PROCEEDINGS

	IN THE CASE OF: 

	BOARD DATE:           3 October 2000
	DOCKET NUMBER:   AR1999034868

	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. Robert J. McGowan		Analyst	

  The following members, a quorum, were present:

	Mr. John N. Slone		Chairperson	
	Mr. Raymond J. Wagner		Member	
	Mr. Richard T. Dunbar		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 that his enlistment contract be honored and his student loans be paid under the terms of the Loan Repayment Program (LRP).

3.  The applicant states that he enlisted in the Regular Army (RA) for the LRP and submitted the appropriate paperwork concerning his loans to his recruiter.  The recruiter did not know whether the loans qualified for the LRP, but referred the applicant to officials at the Military Entrance Processing Station (MEPS).  When he arrived at the MEPS, the applicant showed his loan paperwork to a sergeant first class who took the documents and left the room.  He returned five minutes later and assured the applicant that the loans qualified.  The applicant then signed his enlistment contract.

4.  In support of his request, the applicant provides:  a copy of DD Form 2475, DOD Educational Loan Repayment Program Annual Application, denying repayment of his loans because they are unsubsidized and non-Federal; an 8 December 1999 letter from the applicant to this Board; and copies of DD Form 2475 for six of seven loans.

5.  The applicant’s military records show that he enlisted in RA for 5 years on 19 May 1998.  At that time, he completed a DA Form 3286-66, Statement of Understanding, United States Army Incentive Enlistment Program, enlisting for the LRP.  His enlistment contract specified that the government would repay a designated portion of any student loan he incurred so long as it 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.”  

6.  On 19 March 1999, the applicant was advised by the US Total Army Personnel Command (PERSCOM) that his loans did not qualify for repayment under the LRP because they were not made, insured, or guaranteed under the appropriate portion of the Higher Education Act

7.  The LRP is an educational enlistment incentive which provides for payment of 33 1/3 percent or $1500.00, whichever is greater, of the unpaid principal of eligible student loans for each year of active duty a soldier completes.  The repayment is limited to $65,000.  Title 10, US Code, section 2171, limits repayment to those loans made, insured or guaranteed under the Higher Education Act of 1965.

8.  In the processing of this case, an advisory opinion was obtained from the Education Incentives Branch, PERSCOM which states that the applicant’s loans are non-qualifying under Title IV, Part B, D, or E of the Higher Education Act of 1965 because they are unsubsidized, non-Federal loans.  The opinion recommends that the applicant's request be denied.  The applicant was provided an opportunity to respond to the advisory opinion and reiterated his statement that an official of the US Army assured him that the loans qualified in order to get him to sign his enlistment contract.

CONCLUSIONS:

1.  The applicant enlisted in the Regular Army in order to repay his student loans. He provided his recruiter with all pertinent information concerning his loan and his creditor.  The recruiter passed him off to a sergeant first class at the MEPS who assured him that his loans qualified for the LRP.

2.  The recruiter and the MEPS sergeant should have known that the applicant’s loans were not qualifying under the conditions established by the Higher Education Act of 1965 and should have advised the applicant of this fact.

3.  The applicant has fulfilled the terms of his enlistment; the Army refused to repay his student loan, citing the provisions of the Higher Education Act of 1965.

4.  The applicant’s military records may be corrected to show that paragraph 4a of his DA Form 3286-66 was altered to include the sentence “If a student loan is accepted by the officials 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 10 USC 1552.”

5.  In view of the foregoing, the applicant’s records should be corrected as recommended below.

RECOMMENDATION:

That all of the Department of the Army records related to this case be corrected by:

	a.  Showing that paragraph 4a of the DA Form 3286-66 completed by the individual concerned is altered to include the sentence “If a student loan is accepted by the officials 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 10 USC 1552.”

b.  Showing that this Board has invoked its prerogative under the altered LRP addendum and Title 10, U.S.C., section 1552 to pay to the individual concerned the principal amount of his student loan, notwithstanding whether that loan was made, insured, or guaranteed under the Higher Education Act of 1965, or whether it has been repaid or is in default; and

c.  Indicating that as a result of the foregoing correction and in accordance with 10 USC 1552, the Defense Finance and Accounting Service (DFAS) shall remit payment to the applicant of the total amount of his loan to which he is entitled as a result of this correction at the appropriate rate and time.  The applicant will be required to submit the appropriate evidence (promissory notes, etc.) to DFAS to determine the amount due.

BOARD VOTE:  

__jns____  __rjw___  __rtd____  GRANT AS STATED IN RECOMMENDATION

________  ________  ________  GRANT FORMAL HEARING

________  ________  ________  DENY APPLICATION

		       __John N. Slone__
		        CHAIRPERSON

INDEX

CASE ID	AR1999034868	
SUFFIX		
RECON		
DATE BOARDED	20001002	
TYPE OF DISCHARGE		
DATE OF DISCHARGE		
DISCHARGE AUTHORITY		
DISCHARGE REASON		
BOARD DECISION	GRANT	
REVIEW AUTHORITY	DASA	
ISSUES         1.	112.0400	
2.	128.0500	
3.		
4.		
5.		
6.