RECORD OF PROCEEDINGS

	IN THE CASE OF:     

	BOARD DATE:           8 January 2004                   
	DOCKET NUMBER:   AR2003091301

	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. Kathleen A. Newman		Chairperson	
	Mr. John T. Meixell		Member	
	Ms. Linda M. Barker		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).

THE APPLICANT'S REQUEST, STATEMENT, AND EVIDENCE:  

1.  The applicant requests, in effect, payment of her college loans under the Loan Repayment Program (LRP).  

2.  The applicant states, in effect, that she agreed to enter the military under the LRP.  She asserts that her recruiting career counselor at the Military Entrance Processing Station (MEPS) was aware of her State student loans and guaranteed that all of her loans would be paid under the LRP.  She also states that after enlisting, she submitted her loans for payment and was informed that her loans were ineligible for repayment under the provisions of the LRP.  

3.  In support of her application, the applicant provides copies of her enlistment contract and associated documents, a copy of an e-mail from a United States Army Recruiting Command (USAREC) investigation officer (IO), promissory notes from a New Jersey Class Program loan, a Federal Perkins Loan, and a Stafford loan, the results of a USAREC investigation, and her request for separation by reason of defective enlistment agreement.  

CONSIDERATION OF EVIDENCE: 

1.  The applicant’s military records show that on 2 October 2001, she enlisted in the Regular Army for four years for Option 9A (United States Army Training Enlistment Program and Option 9C (United States Army Incentive Enlistment Program (Cash Bonus & LRP up to $65,000). 

2.  A DA Form 3286-66 (Statement of Understanding United States Army 
Incentive Enlistment Program), confirms the options and incentives the applicant contracted for during her enlistment processing.  The SLRP is one of the incentives authorized and the applicable LRP terms are listed in paragraph 4.

3.  The LRP provisions outlined in the DA Form 3286-66 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 would  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.  

4.  Further, the DA Form 3286-66 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 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 up to $65,000.  The applicant and the guidance counselor signed this document on 2 October 2001, the date she entered active duty.  There is no indication in this document that any question was raised in regard to the eligibility for repayment of her State student loan under the LRP.  

5.  The DD Form 1966/3 prepared on the applicant on 2 October 2001, the date she shipped for active duty, certifies that she enlisted for the LRP for an amount up to $65,000.  The remarks section contains no entry indicating the applicant was advised that any of her student loans may not be eligible for repayment under the LRP.  Both the applicant and recruiting guidance counselor certified that the information contained on this document was correct at that time.  

6.  In September 2002, the applicant was informed by officials at her local education center that her State loan did not qualify for repayment under the LRP, and she verified this fact with the LRP office.  The applicant contacted the United States Army Recruiting Command (USAREC) and an investigation into her allegations of recruiter malpractice was conducted.  

7.  On 14 January 2003, a USAREC investigating officer (IO) completed an investigation into the recruiting impropriety of the applicant’s guidance counselor. The IO finally recommended that the allegations of impropriety against the guidance counselor be dropped.  He further concluded that because applicants were now required to read and sign a list of which loans qualify for repayment under the LRP, corrective action had already been taken to prevent such misunderstandings in the future.  

8.  In an electronic mail (e-mail) message from the USAREC IO to the applicant, dated 11 February 2003, the IO informed the applicant that recruiter error had been substantiated in her case.  However, the State loan was still an unqualified loan under the LRP, and still could not be paid.  The IO advised the applicant that she may want to apply to this Board for relief.  

9.  On 14 April 2003, the applicant requested separation under the provisions of paragraph 7-16 for a defective enlistment agreement based on the non-payment of her student loans by the Army.  This request was approved and on 31 August 2003, she was honorably discharged accordingly.  At the time of her discharge, she had completed a total of 1 year, 10 months, and 29 days of active military service.

10.  In connection with the processing of this case, an advisory opinion was obtained from the Chief, Education Incentives and Counseling Branch, Human Resources Command (HRC), who recommends disapproval of the applicant’s request.  It further indicates that based on the provided documentation, the private loans (loans not made, insured, or guaranteed under Title IV, Part B, D, or E of the higher education act of 1965) do not qualify for repayment under the LRP.  It further indicates that the applicant did have other loans that qualified for repayment under the LRP.  The total remaining original unpaid principal of these qualified loans were verified by Widener University ($2,000.00) and Salle Mae Servicing Corporation ($11,250.00).  It further states that payments totaling $8,833.33 have been authorized toward the qualifying loans.  

