Notwithstanding the provisions of § 21.5138, some incarcerated individuals may have their educational assistance allowance terminated or reduced. The provisions of this section shall not apply in the case of any individual who is pursuing a program of education while residing in a halfway house or participating in a work-release program in connection with that individual's conviction of a felony.

1. (a) No educational assistance allowance payable to some incarcerated individuals. VA will pay no educational assistance allowance to an individual who—

   1. (1) Is incarcerated in a Federal, State or local penal institution for conviction of a felony, and
   2. (2) Is enrolled in a course where his or her tuition and fees are being paid by a Federal program (other than one administered by VA) or by a State or local program, and

   3. (3) Has incurred no expenses for supplies, books or equipment.

      (Authority: 38 U.S.C. 3231(e))

2. (b) Reduced educational assistance allowance for some incarcerated individuals.

   1. (1) VA will pay a reduced educational assistance allowance to a veteran who—

      1. (i) Is incarcerated in a Federal, State or local penal institution of conviction of a felony, and

      2. (ii) Is enrolled in a course—

         1. (A) For which the individual pays some (but not all) of the charges for tuition and fees, or
         2. (B) For which a Federal program (other than one administered by VA) or a State or local program pays all the charges for tuition and fees, but which requires the individual to pay for books, supplies and equipment.

   2. (2) The monthly rate of educational assistance allowance payable to such an individual shall be the lesser of the following:

      1. (i) The monthly rate determined by adding the tuition and fees that the veteran must pay and the charge to the veteran for the cost of necessary supplies, books and equipment and prorating the total on a monthly basis, or

      2. (ii) The monthly rate for the individual as determined by § 21.5138(c) of this part.

         (Authority: 38 U.S.C. 3231(e))

[55 FR 31583, Aug. 3, 1990]