PROCEEDINGS

	IN THE CASE OF:  

	BOARD DATE:            23 July 2002
	DOCKET NUMBER:   AR2001060302

	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. Joseph A. Adriance 		Analyst	

  The following members, a quorum, were present:

	Ms. Jennifer L. Prater		Chairperson	
	Mr. Hubert O. Fry, Jr.		Member	
	Ms. Gail J. Wire		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.

2.  The applicant requests, in effect, that he be provided Loan Repayment Program (LRP) benefits under the terms of enlistment contract.

3.  The applicant states, in effect, that his contract states that the Army would pay all his student loans up to $65,000.  He also claims that he provided the necessary paperwork to qualify for this benefit to the service representatives at the time of his enlistment, and at that time, he was told that his student loans would be paid.  He further indicates that he called the Education Incentives Branch, Total Army Personnel Command (PERSCOM) and was told that he was ineligible to receive LRP benefits because his loan was a private student loan and he is now making the payments on these student loans.  

4.  The applicant’s military records show that on 3 August 2000, he enlisted in the Regular Army for 4 years for a training of choice enlistment option with a cash bonus of $8,000. And the LRP incentives included.  The evidence or record includes the contract documents prepared on the applicant at the time of his enlistment. 

5.  A DA Form 3256-66 (Statement of Understanding United States Army 
Incentive Enlistment Program), Annex D, confirms the applicant’s enlistment option and included incentives.  The LRP is one of the incentives authorized in this Annex and the applicable LRP terms are listed in paragraph 4.

6.  The LRP provisions of Annex D state, in pertinent part, that the applicant understood he must disenroll from the GI Bill at the time he entered active duty and if he failed to do this he would not be eligible for the LRP.  It also indicated that the applicant understood that the government will repay a designated portion of any loan he incurred that was made, insured or guaranteed under Part B of the Higher Education Act (Guaranteed Student Loan) or any loan under Part E of such act (National Direct Student Loan) after 1 October 1975 and before he enlisted in the Army.  

7.  Further, Annex D indicated that the applicant’s enlistment for the LRP ensured him, provided he met and maintained the prescribed prerequisites, that the portion or amount of his student loan that could be repaid was 33 1/3 percent or $1,500, whichever was greater of the unpaid principal balance for each year of service completed not to exceed up to $65,000.  The applicant and the service representative signed this document on the date he entered active duty, 3 August 2000, and there is no indication in this Annex that any question was raised in regard to his eligibility for the LRP or the eligibility of his loan to qualify for repayment. 

8.  On 12 July 2001, the applicant was advised by the Chief, Education Incentives and Counseling Branch, PERSCOM, that they had received the Department of Defense (DD) Form 2475 (DoD Educational Loan Repayment Program Annual Application) from Wells Fargo Educational Financial Services, and they had determined the loan did not qualify for repayment under the LRP.

9.  The applicant was further advised by PERSCOM that in order to be eligible for repayment of their student loans, soldiers who have the LRP in their enlistment contract must meet certain standards and their loans must have been made, insured, or guaranteed under the Higher Education Act of 1965, Parts B, D, or E. 

10.  In addition, the applicant was informed that payment of loans that do not qualify would be in violation of the law governing the LRP and that there are no exceptions to the law.  He was finally advised to apply to this Board if he believed he was improperly counseled or that an error or injustice had occurred.  

11.  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.  

12.  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.

13.  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. 

14.  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.

15.  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, whichever is greater, is authorized annually to the loan holder on the total remaining original outstanding principal balance.  The Government will not make any payments to the soldier or reimburse a soldier if he or she pays off a student loan.  The Government will only pay the lending institution.

16.  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 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. 

2.  A careful review of the evidence or record reveals that the LRP Annex D to the applicant’s enlistment contract clearly established a contractual agreement, between the applicant and the Army, that he would receive LRP benefits in connection with his active duty enlistment.

3.  Although it is clear that Annex D specified the types of loans for which LRP benefits were authorized, there is absolutely no indication that the applicant was ever advised of these specific provisions of the LRP or of the specific criteria required for a loan to qualify for repayment under the law governing the LRP.  

4.  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.  

5.  Notwithstanding the fact that Annex D outlined the legal criteria for repayment under the LRP, the applicant’s enlistment contract and associated documents contain no entries verifying that he was ever properly counseled in regard to the legal loan repayment restrictions. 

6.  Further, the record gives no indication that an Army Guidance Counselor ever verified that the applicant’s loan did or did not qualify for repayment under the LRP.  In addition, there is no suggestion that this verification was ever made a part of the record with the required entries being made in the enlistment contract prior to the applicant entering active duty.

7.  Thus, the Board finds that the applicant was improperly counseled in regard to LRP benefits and it concludes that it would be appropriate to rectify this injustice at this time.  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.

8.  In doing so, the applicant’s military records may 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 the Wells Fargo Educational Financial Services Institution under the LRP.

9.  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 the Wells Fargo Educational Financial Services Institution 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:  

___JLP__  __HOF__  __GJW__  GRANT AS STATED IN RECOMMENDATION

________  ________  ________  GRANT FORMAL HEARING

________  ________  ________  DENY APPLICATION

		__Jennifer L. Prater_____
		        CHAIRPERSON

INDEX

CASE ID	AR2001060302	
SUFFIX		
RECON		
DATE BOARDED	2002/07/23	
TYPE OF DISCHARGE	N/A	
DATE OF DISCHARGE	N/A 	
DISCHARGE AUTHORITY	N/A 	
DISCHARGE REASON	N/A	
BOARD DECISION	GRANT	
REVIEW AUTHORITY		
ISSUES         1.  1026	112.1200	
2.		
3.		
4.		
5.		
6.