1. Improvement of Department of Veterans Affairs Education Debt Reduction Program (a) Additional loans covered Section 7682(a)(2) of title 38, United States Code, is amended by striking a course of education or training which led to a degree that qualified the individual for the position referred to in paragraph (1) and inserting the undergraduate or graduate education of the individual (or both) . (b) Increase of amount of assistance Subsection (d) of section 7683 of such title is amended— (1) in paragraph (1)— (A) by striking $120,000 and inserting $240,000 ; and (B) by striking $24,000 and inserting $60,000 ; and (2) in paragraph (2)(B), by adding at the end the following new sentence: The Secretary shall select the locations covered by the preceding sentence pursuant to a process established by the Secretary that is similar to the process used to determine health professional shortage areas under section 332 of the Public Health Service Act ( 42 U.S.C. 254e ). . (c) Addressing tax liability Such section is further amended by adding at the end the following new subsection: (e) Tax liability For the purpose of providing reimbursements for tax liability resulting from payments under this subchapter on behalf of an individual, the Secretary— (1) shall, in addition to such payments, make payments to the individual in an amount equal to 39 percent of the total amount of loan repayments made for the taxable year involved; and (2) may make such additional payments as the Secretary determines to be appropriate with respect to such purpose. . (d) Applicability The amendments made by this Act shall apply with respect to individuals who first participate in the Department of Veterans Affairs Education Debt Reduction Program under subchapter VII of chapter 76 of title 38, United States Code, beginning on or after the date of the enactment of this Act.