RECORD OF PROCEEDINGS


IN THE CASE OF:

      BOARD DATE:           OCTOBER 7, 2004
      DOCKET NUMBER:   AR2004100950


      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             |
|     |Mr. Luis Almodova                 |     |Analyst              |


      The following members, a quorum, were present:

|     |Mr. Walter T. Morrison            |     |Chairperson          |
|     |Mr. Paul M. Smith                 |     |Member               |
|     |Mr. Patrick H. McGann Jr,         |     |Member               |

      The Board considered the following evidence:

      Exhibit A - Application for correction of military records.

      Exhibit B - Military Personnel Records (including advisory opinion,
if any).

THE APPLICANT'S REQUEST, STATEMENT, AND EVIDENCE:

1.  The applicant requests in effect, that her records be corrected to show
that disbursement of funds for her student loan repayments under the Loan
Repayment Program (LRP) were made in equal one-third installments in the
years 2001, 2002, and 2003.

2.  The applicant states, in effect:

      a.  as the record currently stands, the Army disbursed one installment
in 2001 and two installments in 2002, rather than disbursing once in each
year from 2001 to 2003 in repayment of her student loans which were
eligible for repayment under the LRP enlistment incentive.

      b.  the record is in error and unjust because the above-mentioned
funds were supposed to be disbursed in equal one-third installments after
each year of completed active duty.  Thus, in her case, the Army should
have paid one third, or approximately $17,555 to her lenders each of three
years on active duty.  By disbursing two years worth of installments
$35,165.66, in 2002, the Army caused her adjusted gross income and
consequently her tax liability to increase substantially for that tax year

      c.  This error has cause her to incur a substantially higher tax
burden than she otherwise would have incurred.  Specifically, her tax
liability for 2002 was over $4,600 more than it would have been if the Army
had disbursed the funds correctly.

3.  In addition to her application, the applicant submitted a self-authored
addendum (Personal Statement in Support of Application) and other documents
which are listed as Tabs A through I on a Table of Contents.

CONSIDERATION OF EVIDENCE:

1.  The applicant enlisted in the US Army Reserve, for 8 years, on
20 September 1999.  On 5 January 2000, the applicant enlisted in the
Regular Army for a period of 6 years.  She successfully completed basic
combat training at Fort Jackson, South Carolina.  She completed her
advanced individual training at Fort Sam Houston, Texas, and on completion
of her advanced training, she was awarded the military occupational
specialty 91P, Radiology Specialist.

2.  The applicant was honorably discharged in the rank and pay grade,
Specialist, E-4, under the provisions of Army Regulation (AR) 635-200,
Chapter 8, on 16 July 2003.  The narrative reason for her discharge is,
"Pregnancy."

3.  DD Form 1966/3, Record of Military Processing – Armed Forces of the
United States, and the USAREC Form 1150, Statement of Understanding – Army
Policy, USAREC Addendum to DD Form 1966 Series, shows that the applicant
enlisted for, among other incentives, payment of loans she was given as a
student before her entry on active duty, under the Army's Student Loan
Repayment Program.

4.  DA Form 3286-66, Incentive Enlistment Program, in paragraphs 4a., 4b.,
and 4c. were initialed to indicate the applicant's understanding of her
responsibilities and the Army's responsibilities to her in payment of her
qualifying loans under the LRP.

5. Paragraph 4a. of the DA Form 3286-66 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 1975 (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."  The paragraph was
modified with addition of the phrase, "Up to $65,000."

6.  Paragraph 4b. of the DA Form 3286-66 states, "Enlistment for the LRP
ensures me, provided I meet and maintain the prescribed prerequisites, that
the portion or amount of loan that may be repaid is 33 1/3 percent or
$1,500, whichever is greater, of the unpaid principal balance for each year
of service completed (emphasis added)."

7.  Paragraph 4c. of the DA Form 3286-66 states, "Repayment will be made
only after each successful year of active duty that I perform commencing on
the date of my enlistment in the Regular Army (emphasis added)."

8.  In the processing of this case a staff advisory opinion was obtained
from the U.S. Army Human Resources Command, Education Incentives Branch
(EIB).  The Acting Chief, EIB, opined that the applicant's request should
be disapproved.  She stated that, "Under ideal circumstances, the portion
or amount of a qualifying loan that may be repaid is 33 1/3 percent or
$1500, whichever is greater, toward the remaining original unpaid
principal, after each completed year of active duty, as stated in Title 10,
Chapter 109, US Code."  She added that, "In accordance
with Army Regulation (AR) 621-202 the Army Educational Incentives and
Entitlements, Defense Finance and Accounting Service (DFAS) will issue
payment to the loan holder within 120 days upon receipt of notification to
authorize payment.  The Education Incentives Branch policy is to initiate
the third year payment 90 days prior to the Loan Repayment (LRP)
participant's third year anniversary date.  Authorizing payments 90 days
prior to the third year anniversary date eliminates more serious problems,
i.e., late fees, delinquent charges, defaulted loans, additional interest
charges, etc."

9.  On 5 May 2004, the applicant submitted a rebuttal to the advisory
opinion.  In her rebuttal, she reiterated those points made in her
application and in her self-authored addendum (Personal Statement in
Support of Application).  The applicant objected to the statement, "under
ideal circumstances . . . .after each completed year of active duty" which
are used by the Acting Chief, EIB, with regards to when payments under the
LRP are made.  The applicant quotes, in pertinent part, the contents of the
applicable law, 10 US Code 2171(b) and AR 608-210 (sic), Table 9-4 and
points out that nowhere in these authorities are the words, "under ideal
circumstances" used.

