APPLICANT REQUESTS:  In effect, that recoupment of the educational expenses incurred through his advanced civil schooling (ACS) be set aside/waived and that the recouped funds be refunded to him.

APPLICANT STATES:  That at the time he requested separation under the Voluntary Separation Incentive (VSI) option of the Voluntary Separation Incentive Program (VSIP), he also requested a waiver of recoupment of any funds he still owed (in lieu of completing his active duty service obligation (ADSO)) for having participated in an ACS program.  He further states that he submitted his request on 25 February 1992 and after receiving approval (via electronic message) indicating that his ACS costs would be recouped, he made several attempts to ascertain if the recoupment would be made.  He continues by stating that he was verbally informed by finance officials that recoupment would not be made.  Therefore, when the debt was not collected from his pay at the time of separation he assumed that his request to waive recoupment had been approved.  However, on 15 May 1993 (13 months later), he received a notice from the Defense Finance and Accounting Service (DFAS) advising him that he was required to reimburse the government in the amount of $10,927.18 within 30 days.  

He goes on to state that he immediately contacted the DFAS and informed them that the debt had been waived.  The DFAS informed him that they were notified of the debt by the Total Army Personnel Command (PERSCOM) and that they would suspend collection of the debt until the issue had been resolved.  After contacting the PERSCOM he was informed by the PERSCOM that he would have to apply to this Board for relief.  Meanwhile, the DFAS continued collection actions which included reporting the debt to a credit bureau which negatively affected his credit rating.  It also resulted in the Internal Revenue Service (IRS) collecting his income tax return.  Additionally, the DFAS confiscated his 1995 VSI payment to settle the debt.  He also states that his request for separation under the VSIP was conditioned on the government’s waiver or relief from recoupment of ACS costs and that once the government accepted his offer, a contract was consummated by the necessary exchange of consideration.  Consequently, the government should now honor its contract, especially since he has made every reasonable attempt to resolve the issue and because the DFAS has attempted to ruin his credit rating despite their promise to suspend collection until the matter was resolved.

EVIDENCE OF RECORD:  The applicant's military records show:

He was commissioned as a Regular Army second lieutenant on 8 December 1978, upon graduation from ROTC as a distinguished military graduate.  He was promoted to the rank of major on 1 December 1990.

He attended Babson College at Wellesley, Massachusetts from 26 June 1987 through 20 May 1989 for the purpose of obtaining a master’s degree in business administration.  As a result of his attending ACS, he incurred an active duty service obligation of 2,190 days of active duty in return for the costs incurred by the Army ($22,654.45).  Upon obtaining his master’s degree he was transferred to Vint Hill Farms Station, Warrenton, Virginia for duty as a contract management officer in the communication electronics command. 

On 25 February 1992, the applicant submitted his request for separation under the VSI option of the VSIP.  He specified in his request that he did not desire to separate from the service if his request for the VSI was not approved.  He also acknowledged that he understood that he might be required to reimburse the government for his ACS costs.  However, he requested a waiver or relief from such reimbursement in conjunction with his request for separation under the VSIP in light of the congressionally mandated strength reductions.

The Department approved his request for separation under the VSI option of the VSIP on 25 March 1992, and notified the applicant that he would be required to reimburse the government for the unserved portion of his advance civil schooling costs. 

The applicant was honorably released from active duty and transferred to the USAR Control Group (Reinforcement) on 30 April 1992, under the provisions of Army Regulation    635-120 and the VSIP.  He had served 13 years, 4 months, and 23 days of total active service and was paid his first VSI payment of $13,334.40 at the time of separation and is to receive similar payments over the next 25 years, provided he remains qualified.

On 3 May 1993 (1 year later), the DFAS notified the applicant in writing that he was indebted to the government in the amount of $10,927.18 for the unearned portion of his ACS costs.

On 15 December 1993, the DFAS, in response to an inquiry from the applicant, informed him that the PERSCOM was the agency that certified the debt to the DFAS and that he would have to contact the PERSCOM to have the collection action voided.

The PERSCOM, on 3 February 1994, in response to the applicant’s letter dated 20 January 1994, regarding his debt, informed the applicant that the PERSCOM did not have the authority to waive his ACS debt and advised him to apply to this Board if he still desired to seek relief in the matter. 

On 24 February 1994 the DFAS informed the applicant that they would suspend collection action on his account to allow PERSCOM sufficient time to respond to his request if he provided copies of his correspondence to the PERSCOM.

On 3 July 1995 the IRS informed the applicant that his 1994 Federal income tax refund of $324.00 had been applied to his debt to the government.

The DFAS, on 30 April 1995, withheld the applicant’s annual VSI payment and applied it to his debt.  The applicant, on 15 May 1995, summated a check to the DFAS in the amount of $1,577.66 to satisfy the remainder of the debt.

