IN THE CASE OF: BOARD DATE: 28 July 2016 DOCKET NUMBER: AR20150010892 BOARD VOTE: ____X_____ ___X____ ____X____ GRANT FULL RELIEF ________ ________ ________ GRANT PARTIAL RELIEF ________ ________ ________ GRANT FORMAL HEARING ________ ________ ________ DENY APPLICATION 2 Enclosures 1. Board Determination/Recommendation 2. Evidence and Consideration IN THE CASE OF: BOARD DATE: 28 July 2016 DOCKET NUMBER: AR20150010892 BOARD DETERMINATION/RECOMMENDATION: The Board determined the evidence presented is sufficient to warrant a recommendation for relief. As a result, the Board recommends that all State Army National Guard and Department of the Army records of the individual concerned be corrected by: * showing a request to allow payment of the total Student Loan Repayment Program amount paid on the applicant's behalf was approved * reimbursing any monies due as a result of this correction ______________X___________ CHAIRPERSON I certify that herein is recorded the true and complete record of the proceedings of the Army Board for Correction of Military Records in this case. IN THE CASE OF: BOARD DATE: 28 July 2016 DOCKET NUMBER: AR20150010892 THE BOARD CONSIDERED THE FOLLOWING EVIDENCE: 1. Application for correction of military records (with supporting documents provided, if any). 2. Military Personnel Records and advisory opinions (if any). THE APPLICANT'S REQUEST, STATEMENT, AND EVIDENCE: 1. The applicant requests correction of his records to show he was eligible for a 2001 Student Loan Repayment Program (SLRP) incentive in the amount of $9,000.00 and relief from recoupment of the incentive. 2. The applicant states: a.  On or about 15 January 2013, the National Guard Bureau (NGB) erroneously terminated his 2001 SLRP incentive with recoupment on the grounds that there was no supporting documentation on file to substantiate his eligibility for the incentive. b.  He submitted on numerous occasions, either personally or through his pro bono counsel, supporting documentation evidencing his eligibility for the 2001 SLRP incentive to the California Army National Guard (CAARNG) Incentive Task Force and the U.S. Department of Treasury via communications with Performant Recovery, Incorporated. Despite his efforts, the Defense Finance and Accounting Service (DFAS) continues to erroneously report that he owes a debt due to a lack of supporting documentation on file to substantiate his receipt of the 2001 SLRP incentive. c.  His military records are in error and recoupment of his 2001 SLRP incentive is erroneous because he was eligible for the incentive. d.  Recoupment of his 2001 SLRP incentive is not authorized by the National Guard regulations applicable to the incentive. e.  Even if he had not been technically eligible for the 2001 SLRP incentive, it would be unjust for the government to accept his faithful service and wait more than 10 years to claim that he was ineligible for the incentive. He did nothing wrong, honored the contract, and he sacrificed for his country. f.  Prior to his enlistment, he had three existing student loans which were eligible to be paid through the 2001 SLRP incentive: (1)  an 18 February 1994 Stafford Subsidized Student Loan in the original amount of $2,625.00, (2)  a 13 December 1994 Stafford Subsidized Supplemental Loan in the original amount of $2,158.00, and (3)  a 13 December 1994 Stafford Subsidized Student Loan in the original amount of $3,500.00. g.  At the time of his enlistment, he consolidated the 1994 loans. His eligibility for the 2001 SLRP incentive was verified on multiple occasions by multiple people with subject matter expertise throughout the term of his enlistment, including when payments to his student loan lender were processed and disbursed. h.  He served the full term of his enlistment and he was honorably discharged on 28 April 2009. i.  Following his receipt of the Incentive Notice of Indebtedness, he responded and submitted documentation to the CAARNG Incentive Task Force, including a copy of his DD Form 2475 (Department of Defense (DOD) Loan Repayment Program Annual Application). j.  On 14 February 2013, the CAARNG Incentive Task Force issued a memorandum acknowledging that he had submitted the missing DD Form 2475, but noted: (1)  he had not provided National Student Loan Data System (NSLDS) printouts and he had not established that his qualifying Stafford loans were consolidated into a qualifying consolidation loan with request for payment, (2)  he enlisted on 25 April 2001 for the SLRP incentive and the submitted DD Form 2475 showed a consolidated loan originated on 4 May 2001, and (3)  his submitted promissory note had a prior qualifying date but no amount and additional information needed to be provided showing that the consolidation was of qualifying loans as outlined in Tile 10, U.S. Code, section 16301. k.  