A bill to encourage enlistment and service in the military reserve forces of the United States.

Amends the Higher Education Act of 1965 to direct the Secretary of Education to repay and cancel an amount equal to the lesser of the unpaid balance of a guaranteed or insured student loan or $2,000, for each year, up to four years, of satisfactory service a student borrower performs after December 31, 1981, as a member of the Selected Reserve of the Ready Reserve of an armed force of the United States. Specifies that this does not authorize refunding any repayment of a loan. Authorizes appropriations to carry out such purpose.

Requires that eligible lenders give priority to Selected Reserve members in making federally insured guaranteed student loans.

Requires that institutions of higher education give first priority to Selected Reserve members in making direct student loans.

Includes among those who are "preference eligible" as veterans, for purposes of Federal employment, individuals who: (1) become Selected Reserve members on or before the date of enactment of this Act; and (2) satisfactorily complete at least two years of such service.