PROCEEDINGS


         IN THE CASE OF:
        

         BOARD DATE: 16 January 2003
         DOCKET NUMBER: AR2002074812


         I certify that hereinafter is recorded the true and complete record of the proceedings of the Army Board for Correction of Military Records in the case of the above-named individual.

Mr. Carl W. S. Chun		Director
Ms. Joyce A. Wright		Analyst

The following members, a quorum, were present:

Mr. Raymond V. O'Connor, Jr.		Chairperson
Ms. Marla J. Troup		Member
Mr. Arthur A. Omartian		Member

         The applicant and counsel if any, did not appear before the Board.

         The Board considered the following evidence:

         Exhibit A - Application for correction of military
records
         Exhibit B - Military Personnel Records (including
         advisory opinion, if any)

FINDINGS :

1. The applicant has exhausted or the Board has waived the requirement for exhaustion of all administrative remedies afforded by existing law or regulations.

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2. The applicant requests, in effect, that the Army repay his student loan.

3. The applicant states, in effect, that his recruiter informed him that his student loans would be repaid. In support of his application, he submits copies of: several documents pertaining to his enlistment contract; a letter from the US Total Army Personnel Command (PERSCOM), Education Incentives and Counseling Branch; and several documents pertaining to his student loan.

4. The applicant submits an additional statement to his application. He states that on his first visit to the Norwood Recruiting Station, he asked the NCO in charge (NOCIC) whether his loans from the Connecticut Higher Education Supplemental Loan Authority (CHESLA), held by the Connecticut Assistance for Loan Services (CALS), would be eligible for the Loan Repayment Program (LRP) and was assured that they would be covered. His recruiter sent him to see the NCOIC due to his unfamiliarity with the program. The NCOIC instructed him on how to obtain the proper promissory notes and 2 weeks later, he arrived at the Military Entrance Processing Station (MEPS) in Boston. After his arrival at the contract station, personnel informed him that his loans were not eligible for the program. He responded by stating that if they were not paid he could not sign the contract. This incident caused quite a problem and by the time he returned to the recruiting station, the NCOIC was on the phone with the first sergeant. He made it clear that if his loans did not qualify, then he would be unable to enlist because he would be unable to pay the loans back on his Army salary. The NCOIC contacted him and informed him that the loans would be repaid in the following weeks.

5. After signing his contract, he contacted CALS and CHESLA, who were under the impression that their loans were not eligible. An agreement was reached between the associate director and the NCOIC. He was honest from the beginning and only signed because was assured that these loans would be covered.

6. The applicant’s military records show he enlisted on 19 May 2000, as an interrogator in military occupational specialty (MOS) 97E for a period of 5 years. He continues to serve and is presently assigned to the 311^th Military Intelligence Battalion Service Support Company, Fort Campbell, Kentucky.

7. The applicant’s records contain a copy of a DD Form 2366 (Montgomery GI Bill Act of 1984 (MGIB)), dated 24 May 2000, which was authenticated in his own hand, and shows the entry, "MOS 97E10 TOS 5YRS LRPYMT" (time of service
5 years loan repayment $65,000). It also shows the entry "I DO NOT desire to participate in the MGIB. I understand that I WILL NOT be able to enroll at a later date."


8. The applicant’s DA Form 3286-66, item 1(a) shows that the applicant enlisted
for the LRP. Item 4 shows the entry "I understand that I must DISENROLL from the GI Bill in order to qualify for this program. DISENROLLMENT MUST BE ACCOMPLISHED at the time I enter on active duty. If I fail to complete the disenrollment portion of the DD Form 2366, I will not be eligible for the LRP and will become automatically enrolled in the GI Bill."

9. Item 4(a) states "I understand that under this program (LRP) that the government will repay a designated portion of any loan I incurred that was made, insured or guaranteed under Part B of the Higher Education Act of 1965 (Guaranteed Student Loan) or any loan under Part E of such act (National Direct Student Loan) after 1 October 1975 and before I enlist into the Regular Army. Not to exceed $65,000."

10. The applicant provided a copy of a letter from CHELSA, dated 19 May 2000,
to the station commander based on his request for information. The letter stated that the station commander requested copies of specific documents pertaining to the applicant's loan payment data. The applicant had informed CHELSA that the US Army would repay his loan in full over the next 3 years (including accumulated interest). The first loan installment was due on or before 31 May 2000, and that the attached payment should be forwarded to CHELSA. Also attached to this letter was a complete outline of the applicant's principal and interest due on his loan from 1994 through 1997.