He submitted copies of the NSLDS printouts to the NGB and attempted to contact the NGB without success. The printouts show the loans were paid off by the 2001 consolidation loans. The 1994 loans are marked as "Default" then "Paid in Full by Consolidation." It is clear that the 2001 consolidation loans were of qualifying loans and were eligible to be paid by the 2001 SLRP incentive. l.  National Guard Regulation 600-7 (Selected Reserve Incentive Programs), dated 26 March 1999, specifically provided that in the event of a termination of a Soldier's SLRP, the NGB is not to recoup any of the SLRP payments. Further, his SLRP addendum did not provide for recoupment. The omission of authorization for recoupment from his SLRP addendum was clearly intentional because when National Guard Regulation 600-7 was revised to authorize recoupment, the NGB also revised the loan repayment program bonus addendum forms to specifically include a recoupment section. m.  It would be inequitable to punish him for errors that occurred through no fault of his. He compares his case to three previous Army Board for Correction of Military Records (ABCMR) cases, Docket Numbers AR20130010226, dated 3 April 2014, AR20140007296, dated 11 June 2014, and AR20140000942, dated 25 September 2014. The Board granted relief for an SLRP incentive in all three cases. 3. The applicant provides a brief with Exhibits A through O. CONSIDERATION OF EVIDENCE: 1. The applicant enlisted in the CAARNG on 25 April 2001 for a 6-year period. In connection with his enlistment, he executed an Annex S (SLRP Addendum) which shows he acknowledged the following: * he was a non-prior service applicant enlisting for a term of at least 6 years * he had one loan in the amount of $15,195.95 and the total amount of repayment for qualifying loans would not exceed $10,000 plus accrued interest * loans acquired after his enlistment in the Army National Guard (ARNG) would not be eligible for repayment under the SLRP * loans eligible for the SLRP included Stafford Loans (subsidized and unsubsidized) and Consolidated Loan Program * loans that were in default at the time of his enlistment would not be eligible for repayment * loans that fell into default at any time after his enlistment would not be eligible for repayment 2. His SLRP Addendum does not contain an SLRP control number or provisions for recoupment. 3. He provided copies of his NSLDS records that show: a.  He had a Stafford Subsidized Loan in the amount of $2,625.00 which he entered on 14 February 1994. Disbursement and status information on this loan shows the following entries: * 26 February 1999 – defaulted, unresolved * 9 May 2001 – defaulted, then paid in full by consolidation b.  He had a Supplemental Loan in the amount of $2,158.00 which he entered on 14 February 1994. Disbursement and status information on this loan shows the following entries: * 30 April 1999 – defaulted, unresolved * 9 May 2001 – defaulted, then pain in full by consolidation c.  He had a Safford Subsidized Loan in the amount of $3,500.000 which he entered on 24 October 1994. Disbursement and status information on this loan shows the following entries: * 26 February 1999 – defaulted, unresolved * 9 May 2001 – defaulted, then paid in full by consolidation 4. On 24 April 2007, he was honorably discharged from the CAARNG and transferred to the U.S. Army Reserve Control Group (Annual Training). 5. On 30 October 2007, he received a Direct Consolidated Subsidized Loan in the amount of $10,934.00 for a loan which originated on 4 May 2001. Disbursement and status information on this loan shows it was paid in full on 30 October 2007. 6.   On 30 October 2007, he received a Direct Consolidated Unsubsidized Loan in the amount of $4,497.00 for a loan originated on 4 May 2001. Disbursement and status information on this loan shows it was paid in full on 30 October 2007. 7. On 28 April 2009, he was honorably discharged from the U.S. Army Reserve. 8. On 15 January 2013, the NGB notified the applicant of his indebtedness due to a lack of supporting documentation on file to substantiate his entitlement for an SLRP incentive in the amount of $5,000.00. He was further advised the debt was being referred to DFAS. Options available to him were also listed in the notification. 