
removal of the former eligibility requirement in 38 CFR 21.7042(a)(6), 
21.7042(b)(11), and 21.7044(b)(13), revised as of July 1, 2002, that 
certain veterans meet the requirements for a secondary school diploma 
(or an equivalency certificate) before October 29, 1994, in order to 
establish eligibility for educational assistance.


(Authority: Sec. 103(e), Pub. L. 106-419, 114 Stat. 1826-27)


    (4) High school education eligibility criterion for veterans 
formerly eligible under 38 U.S.C. chapter 34 met after January 1, 1990. 
The veteran was enabled to establish eligibility by the removal of the 
former eligibility requirement in 38 CFR 21.7044(a)(3) and 
21.7044(b)(3), revised as of July 1, 2002, that, as one of the two ways 
that certain veterans could meet the educational criteria for 
establishing eligibility, the veteran must before January 1, 1990, meet 
the requirements for a secondary school diploma (or equivalency 
certificate).


(Authority: Sec. 103(e), Pub. L. 106-419, 114 Stat. 1826-27)



0
11. Section 21.7136 is amended by:

[[Page 34332]]

0
a. In paragraphs (a)(2)(i), (a)(2)(ii), (a)(2)(iii) introductory text, 
and (a)(2)(iii)(B) introductory text, and in the heading for paragraph 
(c), removing ``initial'' and adding, in its place, ``qualifying''.
0
b. In paragraph (e), removing ``(g)'' and adding, in its place, ``(g) 
or (h)''.
0
c. In paragraph (f) introductory text, removing ``Sec.  
21.7045(b)(1)(ii) or (c)(1)(ii)'' and adding, in its place, ``Sec.  
21.7045(b)(1)(ii), (c)(1)(ii), or (e)(2)''.
0
d. Adding paragraph (h).
    The addition reads as follows.


Sec.  21.7136  Rates of payment of basic educational assistance.

* * * * *
    (h) Increase in monthly rates due to contributions. Effective May 
1, 2001, a servicemember who establishes eligibility under Sec.  
21.7042(a), (b), or (c) may contribute up to $600 to the Secretary of 
the military department concerned in multiples of $20.
    (1) VA will increase the monthly rate provided in paragraph (b)(2) 
or (c)(2) of this section by:
    (i) $5 for every $20 an individual pursuing a program of education 
full time has contributed;
    (ii) $3.75 for every $20 an individual pursuing a program of 
education three-quarter time has contributed;
    (iii) $2.50 for every $20 an individual pursuing a program of 
education half time or less than one-half time but more than one-
quarter time has contributed; and
    (iv) $1.25 for every $20 an individual pursuing a program of 
education one-quarter time has contributed.
    (2) If a veteran is pursuing an apprenticeship or other on-job 
training--
    (i) During the first six months of the veteran's pursuit of 
training, VA will increase the monthly rate provided in paragraph 
(b)(4) or (c)(4) of this section by $3.75 for every $20 the individual 
has contributed;
    (ii) During the second six months of the veteran's pursuit of 
training, VA will increase the monthly rate provided in paragraph 
(b)(4) or (c)(4) of this section by $2.75 for every $20 the veteran has 
contributed; and
    (iii) During the remaining months of the veteran's pursuit of 
training, VA will increase the monthly rate proved in paragraph (b)(4) 
or (c)(4) of this section by $1.75 for every $20 the veteran has 
contributed.
    (3) VA will increase the monthly rate provided in paragraph 
(b)(5)(iii) or (c)(5)(iii) of this section by $5 for every $20 the 
veteran has contributed.

(Authority: 38 U.S.C. 3015(g))

[FR Doc. 03-14281 Filed 6-6-03; 8:45 am]
BILLING CODE 8320-01-P