11. On 6 June 2000, the station commander prepared a letter to CHELSA in regards to the applicant's case. The station commander stated that maybe there was some confusion on how the Army will pay the applicant's loan over the next
3 years. The first payment would not occur until next year. The Department of Defense (DOD) would send the money owed and that records should be updated to reflect this change.

12. On 9 June 2000, CHELSA responded to the station commander's letter. CHELSA had instructed their loan servicer, CALS, to update the applicant's first loan installment from the Department of the Army to 25 June 2001.

13. The applicant provided a copy of a letter from PERSCOM, Education Incentives and Counseling Branch, dated 21 June 2001. The letter was written in regards to the Department of Defense (DOD) Educational LRP Annual Application, DD Form 2475, which was recently received from the CALS. The letter stated that individuals enlisting with the LRP as part of their contract must meet certain standards. Part of the eligibility criteria is to have loans that qualify



under the LRP. Loans eligible for repayment under the LRP are Stafford, Perkins, Parent Loans for Undergraduate Students, Supplemental loans, or any
loan made, insured, or guaranteed under the Higher Education Act, Title IV, Part B, D, or E. In addition, Public Law 99-145, Section 671 (a) (1) confirms loans eligible for repayment must be made, insured, or guaranteed prior to entry on active duty. Payment toward loans that do not qualify under the LRP would be in violation of the law governing this program. There are no exceptions. It was determined that his loan did not qualify for repayment under LRP based on information provided by CALS. The applicant had a Private Loan, which was not eligible under the LRP.

14. Army Regulation 601-210 (Regular Army and Army Reserve Enlistment Program) prescribes eligibility criteria governing the enlistment of persons, with or without prior service (PS), into the Regular Army (RA) and the USAR. Chapter 9 (Enlistment Programs/Options) indicates that these programs/options are designed to merge valid Army requirements with personal desires.

15. Table 9-4 contains guidance on enlistment option program 9C (Bonus/Army College Fund/Loan Repayment Program). It contains specific guidance pertaining to the LRP and indicates that the government will repay a designated portion of any loan incurred that was made, insured, or guaranteed under part
B of the Higher Education Act of 1965 (Guaranteed Student Loan) or any loan under part E of such act (National Direct Student Loan) after 1 October 1975 and before enlistment into the Regular Army.

16. Table 9-4 also provides program processing procedures that require Army Guidance Counselors to accomplish specific counseling and administrative actions in connection with processing members enlisting with the LRP incentive. These actions include ensuring members are disenrolled from the GI Bill; verifying that members have qualifying loans; and advising members of any loan that is not eligible.

17. The regulation further states that Guidance Counselors are specifically required to confirm they accomplished all the processing procedures by making the appropriate entries in the DD Form 1966 and DA Form 3286-66. This includes a statement advising members of any loan he or she has that is not eligible for repayment and ensuring the applicant’s acknowledgement of this fact is also recorded in the remarks section of the DD Form 1966.

18. The Loan Repayment Program is a Department of the Army enlistment option authorized by Public Law 99-145. This option is designed to increase Test Score Category I-IIIA accessions. Loans that qualify for repayment are Guaranteed Student Loan/Stafford Loans, National Direct Student Loan/Perkins


Loans, William D. Ford Loans, Supplemental Loans for Students, Federally Insured Student Loans (FISL), Parent Loans for Undergraduate Students (PLUS), Auxiliary Loan Assistance for Students (ALAS), and consolidated loans
which fall under Title IV, Part B or E of the Higher Education Act of 1965, or William D. Ford Loans. Before entering active duty, the loan must not be in default. The borrower is responsible for obtaining a deferment/forbearance with the loan holder and the loan must remain in good standing throughout the repayment process. Active Army LRP participants earn their first loan repayment after completion of a full year of active duty and for each full year thereafter, up to
3 years. Payment of 33 1/3 percent or $1,500, whichever is greater, is authorized annually to the loan holder on the total remaining original outstanding principal balance.

19. Title 10, U.S. Code, section 1552, the law which provides for the Board, states that “The Secretary may pay, from applicable current appropriations, a claim for the loss of pay, allowances, compensation, emoluments, or other pecuniary benefits, or the repayment of a fine or forfeiture, if, as a result of correcting a record under this section, the amount is found to be due the claimant on account of his or another’s service in the Army, Navy, Air Force, Marine Corps or Coast Guard, as the case may be.”