9. On 14 February 2013, personnel of the Incentives Task Force Audit Program, CAARNG, determined the applicant has not provided sufficient evidence for a re-audit of his SLRP debt or change the category. 10. On 10 May 2016, the Deputy Chief, Personnel Policy Division, NGB, provided an advisory opinion in which he recommended approval of the applicant's request. He stated: a.  The applicant's SLRP addendum identified existing loans in the amount of $15,195.95. However, the Soldier's National Student Loan Data System (NSLDS) profile shows that at the time of enlistment, the Soldier had three loans that qualified for payment: a Stafford Subsidized loan in the amount of $3,500.00, a Supplemental loan in the amount of $2,158.00, and a Stafford Subsidized loan in the amount of $2,625.00, for a total of $8,283. All three loans were in default at the time of his enlistment making them ineligible for repayment by the SLRP in accordance with National Guard Regulation 600-7, dated 26 March 1999, paragraph 5-3. b.  The applicant consolidated his debt around the time of his enlistment and his NSLDS shows two consolidated loans originating on 4 May 2001. He had a Direct Consolidated Unsubsidized loan in the amount of $4,497.00 and a Direct Consolidated Subsidized Loan in the amount of $10,934.00. Consolidation loans are qualifying loans for repayment as long as the promissory note clearly identifies all loans consolidated and that all loans are eligible for SLRP. When the consolidation is done after the start of the contract, as in this case, the origination date will be changed to one day prior to the contract start date. The promissory note the applicant provided was dated 1 April 2001, but does not clearly show which debts were included in the consolidation and if they were eligible for SLRP. c.  The NSLDS does show that the original three loans were paid off by consolidation on 9 May 2001. Based on the NSLDS, the three loans were the only loans that clearly existed at the time of his enlistment and had these loans not been in default, the total amount eligible for SLRP would have been $8,283.00. The fact these loans were in default was clearly overlooked and, although these loans were not eligible for repayment by SLRP, the loan eligibility was approved by the State. d.  National Regulation 600-7 states, "the portion or amount of a loan that may be repaid under section 2-25 is 15 percent or $500.00, whichever is greater, for each year of service, plus the amount of any interest that may accrue during the current year." Fifteen percent of the exiting loan total $8,283.00 comes to a total of $1,242.45. With an annual payment of $1,242.45 over a 6-year timeframe, the applicant would have been eligible to receive approximately $7,455.00 towards payment of his existing student loans. e.  The Guard Incentives Management System shows that from fiscal years 2001 to 2005, the applicant actually received annual payments of $1,500 toward his student loans. The total amount received was $9,000.00; therefore, overpaying him by $1,545.00. f.  The question of the applicant's SLRP overpayment or eligibility was not addressed until after he was discharged and 12 years after he signed the original SLRP addendum. The approval of his eligibility and the miscalculation of his SLRP annual payment, had he been eligible, were due to administrative errors in the State and no fault of his. g.  Consideration should be given that when the erroneous payment is the fault of the government, the recoupment may be waived in accordance with Title 10, U.S. Code, section 2774, paragraph (a). Furthermore, he served his obligation honorably and fulfilled the requirements of his contract. h.  Both the NGB Incentives Branch and the CAARNG concur with the recommendation. 11. On 13 May 2016, a copy of the advisory opinion was sent to the applicant for review and for an opportunity to provide a response. 12. On 7 June 2016, counsel for the applicant provided a response to the advisory opinion in which he stated the applicant concurred with the recommendation. He further stated: a.  In addition to the inequities noted in the advisory opinion, it should be noted that the student loan lender agreed to consolidate the three existing student loans into the two new loans, capitalizing unpaid interest into the new principal balance of the consolidated loans. The new consolidated loans totaling $15,431.00 were never in default. The applicant made all of the required payments on time and paid off every penny of the loans, including every penny of the interest accrued prior to consolidation and every penny of interest accrued on the new consolidated loan balances. b.  