In the processing of this case an advisory opinion (COPY ATTACHED) was obtained from the DFAS.  It opined that the authority which authorized the applicant’s separation from the service specifically directed that the funds were to be recouped and the applicant has provided no proof that a waiver of the collection was authorized.  It further opined that the debt, which has already been collected, should not be refunded to the applicant since there is no provision to repay funds to individuals for which they are not entitled and to do so would constitute an injustice to the government.  The DFAS recommended that his request be disapproved.

In the processing of the case, a staff member contacted the DFAS to ascertain the interest and processing fees that were assessed to the applicant’s account and what action was taken to clear his account with the credit bureaus.  Officials at the DFAS debt management office provided that a $30.00 administrative collection fee and $2.98 in interest were assessed to his account prior to his satisfying the debt.  In addition, notification was sent out to the appropriate credit bureaus indicating that the debt had been erroneously reported and that the account had been satisfied and that all references to the debt should be removed from his records.

In order to comply with Congressional intent to drawdown the Army through voluntary separation, the Department announced the provisions of the Fiscal Year (FY) 1992 Enlisted Voluntary Early Transition (VET) Program through electronic message on 1 October 1991.
In the interim, the Secretary of Defense was in the process of drafting guidance for the administration and payment of separation incentive pay for both officer and enlisted personnel in overstrength inventories to encourage them to leave active duty voluntarily.  On 20 December 1991 the Department announced the provisions of the National Defense Authorization Act for FY92, which established the VSIP and two separation incentive options.  Both separation incentive options, the VSI and the SSB, were offered jointly.  Service members who were approved for the VSIP had the option of receiving either the VSI or the SSB.
Those who chose the SSB received a lump sum payment equal to 15 percent of his/her annual basic pay multiplied by 12 and multiplied again by his/her number of years of active military service.  In return, they had to agree to serve in the Ready Reserve for a period of not less than 3 years after completion of any remaining statutory obligation.
Those choosing the VSI were to receive an annual payment equal to 2.5 percent of his/her annual basic pay, multiplied by 12 and multiplied again by the number of years of active Federal service.  The member had to agree to serve in the Ready Reserve for the entire period that he/she received annual payments.
Army Regulation 37-104-3 prescribes policies and provisions for entitlements and collections of pay and allowances of military personnel.  Chapter 11 provides for recoupment of educational expenses, e.g., Senior ROTC, United States Military Academy, and advanced civilian schooling under previous agreement when obligated active duty service has not been completed.

Title 10, U.S. Code, section 2005, serves as the authority for reimbursement requirements for advanced education assistance.  It states, in pertinent part, that persons who voluntarily fail to complete the terms of their advanced education assistance agreement will reimburse the United States for the unserved portion not fulfilled.

DISCUSSION:  Considering all the evidence, allegations, and information presented by the applicant, together with the evidence of record, applicable law and regulations, it is concluded:

1.  In order to justify correction of a military record the applicant must show to the satisfaction of the Board, or it must otherwise satisfactorily appear, that the record is in error or unjust.  The applicant has failed to submit evidence that would satisfy the aforementioned requirement.

2.  The applicant was aware that one of the conditions of his voluntarily separation under the VSIP was the requirement to repay the unearned portion of the cost of his ACS.  There is no indication that he chose to withdraw his request for separation following the notification that he had to repay the money.

3.  The Board finds no indication in his request for separation under the VSIP, any evidence to suggest that his request for separation was contingent on approval of a waiver for recoupment of the unearned ACS costs.  Likewise, there is no indication that he had been assured that a waiver would have been approved or that he would have elected to withdraw his request if his waiver had been disapproved.

4.  The Board is convinced that the applicant was aware that his request for separation under the VSIP had been approved and that his request for a waiver of recoupment had been disapproved.  Both actions were specifically addressed in the message that responded to his request.  If the applicant had questions regarding the issues at the time, he easily could have contacted the PERSCOM which administered the program at the time, especially since he was stationed in close proximity to the PERSCOM.  While it is unfortunate that the applicant was not notified of the exact amount of the debt until 1 year after he separated, that is no basis to forgive the debt.

5.  Although, the applicant’s debt was valid and the DFAS acted within it’s authority to collect the debt, it was inappropriate for the DFAS to report the debt to the credit bureaus prior to the issue being resolved.  Accordingly, the DFAS has taken action to correct the administrative error by notifying the appropriate agencies to remove all references to the debt from his records.

6.  In view of the foregoing, there is no basis for granting the applicant’s request. 

DETERMINATION:  The applicant has failed to submit sufficient relevant evidence to demonstrate the existence of probable error or injustice.

BOARD VOTE:

                       GRANT          

                       GRANT FORMAL HEARING

                       DENY APPLICATION




		Karl F. Schneider
		Acting Director