IN THE CASE OF:	  

		BOARD DATE:	  22 March 2012

		DOCKET NUMBER:  AR20110022654 


THE BOARD CONSIDERED THE FOLLOWING EVIDENCE:

1.  Application for correction of military records (with supporting documents provided, if any).

2.  Military Personnel Records and advisory opinions (if any).


THE APPLICANT'S REQUEST, STATEMENT, AND EVIDENCE:

1.  The applicant requests payment of $18,000.00 worth of private loans under the Loan Repayment Program (LRP) on behalf of her son, a former service member (FSM), who was killed in action.

2.  The applicant states:

* Her son was approved for the LRP that covered college loans up to $65,000.00; he received $640.00 of this money prior to being killed in action in Afghanistan
* He had three separate loans that Sallie Mae consolidated into one loan and moved into her name after her son was killed
* Sallie Mae initially dismissed all his loans since they were Federal loans but later changed their position and stated the loans were private loans
* It appears at least one of the loans with "Knowledgeworks" was a non-private loan but was changed to a private loan by Sallie Mae
* Although she is requesting payment of the contested $18,000.00 loan in full, she would agree to payment of 1/4th of the promised $65,000.00
* Since her son was in the Army just days short of 1 year, she should at least receive $16,000.00 minus the $640.00 he previously received

3.  The applicant provides:

* Letter to her Member of Congress
* Letter from the FSM's commander to her as the Next of Kin (NOK)
* 
Sallie Mae loan printouts
* DD Form 1300 (Report of Casualty)
* Letter from the U.S. Army Human Resources Command (USAHRC), Fort Knox, KY to her member of Congress
* Multiple DD Forms 2475 (DOD Educational Loan Repayment Program Annual Application)
* Multiple email exchange

CONSIDERATION OF EVIDENCE:

1.  The FSM enlisted in the Regular Army for 3 years and 16 weeks on 17 February 2010.  He enlisted under the following programs or incentives:

* Program 9A, U.S. Army Training Enlistment Program
* Program 9C, U.S. Army Enlistment Program (High Grad Bonus, Loan Repayment Program)

2.  The FSM's DA Form 3286 (Statement of Enlistment – U.S. Army Enlistment Program) shows in item 3:

	a.  I understand that under the LRP 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 in the Regular Army.

	b.  I understand only certain loans qualify for the LRP Program.  Loans which qualify for this program include those which are made, insured, or guaranteed under part B (Federal Family Education Loan Program), Part D (William D. Ford Direct Loan Program), or Part E (Federal Perkins Loans) of the Higher Education Act of 196, after 1 October 1975, and before entering active duty.  The types of loans that qualify for the LRP are:

* Auxiliary Loan Assistance for Students
* Federally Insured Student Loans
* Guaranteed Student Loans or Stafford Loans
* National Direct Student Loans or Perkins Loans
* Supplemental Loans for Students
* Consolidated Loans (in Soldier's name)
* Parent Loans for Undergraduate Students (PLUS Loans) incurred for the use of individuals contracting for the LRP

	c.  Enlistment for the LRP ensures me, provided I meet and maintain the prescribed prerequisites, that the portion of the amount of loan that may be repaid is 33 1/3 percent or $1,500.00, whichever is greater, of the unpaid principal balance for each year of service completed.

	d.  Repayment will be made only after such successful year of active duty that I perform commencing on the date of my enlistment in the Regular Army. 

	e.  I fully understand that I must secure a military deferment or maintain my account in good standing until such time the repayment is started.

	f.  I understand that interest (even interest re-capitalized into principal) will not be repaid.  I also understand that I will not be reimbursed for payments I make or have already been made to my lenders.

	g.  I understand that under the LRP, the Army will not repay student loans in excess of $65,000.00 regardless of the amount of my student loans.  I further understand that I am required to make all interest payments of my student loan during my enlistment.  In addition, I understand that I must bring copies of all my student loan promissory notes when I report to the Military Entrance Processing Station for active duty ship date.

3.  On 14 July 2010, the FSM submitted through his chain of command three educational LRP annual applications (DA Forms 2475) requesting payment of three loans, Loan Account Number 905xxxxxx46, held by Sallie Mae (Loan Holder):

* Loan 1 of 6, original balance $5,800.00; unpaid balance $4,362.52
* Loan 2 of 6, original balance $9,200.00; unpaid balance $6,920.50
* Loan 3 of 6, original balance $8,917.00; unpaid balance $6,707.29

4.  The FSM was killed in action on 8 February 2011.  He had completed
11 months and 21 days of creditable active service.