The recruiting noncommissioned officer (NCO) advised the applicant to consolidate his student loan and advised him that the consolidated loans would be eligible for the SLRP incentive. The applicant relied on the advice he received from the subject matter expert and at all times acted responsibly and in good faith. c.  If the consolidation is deemed to have occurred one day prior to the contract start date, then the recruiting NCO's advice should be upheld by the Board as correct and his loans were fully eligible for payment by the SLRP incentive. If no error was made by the enlistment and incentive chain of command and the consolidated loans were eligible for the SLRP incentive, then the $9,000.00 disbursed to the student loan lender was proper. If the Board adopts this analysis, there was no overpayment and the SLRP incentive was properly paid. d.  DFAS has already recouped Federal tax refunds for tax year 2014 in the amount of $536.00 and tax year 2015 in the amount of $2,012.00. e.  Counsel submits a new issue in which he requests the Board to direct DFAS to reimburse the applicant recouped funds. REFERENCES: 1. DOD Instruction 1205.21 prescribes policy, assigns responsibilities, and provides procedures for management of the Reserve Component incentive programs. Section 6.2 (Written Agreements) states that as a condition of the receipt of an incentive covered by this instruction, each recipient shall be required to sign a written agreement stating the member has been advised of and understands the conditions under which continued entitlement to unpaid incentive amounts shall be terminated and which advance payments may be recouped. That agreement shall clearly specify the terms of the Reserve service commitment that authorizes the payment of the incentive to the member. 2. Army Regulation 135-7 (Incentive Programs) prescribes policies and procedures for administration of the ARNG and the U.S. Army Reserve incentive programs. Chapter 5 authorizes student loan repayment for qualified Selected Reserve enlisted personnel. This incentive is offered to qualifying non-prior, prior, and in-service personnel upon signing a contractual agreement for a specified term of service in the Selected Reserve and executing an SLRP addendum. This incentive pays a limited sum of money to a lending institution on the anniversary date of an enlistment or reenlistment. These payments continue on a yearly basis unless the Soldier loses eligibility by no longer serving in the approved military occupational specialty or unit. Entitlement to the SLRP will stop if the Soldier is appointed as a commissioned officer or warrant officer. 3. National Guard Regulation 600-7 provides incentive policies, procedures, and eligibility criteria for persons entering into an incentive agreement at the time of enlistment, affiliation, reenlistment, extension, commission or appointment into the ARNG. Chapter 5, in effect at the time, authorized student loan repayment for qualified Selected Reserve enlisted personnel. This incentive is offered to qualifying non-prior, prior, and in-service personnel upon signing a contractual agreement for a specified term of service in the Selected Reserve and executing an SLRP addendum. This incentive pays a limited sum of money to a lending institution on the anniversary date of an enlistment or reenlistment. These payments continue on a yearly basis unless the Soldier loses eligibility by no longer serving in the approved military occupational specialty or unit. Entitlement to the SLRP will stop if the Soldier is appointed as a commissioned officer or warrant officer. 4. Title 10, U.S. Code, section 1552, the law under which this Board operates, states: a.  The Secretary of a military department may correct any military record of the Secretary’s department when the Secretary considers it necessary to correct an error or remove an injustice. b.  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. 5. Title 10 of the U.S. Code, section 2774, provides the legal authority for waiving claims for erroneous payment and allowances made to or on behalf of members or former members of the uniformed services if collection of the claim would be against the equity and good conscience and not in the best interests of the United States. Generally, these criteria are met by finding that the claim arose from an administrative error with no indication of fraud, misrepresentation, or lack of good faith on the part of the member or any other person having an interest in obtaining the waiver. 