CONCLUSIONS:

1. The evidence of record shows that the applicant enlisted under the LRP and
acquired student loans prior to his entry on active duty. The evidence of record also notes that the applicant signed his addendum to his MGIB Enlistment Contract attesting to the fact that he was disenrolled from the MGIB.

2. The applicant was informed and assured by his recruiter that his loans would be repaid; however, personnel at the MEPS stations informed him that his loans were not eligible for the program. The applicant responded and stated that if they were not paid he was unable to sign the contract. The applicant returned to the recruiting station and was later informed by the NCOIC that the loans would be repaid.

3. CHELSA was notified by the station commander in regards to the applicant's case and stated that there was some confusion on how the Army pays the applicant's loan over the next 3 years and that the first payment would not occur until next year. CHELSA was also informed that the funds owed would be paid by DOD and that the applicant's records should be updated to reflect this change.
CHELSA responded to the station commander and instructed their loan servicer, CALS, to update the applicant's first loan installment from the Army.



4. The Board notes that Chief, Education Incentives Counseling Branch, received a copy of the applicant’s DD Form 2475 from CALS. However, upon receipt of his DD Form 2475, the Chief, Education Incentives Counseling Branch, determined that the applicant’s loan did not qualify for repayment under the LRP.
Therefore, the Army was not authorized to repay the applicant’s student loan.

5. The Board concedes that the applicant’s loan does not meet the criteria established by law; however, it finds this is not the overriding factor in this case given the equity considerations and the resultant injustice.

6. By regulation, Army Guidance Counselors are required to verify that a member enlisting for the LRP has qualifying loans and to advise those members if any loan is not eligible for repayment. Further, these service representatives must confirm these actions were accomplished by making the appropriate entries in the enlistment contract or associated documents.

7. After a careful review of the evidence, the Board finds that the applicant's recruiter notified CHELSA, CALS, that the applicant's loans did qualify for repayment. However, there is no evidence that this verification was made a part of the applicant's contract prior to his enlistment.

8. The applicant was misled and assured that his loans would be repaid; however, after his enlistment he discovered that they were not entitled to repayment. Therefore, in the interest of justice and equity, the Board concludes that it would be appropriate to provide the applicant the LRP benefits outlined in his enlistment contract.

9. In doing so, the applicant’s military records should be corrected to show his
DA Form 3286-66 was amended to include the sentence “If a student loan is accepted by the official processing you for enlistment as payable under the LRP and the government fails to verify that the student loan accepted actually is eligible under the Higher Education Act of 2965 and such failure results in nonpayment of the loan by the LRP or the repayment or default of the loan, the Army Board for Correction of Military Records may pay the loan, at its sole discretion, in accordance with Title 10, U.S. Code, section 1552.” This would allow the Board to invoke that provision and pay him the amount his lending institution would have been paid for his loan obtained from CHELSA, CALS,
under the LRP.

10. In view of the foregoing, the applicant’s records should be corrected as recommended below.




RECOMMENDATION:

1. That the applicant’s DA Form 3286-66, Statement of Understanding, US Army Incentive Enlistment Program, be amended to include the sentence “If a student loan is accepted by the official processing you for enlistment as payable under the LRP and the government fails to verify that the student loan accepted actually is eligible under the Higher Education Act of 2965 and such failure results in nonpayment of the loan by the LRP or the repayment or default of the loan, the Army Board for Correction of Military Records may pay the loan, at its sole discretion, in accordance with Title 10, U.S. Code, section 1552.”

2. That as a result of the above correction the Defense Finance and Accounting Service (DFAS) shall remit payment to the applicant of the total amount of the loan obtained from CHELSA, held by CALS, to which he is entitled as a result of this correction at the appropriate rate and time. The applicant will submit the appropriate evidence (promissory notes, etc.) to the DFAS to determine the amount due, if required.

BOARD VOTE:

__ro___ ___mt___ __ao__ GRANT AS STATED IN RECOMMENDATION

________ ________ ________ GRANT FORMAL HEARING

________ ________ ________ DENY APPLICATION




                  ___Raymond V. O'Connor, Jr.___
                  CHAIRPERSON

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INDEX

CASE ID	AR2002074812
SUFFIX
RECON
DATE BOARDED	20030116
TYPE OF DISCHARGE
DATE OF DISCHARGE
DISCHARGE AUTHORITY
DISCHARGE REASON
BOARD DECISION	GRANT
REVIEW AUTHORITY
ISSUES 1.	1026
2.
3.
4.
5.
6.