B-135609, MAY 16, 1958

B-135609, MAY 16, 1958

TO MR. WILLIAM J. MCNAIR, JR.:

YOUR LETTER DATED MARCH 12, 1958, REQUESTS A DECISION AS TO WHETHER YOU ARE VALIDLY INDEBTED TO THE UNITED STATES AS A RESULT OF A LOAN MADE TO YOU PURSUANT TO THE PROVISIONS OF PUBLIC LAW 647, 77TH CONGRESS, 56 STAT. 576, WHILE YOU WERE ENROLLED AS A STUDENT AT THE UNIVERSITY OF ALABAMA.

YOU ASSERT IN YOUR LETTER OF MARCH 12, 1958, THAT AT THE TIME OF YOUR CALL TO MILITARY DUTY YOU "LACKED 5 1/2 HOURS OF THE TOTAL HOURS REQUIRED FOR GRADUATION" AND THAT SINCE PUBLIC LAW 647 PROVIDED THAT THE NOTE SHALL BE CANCELED IN THE EVENT THE MAKER IS ORDERED INTO MILITARY SERVICE BEFORE COMPLETING HIS COURSE OF STUDY, YOUR DEBT PROPERLY SHOULD BE CONSIDERED AS CANCELED.

THE LOAN TO YOU WAS AUTHORIZED BY THE APPROPRIATION "LOANS TO STUDENTS IN TECHNICAL AND PROFESSIONAL FIELDS (NATIONAL DEFENSE)" UNDER THE HEADING "OFFICE OF EDUCATION" CONTAINED IN TITLE II OF THE LABOR-FEDERAL SECURITY APPROPRIATION ACT, 1943 (PUBLIC LAW 647). THAT ACT PROVIDES, IN PERTINENT PART, AS FOLLOWS:

"LOANS HEREUNDER SHALL BE MADE IN AMOUNTS NOT EXCEEDING TUITION AND FEES PLUS $25 PER MONTH AND NOT EXCEEDING A TOTAL OF $500 TO ANY ONE STUDENT DURING ANY TWELVE-MONTH PERIOD, SAID LOANS TO BE EVIDENCED BY NOTES EXECUTED BY SUCH STUDENTS PAYABLE TO THE TREASURER OF THE UNITED STATES AT A RATE OF INTEREST AT 2 1/2 PERCENTUM PER ANNUM. REPAYMENTS OF SUCH LOANS SHALL BE MADE THROUGH THE COLLEGES, UNIVERSITIES, OR OTHER AGENCIES NEGOTIATING THE LOANS AND COVERED INTO THE TREASURY AS MISCELLANEOUS RECEIPTS: PROVIDED, THAT INDEBTEDNESS OF STUDENTS WHO, BEFORE COMPLETING THEIR COURSES, ARE ORDERED INTO MILITARY SERVICE DURING THE PRESENT WARS UNDER THE SELECTIVE TRAINING AND SERVICE ACT OF 1940, AS AMENDED, OR WHO SUFFER TOTAL AND PERMANENT DISABILITY OR DEATH, SHALL BE CANCELED. THE FOREGOING LOAN PROGRAM SHALL BE ADMINISTERED IN ACCORDANCE WITH REGULATIONS PROMULGATED BY THE COMMISSIONER OF EDUCATION WITH THE APPROVAL OF THE CHAIRMAN OF THE WAR MANPOWER COMMISSION.'

SECTION 3.8 (D) OF THE REGULATIONS, PROMULGATED BY THE COMMISSIONER OF EDUCATION WITH THE APPROVAL OF THE CHAIRMAN OF THE WAR MANPOWER COMMISSION PURSUANT TO THE FOREGOING PROVISION OF LAW AND PUBLISHED ON AUGUST 26, 1942 (7 F.R. 6747, 6748), PROVIDES:

"CANCELLATION OF LOANS. IF ANY BORROWER BEFORE COMPLETING HIS COURSE OF STUDY IS ORDERED INTO MILITARY SERVICE DURING THE PRESENT WARS UNDER THE SELECTIVE TRAINING AND SERVICE ACT OF 1940, AS AMENDED, THE TOTAL UNPAID PRINCIPAL AMOUNT OF HIS LOANS AND INTEREST SHALL BE CANCELLED. IF ANY BORROWER SUFFERS TOTAL AND PERMANENT DISABILITY OR DEATH THE UNPAID PRINCIPAL AMOUNT OF HIS LOANS AND INTEREST THEREON SHALL BE CANCELLED. THE INSTITUTION OR AGENCY SHALL REPORT TO THE COMMISSIONER ALL STUDENTS ENTITLED TO SUCH CANCELLATION.'

THE NOTE EXECUTED BY YOU ON NOVEMBER 3, 1942, CONTAINS SIMILAR PROVISIONS WITH RESPECT TO ITS CANCELLATION.