6. Title 37, U.S. Code, section 373(b)(1) reads, "Discretion to provide exception to termination and repayment requirements. Pursuant to the regulations prescribed to administer this section, the Secretary concerned may grant an exception to the repayment requirement and requirement to terminate the payment of unpaid amounts of a bonus, incentive pay, or similar benefit if the Secretary concerned determines that the imposition of the repayment and termination requirements with regard to a member of the uniformed services would be contrary to a personnel policy or management objective, would be against equity and good conscience, or would be contrary to the best interests of the United States. " 7. Title 10, U.S. Code, section 16301 (b-c) states the portion or amount of a loan that may be repaid under subsection (a) is 15 percent or $500, whichever is greater, for each year of service, plus the amount of any interest that may accrue during the current year. If a portion of a loan is repaid under this section for any year, interest on the remainder of the loan shall accrue and be paid in the same manner as is otherwise required. For the purposes of this section, any interest that has accrued on the loan for periods before the current year shall be considered as within the total loan amount that shall be repaid. 8. DOD Financial Management Regulation, 7000.14-R, chapter 2, in effect at the time, stated a member of the uniformed services who enters into a written agreement with specified service conditions for receipt of a bonus, special or incentive pay, educational benefits, stipend, or similar payment (hereinafter referred to as "pay or benefit"), is entitled to the full amount of the pay or benefit if the member fulfills the required conditions. If the member fails to fulfill the service conditions specified in the written agreement for the pay or benefit, then the pay or benefit may be terminated, and the member may be required to repay an amount equal to the unearned portion of the pay or benefit. Such repayment will be pursued unless the member’s failure to fulfill specified service conditions is due to circumstances determined reasonably beyond the member’s control. DISCUSSION: 1. The applicant enlisted in the CAARNG on 25 April 2001 and he executed an SLRP addendum which identified existing loans in the amount of $15,195.95. However, he acknowledged the total amount of repayment for qualifying loans would not exceed $10,000 plus accrued interest. 2. His NSLDS profile showed, at the time of his enlistment, he had three qualifying loans which totaled $8,283.00. The loans were paid off by consolidation on 9 May 2001. 3. Although records show his loans were in default, they were nevertheless accepted as qualifying loans, processed for the SLRP incentive, and approved by the State. Records further show his paid SLRP incentive exceeded the authorized $8,283.00 and he was overpaid $1,545.00. The approval of his eligibility for the SLRP incentive was due to administrative errors by his recruiting NCO, in the State, and through no fault of his. 4. He was notified of the errors of his SLRP incentive over 10 years after his separation. Further, DFAS established a debt on behalf of the government and his 2014 and 2015 Federal tax refunds were taken and applied to his debt. 5. The applicant acted in good faith and fulfilled all the requirements to receive the SLRP incentive and he had every reason to believe that he was entitled to participate in the SLRP. 6. The Secretary of the Military Department concerned has the discretion to render a determination that the member's repayment of, or the Military Department's full payment of an unpaid portion of, a pay or benefit is appropriate based on it being contrary to a personnel policy or management objective or against equity and good conscience. //NOTHING FOLLOWS// ABCMR Record of Proceedings AR20150000953 Enclosure 1 ARMY BOARD FOR CORRECTION OF MILITARY RECORDS RECORD OF PROCEEDINGS ABCMR Record of Proceedings (cont) AR20150010892 2 ARMY BOARD FOR CORRECTION OF MILITARY RECORDS RECORD OF PROCEEDINGS Enclosure 1 ABCMR Record of Proceedings (cont) AR20150010892 10 ARMY BOARD FOR CORRECTION OF MILITARY RECORDS RECORD OF PROCEEDINGS Enclosure 2