5.  Following his death, a series of email exchanges took place between the applicant and various Army officials, including the casualty assistance officer; case manager, Benefits and Entitlements Support Team, Casualty and Mortuary Affairs Operations Center, USAHRC; and the Chief, Education Incentive Branch, USAHRC.  One email, dated 23 August 2011, from the Chief, Education Incentive Branch, USAHRC, to the applicant stated "I contacted Sallie Mae Servicing Corporation on 14 August 2011.  Sallie Mae assured me that the Smart 

Loan is covered under Title IV and eligible for discharge.  I called Sallie Mae Servicing Corporation again to verify whether Smart Loans are eligible for discharge.  Sallie Mae Servicing Corporation verified the Smart Loans, approximate amount $75,000.00 have already been discharged.  However, there are also private loans, approximate amount $25,000.00 which have not been discharged and are not covered under Title IV.  This office would have authorized payments toward the $65,000.00 (less taxes) and only had information on the Smart Loans.  Sallie Mae Servicing Corporation stated that you should contact them regarding options for the private loans."

6.  On 14 September 2011, by letter to the applicant's Member of Congress, the Director of Army Continuing Education Services, USAHRC stated:

	a.  At the time of the FSM's entry on active duty, individuals contracting for the LRP must have met certain eligibility criteria.  Part of the eligibility criteria is to have loans that qualify for repayment under the U.S. Army LRP.  As outlined in his enlistment contract, Statement of Understanding, U.S. Army Incentive Enlistment Program, DA Form 3286-66, Section 4 states "I understand that under this program (LRP) the government will repay designated portions of any loans 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 in the Army."  In addition, Title 10, U.S. Code, section 2171 confirms that loans eligible for repayment must be made under Title IV, Part B, D, or E of the Higher Education Act.

	b.  The 2006 National Defense Authorization Act (NDAA) expanded Title 10, U.S. Code, section 2171 to allow repayment of education loans made by a lender under pension plans, state and commercial loans, and other similar sources which are not federally insured in case of death or serious injury.  The Soldier provided information that indicated the loans qualified under the U.S. Army LRP. Based on the documentation provided and with the expansion of the law, the HRC Education Incentive Branch would have paid the Sallie Mae Private Loans.  However, there is no standard procedure that would settle loans in the final death benefits action or in the case of grievous injury.  Therefore, payment cannot be authorized by this office toward the student loans.

	c.  Relief may be requested through the Army Board for Correction of Military Records (ABCMR).  If the applicant requests compensation through the ABCMR, the Director of Army Continuing Education Services, USAHRC recommends the applicant provide a payoff statement from Sallie Mae. 

7.  The applicant submitted an Account Summary issued by Sallie Mae on 25 September 2011, which shows a total amount owed of $18,191.15.

8.  During the processing of this case, on 24 February 2012, an advisory opinion was obtained from the Education Incentive Branch, USAHRC.  The advisory official recommended approval of payment directly to the FSM's next of kin (the applicant).  The advisory official stated:

	a.  At the time the FSM entered active duty, individuals contracting for the LRP must have met certain eligibility criteria.  Part of the eligibility criteria was to have loans that qualify under the LRP.  As outlined in the enlistment contract, Statement of Understanding, U.S. Army Incentive Enlistment Program, DA Form 3286-44, section 4, states "I understand that under this program (LRP) 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."  In addition, Title 10, U.S. Code, section 2171 confirmed loans eligible for repayment must be made under Title IV, Part B, D. or E of the Higher Education Act.

	b.  The 2006, the NDAA expanded Title 10, USC, section 2171 to allow repayment of education loans made by a lender under pension plans, state and commercial loans, and other similar sources which are not federally ensured in case of death or serious injury.  The applicant has provided information that indicates her deceased son believed his loans qualified under the LRP.  Based on documentation provided and with the expansion of the law, the USAHRC Education Incentive Branch would have paid the private student loans.  There is no standard procedure that would settle loans in the final death benefits action or in the case of grievous injury.  Therefore, payment cannot be authorized by this office toward the student loan.  

	c.  If the Board decides to grant compensation, computation should be based on the information provided to the USAHRC Education Incentive Branch.  The total amount verified for all loans from Sallie Mae Servicing Corporation exceeded the Army imposed limit of $65,000.00.  Payments totaling $21,666.67, less taxes, were authorized for the FSM's first year of active duty.  Sallie Mae Servicing Corporation applied all payments authorized to the FSM's Stafford loans and no payments were applied to the private loans.  Had the FSM served the full 3 years of active duty he would have received $65,000.00, less taxes.  Some of the FSM's loans were forgiven by the loan holder due to his death; however, the private loans were not forgiven.  The second and third year 

payments would have totaled $43,333.33, less taxes, had the FSM survived.  The total amount verified for the private loans is $24,070.97.