IN AN UNDATED MEMORANDUM, WHICH WE UNDERSTAND WAS ISSUED BY THE OFFICE OF EDUCATION ON MARCH 17, 1943, IT WAS STATED:

"IT SHOULD BE ESPECIALLY NOTED THAT STUDENTS WHO ENTERED ANY RESERVE PROGRAM OF THE ARMY OR NAVY PRIOR TO THEIR ACCEPTANCE OF A STUDENT WAR LOAN AND ARE SUBSEQUENTLY CALLED TO ACTIVE DUTY ARE DEEMED TO HAVE ENTERED THE SERVICE VOLUNTARILY AND ARE THEREFORE ENTITLED ONLY TO DEFERMENT OF THEIR OBLIGATIONS. IN THE SAME MANNER STUDENTS WHO ENTERED A RESERVE PROGRAM AFTER ACCEPTANCE OF A LOAN AND WHO ARE CALLED TO ACTIVE DUTY ARE ENTITLED TO DEFERMENT. LIKEWISE, STUDENTS WHO VOLUNTEER FOR INDUCTION IN ORDER TO ENTER OFFICERS CANDIDATE SCHOOLS OR OTHER PROGRAMS ARE ENTITLED ONLY TO DEFERMENT. ONLY STUDENTS WHO ARE INDUCTED (DRAFTED) UNDER THE SELECTIVE TRAINING AND SERVICE ACT OF 1940 BEFORE COMPLETING THEIR COURSES OR WHO SUFFER DEATH OR PERMANENT DISABILITY AT ANY TIME ARE UNDER THE LAW ENTITLED TO CANCELLATION OF THEIR OBLIGATIONS. * * *"

A THOROUGH REVIEW OF THE LEGISLATIVE HISTORY OF THE STATUTE MAKES CLEAR THAT THE CONGRESS INTENDED TO PERMIT CANCELLATION OF A LOAN IN CIRCUMSTANCES SOMEWHAT ANALOGOUS TO YOURS, ONLY WHERE THE STUDENT WAS PREVENTED FROM COMPLETING HIS COURSE OF STUDY BECAUSE ORDERED INTO THE MILITARY SERVICE UNDER THE SELECTIVE TRAINING AND SERVICE ACT OF 1940, AS AMENDED. THE REGULATIONS AND MEMORANDUM OF THE OFFICE OF EDUCATION CLEARLY CARRY OUT SUCH INTENT BY PROVIDING FOR CANCELLATION OF THE INDEBTEDNESS ARISING FROM STUDENT WAR LOANS ONLY IN THE EVENT OF (1) AN ORDER INTO MILITARY SERVICE UNDER THE SELECTIVE TRAINING AND SERVICE ACT OF 1940, ARISING BY REASON OF SELECTION BY THE LOCAL BOARD (DRAFTING) AS DISTINGUISHED FROM VOLUNTARY ENTRANCE INTO THE MILITARY SERVICE AND (2) THAT SUCH ORDER INTO THE MILITARY SERVICE PREVENTED THE COMPLETION OF THE COURSE.

THE FILE IN YOUR CASE SHOWS THAT ON OCTOBER 28, 1942, YOU APPLIED FOR A STUDENT WAR LOAN INDICATING YOUR EXPECTED DATE OF GRADUATION AS AUGUST 1943; THAT ON NOVEMBER 3, 1942, YOU EXECUTED A NOTE UNDER THAT PROGRAM AND A TOTAL OF $500 WAS ADVANCED TO YOU. ON JUNE 13, 1943, YOU ENLISTED IN THE UNITED STATES NAVY THROUGH LOCAL DRAFT BOARD NO. 1, RIDGWAY, PENNSYLVANIA WITH DRAFT CLASSIFICATION AT THAT TIME IIA. ON JUNE 15, 1943, YOU RECEIVED ORDERS TO REPORT FOR MILITARY SERVICE ON JULY 1, 1943. AT THE TIME OF LEAVING THE UNIVERSITY YOU LACKED 5 1/2 HOURS FOR GRADUATION. HOWEVER, UNDER A WARTIME POLICY OF THE UNIVERSITY OF ALABAMA YOU WERE ALLOWED CREDIT FOR THESE HOURS AND YOU WERE AWARDED A DEGREE OF BACHELOR OF SCIENCE IN AERONAUTICAL ENGINEERING ON AUGUST 27, 1943.

SINCE YOU WERE PERMITTED UNDER THE UNIVERSITY'S WARTIME POLICY TO GRADUATE AFTER YOUR ENTRANCE INTO THE MILITARY SERVICE WITHOUT TAKING ADDITIONAL WORK, THERE IS A SUBSTANTIAL BASIS FOR HOLDING THAT YOU HAD COMPLETED YOUR COURSE OF STUDY AT THAT TIME AND THE PURPOSE FOR WHICH THE LOAN WAS MADE WAS THEN SERVED. HOWEVER, SINCE THE RECORD CLEARLY ESTABLISHES THAT ANY INTERRUPTION TO YOUR COURSE OF STUDY WHICH MAY HAVE OCCURRED, DID NOT OCCUR BECAUSE YOU WERE ORDERED (DRAFTED) INTO THE MILITARY SERVICE UNDER THE SELECTIVE TRAINING AND SERVICE ACT OF 1940 AS AMENDED BUT THAT YOUR ENTRANCE INTO THE MILITARY SERVICE PRIOR TO THE COMPLETION THEREOF WAS VOLUNTARY, THERE IS NO LEGAL BASIS UPON WHICH YOUR INDEBTEDNESS MAY BE CANCELED UNDER THE LAW AND REGULATIONS AS EXPLAINED ABOVE.

WE THEREFORE CONCLUDE THAT YOU ARE VALIDLY INDEBTED TO THE UNITED STATES FOR THE AMOUNT OF THE LOAN PLUS INTEREST THEREON (2 1/2 PERCENT FROM THE TIME EACH ADVANCE WAS MADE) LESS THE AMOUNTS WHICH YOU HAVE REFUNDED IN INSTALLMENTS.