11.  The HRC opinion further indicates that in accordance with the governing regulation, an individual who does not complete his/her initial enlistment will be eligible for prorated payments under the LRP if they served at least 1 year and were discharged by reason of convenience of the government, service connected disability, or hardship.  In the applicant’s case, she was not separated for any of these qualifying reasons and therefore the reason for her separation does not entitle her to prorated payments under the LRP for her second year of active duty and she will be responsible for repaying the remaining original principal balance and any interest or other charges accrued to her accounts.  

12.  The applicant was provided a copy of the HRC advisory opinion and responded on 11 December 2003.  She states that she entered the Army on 
2 October 2001 under the agreement that the Army would pay off all of her outstanding student loans.  She claims that prior to her enlistment, she presented all the student loan promissory notes and she and her recruiter reviewed them together.  Subsequent to this review, she and her recruiter came to the mutual agreement that all her student loans would be paid by the Army.  The applicant further states that she served in the Army through 31 August 2003, at which time after having served 23 months of her 48 month obligation, she was discharged because the Army failed to fulfill their agreed upon obligation to pay the portion of her student loans that were debts to the State of New Jersey.  They did indicate that the portion of her loans that were Federal would be paid by the Army.  

13.  The applicant further states in her rebuttal that ten days prior to her discharge, she was notified that the Army would not pay off the Federal portion of her student loans, in effect, the Army fully reneged on the obligation to pay off any of her student loans.  She claims that she was only informed of this decision after she had informed the Army that she intended to resign on 31 August 2003.  Further, she was notified that the remaining portion of her student loans would not be repaid because the reason for her discharge was a defective enlistment agreement and not for the convenience of the government, a service connected disability, or hardship reasons.
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 6, section II contains guidance on the Guidance Counselor Processing Phase.  It states, in pertinent part, that Guidance Counselors will use the supporting automated systems and updated regulatory material applicable to MOS and available options to counsel all applicants on their enlistment options.  It further states that Guidance Counselors will counsel applicants who failed to meet specific qualifications for options for which they applied; and advise them of other available options. 

15.  Chapter 9 (Enlistment Programs/Options) indicates that these programs/options are designed to merge valid Army requirements with personal desires.  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.  The LRP enlistment option was authorized by Title 10 of the United States Code, section 2171 (10 USC 2171), which provides the legal authority for the education loan repayment program for enlisted members on active duty in specified military specialties.  The law states, in pertinent part, that 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. It further specifies that payment of such loans shall be made on the basis of each complete year of service performed as an enlisted member in a military specialty specified by the Army.  

DISCUSSION AND CONCLUSIONS:

1.  The evidence of record confirms that the applicant had State loans that did not qualify for repayment under the law governing the LRP.  Further, a determination was made that recruiter error contributed to her enlisting for the LRP and repayment of some non-qualifying loans.  

2.  By law and regulation, only specific loans qualify for repayment under the LRP incentive option.  The record confirms that payment for the portion of the authorized loans to which the applicant was entitled based on the period of service she completed has already been authorized.  Had the applicant elected to remain on active duty for the full term of enlistment, she would have been entitled to repayment of the remaining portion of the qualified loans under the terms and conditions of the LRP.  Further, some form of equity relief from this  Board for the unauthorized loans may have been appropriate.  

3.  However, the record shows that the applicant chose to accept the administrative remedy of discharge, by reason of a defective enlistment commitment, rather than completing her enlistment commitment.  Further, her voluntary discharge under these provisions does not qualify for the authorized prorated payment of qualifying student loans for members separated by reason of convenience of the government, physical disability, or hardship reason.  Thus, payment of any additional portion of the applicant’s student loans would not be appropriate at this time.  

BOARD VOTE:

________  ________  __JM__    GRANT RELIEF 

________  ________  ________  GRANT FORMAL HEARING

__KAN___  __LB__  ________     DENY APPLICATION

BOARD DETERMINATION/RECOMMENDATION:

The evidence presented does not demonstrate the existence of a probable error or injustice.  Therefore, the Board determined that the overall merits of this case are insufficient as a basis for correction of the records of the individual concerned.

		Kathleen A. Newman
		   CHAIRPERSON

INDEX

CASE ID	AR2003091301	
SUFFIX		
RECON		
DATE BOARDED	2004/01/08	
TYPE OF DISCHARGE	HD	
DATE OF DISCHARGE	2003/08/31	
DISCHARGE AUTHORITY	AR 635-200	
DISCHARGE REASON	Defective enlistment 	
BOARD DECISION	DENY	
REVIEW AUTHORITY		
ISSUES         1.  1026	112.1200	
2.		
3.		
4.		
5.		
6.