10.  Army Regulation 621-202 provides the Army-unique policies for
administration of education incentives authorized by law.  Paragraph 3-8
provides the policies and procedures for processing of payment under the
LRP.  Subparagraph b. of this paragraph provides Soldier responsibilities.
Subparagraph e. delineates PERSCOM and DFAS responsibilities.  These
responsibilities are quoted as follows:

   "e.  Upon completion of each full year of AD,
   (1) PERSCOM –
   (a) Authorizes DFAS to issue LRP payment.
   (b) Sends a letter to the Soldier stating that DFAS has been authorized
   to pay the lender.
   (2) DFAS –
   (a) Issues the check to the lender within 120 days of receipt of the
   PERSCOM notification.
   (b) Provides verification of disbursement to PERSCOM.
   (c) Reflects amount paid in following month LES [Leave and Earning
   Statement].
   (d) Notifies Internal Revenue Service of the amount paid."

11.  AR 601-210, Table 9-4 Line 6 c.(Loan Repayment Program), Items 3 and 4
state:

   "3. Provided the applicant meets and maintains the prescribed
   prerequisites, enlistment for the LRP ensures that the portion or amount
   of loan that may be repaid is 33-1/3 percent or $1,500, whichever is
   greater, of the unpaid principal balance for each year of service
   completed (emphasis added) up to the authorized limit of the loan to be
   repaid.


   4.  Repayment is made only after each successful year of active duty
   (emphasis added) performed commencing on the date of RA enlistment."

12.  Among the documents that the applicant submitted are a Form W-2, Wage
and Tax Statement (OMB No. 1545-0008), for the tax year 2001 and for the
tax year 2002.  The Form W-2 for the tax year 2001 shows, in Item 1 (Wages,
tips, other compensation), the dollar amount, $17,533.34.  The Form W-2 for
the tax year 2002 shows, in Item 1, the dollar amount, $35,165.66.

DISCUSSION AND CONCLUSIONS:

1.  As part of her enlistment contract, the applicant enlisted for the LRP
enlistment incentive.

2.  Disbursement was made to loan institution(s) in the amount of
$17,533.34, on behalf of the applicant after the applicant had completed
her first year of service.  This amount represents the first installment of
three installments to be made under the LRP.

3.  Loan institution(s) were paid $35,165.66, the second and third
installments, of three installments, on behalf of the applicant after the
applicant had completed her second year of service.  The evidence of
records shows that the third installment was made before the applicant had
completed her third year of service on 4 January 2003.

4.  The third installment was not due and payable under Title 10, USC 2171,
until after the applicant completed her third year of service, 4 January
2003.
This installment payment was made prematurely and thus increased the
applicant's income for tax year 2002 and simultaneously unfairly increased
her tax liability for this tax year.

5.  The language in both Title 10, USC 2171, and that used in AR 601-210
and all applicable enlistment documents supports the applicant's contention
that the third loan installment payment should not have been made until on
or after 5 January 2003, after she had completed her third year or service.

6.  That portion of the Chief EIBs advisory opinion which follows, "The
Education Incentives Branch policy is to initiate the third year payment
90 days prior to the Loan Repayment (LRP) participant's third year
anniversary date.  Authorizing payments 90 days prior to the third year
anniversary date eliminates more serious problems, i.e., late fees,
delinquent charges, defaulted loans, additional interest charges, etc." is
not contained in the applicable regulation or in applicable section of
Title 10, USC.  This appears to be a buffer period which has been built in
to the office's standing operating procedures to preclude those, "more
serious problems."

7.  The applicant is entitled to an adjustment to show that the third
installment, of three installments, was not made until on or after the
anniversary of her enlistment, 5 January 2003.

BOARD VOTE:

__ wtm _  __ pms __  __pm_ __  GRANT FULL RELIEF

________  ________  ________  GRANT PARTIAL RELIEF

________  ________  ________  GRANT FORMAL HEARING

________  _______  _________  DENY APPLICATION

BOARD DETERMINATION/RECOMMENDATION:

The Board determined that the evidence presented was sufficient to warrant
a recommendation for relief.  As a result, the Board recommends that all
Department of the Army records of the individual concerned be corrected by
showing that her second LRP payment, in the amount of $17,582.83, was made
in tax year 2002, and that her third and final LRP payment, in the amount
of $17.582.83, was made in tax year 2003, and issuing the applicant
corrected
W-2 forms for both tax years.




            ___Walter T. Morrison__
                    CHAIRPERSON

                                    INDEX

|CASE ID                 |AR2004100950                            |
|SUFFIX                  |                                        |
|RECON                   |                                        |
|DATE BOARDED            |20041007                                |
|TYPE OF DISCHARGE       |                                        |
|DATE OF DISCHARGE       |                                        |
|DISCHARGE AUTHORITY     |                                        |
|DISCHARGE REASON        |                                        |
|BOARD DECISION          |GRANT                                   |
|REVIEW AUTHORITY        |                                        |
|ISSUES         1.       |PAY AND ALLOWANCES                      |
|128.0000                |                                        |
|2.                      |                                        |
|3.                      |                                        |
|4.                      |                                        |
|5.                      |                                        |
|6.                      |                                        |



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