PROCEEDINGS

	IN THE CASE OF:  

	BOARD DATE:  14 May 2002
	DOCKET NUMBER:  AR2001064527

	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. Paul A. Petty		Analyst	

  The following members, a quorum, were present:

	Mr. Melvin H. Meyer		Chairperson	
	Mr. Donald P. Hupman		Member	
	Ms. Kathleen A. Newman		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 his college loan be paid under the enlistment incentive Loan Repayment Program (LRP).

3.  The applicant states, in effect, that he and his college loan finance officer from Mount Olive College were told by his recruiter and recruiting station commander that his loan of $19,165.31 would be paid under the LRP.  His enlistment in the Army was contingent on the repayment of his college loan and the subsequent release of his four year degree.  The Army’s failure to pay the loan is a breach of his enlistment contract.  The applicant provided copies of the following related documents: 1) a letter, dated 10 September 1999, from the college loan finance officer notifying the recruiter that the applicant had a loan debt to the college of $19,165.31, that the applicant had completed his degree requirements in May of 1999, and that a transcript would be provided to the Army if the Army provided a written guarantee that the loan would be paid; 2) a letter, dated 29 September 1999, from the Army recruiting station commander to the college loan finance officer informing him that the applicant had enlisted for the LRP and “that all of his outstanding loans will be paid after completing of his formal training;” 3) a letter, dated 31 July 2001, from the college loan finance officer delineating the history of attempts to obtain payment for the loan debt; 4) a copy of his college transcripts and degree certificate for Bachelor of Science in Psychology conferred on 8 May 1999; and 5) a promissory note to the Mount Olive College, Inc. (a non-profit corporation), dated 27 September 1999, for a loan amount of $19,165.31, for the balance of tuition, books, and room and board he owed the college in earning his bachelor degree.

4.  The applicant’s military records show that he enlisted in the Delayed Entry / Enlistment Program (DEP) on 27 May 1999, and then enlisted in the Regular Army on 5 October 1999, in pay grade E-4, for a 4 year period of service, for training as a mental health specialist, Military Occupational Specialty (MOS) 91X10.  The DA Form 3286-66 (Statement of Understanding, U. S. Army Incentive Enlistment Program), signed on 5 October 1999, by the applicant and a sergeant first class enlistment counselor, shows that the applicant enlisted for the LRP incentive, not to exceed $65,000, as authorized by Headquarters, Department of the Army message 151322Z, dated 17 March 1999.  The statement of understanding informed the applicant that 33 1/3 percent of the unpaid principle balance would be paid each year on successful completion of a year of active duty.

5.  The applicant completed his basic training on or about 4 January 2000.  On or about 10 January 2001 he completed training for mental health specialist and was awarded the MOS.  He completed airborne training on 26 January 2001.  He is now assigned to the 782nd Combat Support Medical Company at Fort Bragg, North Carolina.

6.  In about May 2001, the applicant submitted a DD Form 2475 (Department of Defense Educational Loan Repayment Program Annual Application) for payment on his loan.  On 6 June 2001, the Education Incentives Office, U. S. Total Army Personnel Command (PERSCOM), responded that the loan from Mount Olive College was an institutional loan and did not qualify for loan repayment.  The letter informed him that if he was not properly counseled concerning this or if an error or injustice had occurred, it was recommended that he apply to the Army Board for Correction of Military Records.

7.  The Loan Repayment Program is a Department of the Army enlistment option authorized by Public Law 99-145.  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.

8.  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 applicant’s recruiting station commander provided a signed statement that led the applicant and his college loan finance officer to believe that the loan from the Mount Olive College would be paid under the LRP as an enlistment incentive.  The applicant enlisted in the Regular Army in good faith believing that his loans qualified for repayment under the LRP.  As a matter of justice and as an exception to policy, the applicant’s college loan from the Mount Olive College should be paid under the LRP according to the payment rules in the enlistment incentive program statement of understanding.
2.  The applicant’s military record should be corrected to show that his DA Form 3286-66 was amended 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 Title 10, U. S. Code, section 1552.”  This would allow the Board to invoke that provision and pay his college for the outstanding loan owed which the recruiter stated in writing would be paid.

3.  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 as an exception to policy for the individual concerned by:

a.  amending his DA Form 3286-66 to show, “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 Title 10, U. S. Code, section 1552;”

b.  the Defense Finance and Accounting Service paying his college loan from the Mount Olive College according to the payment rules of the LRP; and 

c.  making the payments for 2000 and 2001 immediately without further application.

BOARD VOTE:  

__mm___  __dh___  __kn____  GRANT AS STATED IN RECOMMENDATION

________  ________  ________  GRANT FORMAL HEARING

________  ________  ________  DENY APPLICATION

		___Melvin H. Meyer___
		        CHAIRPERSON

INDEX

CASE ID	AR2001064527	
SUFFIX		
RECON		
DATE BOARDED	20020514	
TYPE OF DISCHARGE		
DATE OF DISCHARGE		
DISCHARGE AUTHORITY		
DISCHARGE REASON		
BOARD DECISION	GRANT	
REVIEW AUTHORITY		
ISSUES         1.	112.12 – Loan Repayment	
2.		
3.		
4.		
5.		
6.