PROCEEDINGS

	IN THE CASE OF:  

	BOARD DATE:           6 August 2002      
	DOCKET NUMBER:   AR2001065475

	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. Wanda L. Waller		Analyst	

  The following members, a quorum, were present:

	Mr. Luther L. Santiful		Chairperson	
	Ms. Paula Mokulis		Member	
	Mr. Donald P. Hupman		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 she be provided Loan Repayment Program (LRP) benefits under the terms of her enlistment contract.

3.  The applicant states that prior to entering into her enlistment contract with the Army, she was guaranteed by her recruiter and Military Entrance Processing Station (MEPS) personnel that all of her student loans would be included in the SLRP.  She contends that she relied on their representations and based her entering the Army on their assurances that all of her student loans were covered under the LRP.  However, after entering the Army, she was informed by the Chief of the Education Incentives and Counseling Branch that her supplemental loans did not qualify under the Higher Education Act.  In support of her application, she submits an undated letter of explanation; a letter, dated 21 June 2001, from the Chief, Education Incentives and Counseling Branch of the U.S. Total Army Personnel Command; two memoranda, dated 23 August 2001, from recruiter personnel; three letters of support from her company commander, first sergeant and first line supervisor; three Sallie Mae loan papers; and DD Form 2475 (DOD Educational Loan Repayment Program Annual Application), dated 24 May 2001. 

4.  Between October 1996 and August 1999, the applicant received three student loans (Sallie Mae Servicing Corporation) for educational purposes.  
       
5.  The applicant’s military records show that she enlisted on 2 October 2000 in the Regular Army for a period of 4 years.  Her DA Form 3286-59 (Statement for Enlistment) shows that she enlisted for the U.S. Army Incentive Enlistment Program (Cash Bonus $8,000 and Loan Repayment Program up to $65,000).  

6.  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.

7.  The LRP provisions of Annex D state, in pertinent part, that the applicant understood she must disenroll from the GI Bill at the time she entered active duty and if she failed to do this she 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 she 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 she enlisted in the Army.

8.  Further, Annex D indicated that the applicant’s enlistment for the LRP ensured her, provided she met and maintained the prescribed prerequisites, that the portion or amount of  her student loan that could be repaid was 33 1/3 percent or $1500, 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 she entered active duty, 
2 October 2000, and there is no indication in this Annex that any question was raised in regard to her eligibility for the LRP or the eligibility of her loans to qualify for repayment.

9.  Section VI (Remarks) on the applicant’s DD Form 1966/3 (Record of Military Processing - Armed Forces of the United States) shows that the recruiter made the entry, “Applicant understands that if she does not have all promissory notes, those notes will not be paid.”  This entry was authenticated by the applicant.  

10.  At the time the applicant submitted her application to the Army Board for Correction of Military Records, she was serving on active duty in pay grade E-4.    
11.  The applicant provided a letter, dated 21 June 2001, from the Chief, Education Incentives and Counseling Branch, U.S. Total Army Personnel Command.  This letter indicates that the applicant’s student loans from Sallie Mae Servicing Corporation do not qualify for repayment under the LRP.  This letter further states that these loans are private loans, which are not made, insured, or guaranteed under Title IV, Part B, D, or E of the Higher Education Act.  She was advised to apply to this Board if she believed she was improperly counseled or that an error or injustice had occurred.                 

12.  The applicant provided a Memorandum for Record, dated 23 August 2001, from a recruiter who initially handled her loan paperwork prior to her enlistment.  The recruiter explained that he had the applicant bring in all of her promissory notes and loan contracts and that he faxed all the promissory notes to the Battalion Operations through a first sergeant of the Marion Recruiting Company for determination.  He states that he got word from the first sergeant that the applicant’s promissory notes were reviewed and all were approved for repayment.  He further states that he is not sure who the first sergeant spoke with at MEPS or Operations.  He goes on to state that he was reassigned prior to the applicant’s enlistment; however, when the applicant shipped, he assumed that the guidance counselor verified that all the loans were eligible for repayment. 

13.  The applicant also provided a memorandum, dated 23 August 2001, from recruiting personnel attesting that to the best of his knowledge the applicant’s student loans were approved for repayment prior to her enlistment. 

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 U.S. Army Reserve.  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 Loan for Undergraduate Students (PLUS), Auxiliary Loan Assistance for Students (ALAS) and consolidated loans which fall under Title IV, Part B, D 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.
  
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 Board concedes that the applicant’s loans do 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.  The applicant provided two statements from recruiting personnel attesting that, to the best of their knowledge, the applicant’s student loans were approved for repayment prior to her enlistment.   

3.  A careful review of the evidence of 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 she would receive LRP benefits in connection with her active duty enlistment.

4.  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.

5.  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.

6.  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 she was ever properly counseled in regard to the legal loan repayment restrictions.

7.  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.

8.  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 her enlistment contract.

9.  In doing so, the applicant’s military records may be corrected to show her 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 1965 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 her the amount her lending institution would have been paid for her loans obtained from the Sallie Mae Servicing Corporation 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 United States 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 1965 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 loans obtained from the Sallie Mae Servicing Corporation to which she 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:  

LLS____  PM_____  DPH_____  GRANT AS STATED IN RECOMMENDATION

________  ________  ________  GRANT FORMAL HEARING

________  ________  ________  DENY APPLICATION

		__Luther L. Santiful________
		        CHAIRPERSON

INDEX

CASE ID	AR2001065475	
SUFFIX		
RECON		
DATE BOARDED	20020806	
TYPE OF DISCHARGE		
DATE OF DISCHARGE		
DISCHARGE AUTHORITY	 	
DISCHARGE REASON		
BOARD DECISION	(GRANT)	
REVIEW AUTHORITY		
ISSUES         1.	112.1200	
2.		
3.		
4.		
5.		
6.