9.  On 27 February 2012, a copy of the advisory opinion was forwarded to the applicant for information and to allow her the opportunity to submit comments or a rebuttal.  On 5 March 2012, the applicant submitted a response to the advisory opinion.  She stated:

* When she first applied for the LRP benefits, she was told her cause was an unusual case
* Having been on active duty for 1 year, her son qualified to receive 1 year of LRP payments but he was not paid the full amount; how can 1 year of eligibility for unpaid LRP compensation be considered a death benefit?
* Her son received only $640.00.  It appears the rest of the money was allocated to Sallie Mae which allowed them to determine how the money was distributed among the loans
* Sallie Mae chose to apply the money toward the Federal loans but they should have dismissed the loans upon death
* After Sallie Mae distributed the money, she was left with her son's private loans to which she co-signed and she now finds herself responsible for the loans
* This is not about money; she continues to grieve and cope with the loss of her son
* Her son loved the Army; he had a masters degree in engineering but he chose to join the Army as an enlisted Soldier
* Her son felt it was the right thing to do in order to fully understand what his Soldiers had to go through to fight for our country 

10.  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 Loan 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 Loan.  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 $1,500.00, whichever is greater, is authorized annually to the loan holder on the total remaining original outstanding principal balance.

11.  Office of the Under Secretary of Defense memorandum, dated 21 May 2008, Subject: Repayment of Unearned Portions of Bonuses, Special Pay, and Education Benefits or Stipends provides policy guidance regarding repayment of unearned pay or benefits.  It states a member who fulfills the requirements specified in a written agreement related to the member's receipt of pay or benefits is entitled to the full amount of the pay or benefit under the agreement.  Any failure to fulfill the service requirements specified in a written agreement may result in the termination of the agreement and the member's repayment of an unearned portion of the pay or benefit.  As a general rule, repayment will not be sought if the member's inability to fulfill the eligibility requirements is due to circumstances determined reasonably beyond the member's control.  Repayment shall not be sought and any remaining unpaid portion of a pay or benefit due to a member under a written agreement that existed at the time of the member's death, which was not the result of the member's misconduct, is payable as a lump sum in the settlement of the decedent's final military pay account.

DISCUSSION AND CONCLUSIONS:

1.  The FSM enlisted in the Regular Army on 17 February 2010 for various incentives, including the LRP.  His written contract stipulated he would be entitled to payment of an appropriate amount of the LRP, up to $65,000.00.  Regretfully, the FSM was killed in action on 8 February 2011.

2.  The total amount verified for all loans from Sallie Mae Servicing Corporation exceeded the Army imposed limit of $65,000.00.  Payments totaling $21,666.67, less taxes, were authorized for the FSM's first year of active duty.  Sallie Mae Servicing Corporation applied all payments authorized to the FSM's Stafford loans and no payments were applied to the private loans.

3.  Had the FSM served the full 3 years of active duty, he would have received up to $65,000.00, less taxes.  Some of the FSM's loans were forgiven by the loan holder due to his death; however, the private loans were not forgiven.  The second and third year payments would have totaled $43,333.33, less taxes, had the FSM survived.

4.  According to DOD policy, the remaining unpaid portion of a pay or benefit due to a member under a written agreement that existed at the time of the member's 

death, which was not the result of the member's misconduct, is payable as a lump sum in the settlement of the decedent's final military pay account.  

5.  As such, payment of the remaining balance of the FSM's authorized loans, less any taxes, fees, and interest, in accordance with the FSM's written contract, should be made.  The total amount verified for the private loans is $24,070.97.

6.  In view of the foregoing, the FSM's record should be corrected to pay the applicant the full amount of the verified private loans, less taxes, interest, and fees.

BOARD VOTE:

___X____  ___X___  ___X____  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:

	a.  showing the FSM was authorized payment of the total amount verified for the private loans - $24,070.97 - under the LRP, and

	b.  having the Defense Finance and Accounting Service (DFAS) pay this amount directly to the applicant as the FSM’s next of kin.



      _______ _ X_______   ___
               CHAIRPERSON
      
I certify that herein is recorded the true and complete record of the proceedings of the Army Board for Correction of Military Records in this case.
ABCMR Record of Proceedings (cont)                                         AR20110022654



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ABCMR Record of Proceedings (cont)                                         AR20110022654



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