B-134224, DEC. 3, 1957

B-134224: Dec 3, 1957

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YOUR STUDENT WAR LOAN 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. ARE ORDERED INTO MILITARY SERVICE DURING THE PRESENT WARS UNDER THE SELECTIVE TRAINING AND SERVICE ACT OF 1940. 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. WHICH WE UNDERSTAND WAS ISSUED BY THE OFFICE OF EDUCATION ON MARCH 17. 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.

B-134224, DEC. 3, 1957

TO MR. JOHN A. MITCHELL:

YOUR LETTER OF OCTOBER 22, 1957, REQUESTED US TO REVIEW THE CLAIM OF THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, OFFICE OF EDUCATION, IN THE AMOUNT OF $667.67 AGAINST YOU FOR REPAYMENT OF A STUDENT WAR LOAN PLUS INTEREST WHICH YOU OBTAINED FROM THE OFFICE OF EDUCATION WHILE ATTENDING MANHATTAN COLLEGE IN 1942.

YOUR STUDENT WAR LOAN 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, 56 STAT. 576, WHICH PROVIDES IN PERTINENT PART:

"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 (7F.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.'

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 ONLY 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. * * *"

THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, BY LETTER OF NOVEMBER 14, 1957, INFORMED US THAT---

"IT WAS FELT, ON THE BASIS OF THE LEGISLATIVE HISTORY OF THE PROGRAM, THAT THE CONGRESS DID NOT INTEND TO CANCEL THE LOANS OF THOSE WHO VOLUNTARILY ENLISTED IN THE RESERVE CORPS, THROUGH WHICH THEY WERE SUBJECT TO CALL TO ACTIVE DUTY AT ANY TIME, OR ADVANCED THE DATE OF THEIR INDUCTION BY VOLUNTEERING. OTHERWISE, A STUDENT COULD REAP ALL OF THE BENEFITS OF THE PROGRAM BUT INTENTIONALLY EVADE REPAYMENT OF HIS LOAN BY VOLUNTARILY ENTERING THE ARMED FORCES JUST BEFORE HIS COURSE WAS COMPLETED.'

THE ORIGINAL STUDENT WAR LOAN PROGRAM PROPOSED TO THE CONGRESS BY THE BUREAU OF THE BUDGET CONTAINED A VERY BROAD CANCELLATION PROVISION. THE HOUSE COMMITTEE ON APPROPRIATIONS REJECTED THE ENTIRE STUDENT WAR LOAN PROGRAM, ONE OF THE REASONS GIVEN BEING THAT THE PROGRAM WAS MORE OF A GIFT THAN A LOAN PROGRAM. HOUSE REPORT 2200, 77TH CONGRESS, P. 18. THE COMMITTEE REPORT STATED ,IT IS EXTREMELY DOUBTFUL WHETHER ANY OF THE SO- CALLED LOANS WOULD EVER BE REPAID AS EACH STUDENT WOULD BE ABLE TO SECURE CANCELLATION OF HIS NOTE BY ENTERING THE ARMED FORCES OR ACCEPTING CERTAIN TYPES OF EMPLOYMENT.' ALSO, SEE CONGRESSMAN HARE'S STATEMENT IN 88 CONG.REC. 5806 THAT ,THE OTHER REASON ADVANCED WAS THAT MUCH OF THE MONEY PROBABLY WOULD NOT BE REPAID.' A MODIFIED VERSION OF THE ORIGINAL LANGUAGE WAS INTRODUCED BY SENATOR MCCARRAN ON THE FLOOR OF THE SENATE DURING CONSIDERATION OF THE LABOR-FEDERAL SECURITY APPROPRIATION ACT, 1943, WHICH CONTAINED THE CANCELLATION PROVISION AS FINALLY ENACTED. EXPLAINING THE CANCELLATION PROVISION ON THE SENATE FLOOR, SENATOR MCCARRAN STATED "IF THE STUDENT IS CALLED INTO THE MILITARY SERVICE OF THE UNITED STATES, THE OBLIGATION WILL BE ENTIRELY LIQUIDATED.' 88 CONG.REC. 5599. AFTER THIS PROVISION PASSED THE SENATE AND DURING ITS CONSIDERATION ON THE FLOOR OF THE HOUSE, CONGRESSMAN HARE STATED ,AND LET ME SAY THAT UNDER THIS NO LOAN WILL BE CANCELED UNLESS THE MAN IS CALLED INTO THE SERVICE BEFORE HE COMPLETES HIS COURSE IN MEDICINE, ENGINEERING, PHARMACY, AND SO FORTH; THAT IS THE ONLY CONDITION UPON WHICH HIS LOAN WILL BE CANCELED.' 88 CONG.REC. 5807. HE SUBSEQUENTLY STATED FURTHER "THE ONLY TIME HIS OBLIGATION IS CANCELED IS IF HE HAS PURSUED HIS COURSE 1 OR 2 YEARS AND HAS NOT COMPLETED HIS COURSE AND HE IS CARRIED INTO THE SERVICE, THEN HIS NOTE IS CANCELED.' 88 CONG.REC. 5808. WITH THIS UNDERSTANDING, THE HOUSE OF REPRESENTATIVES FINALLY AGREED TO A MODIFIED STUDENT LOAN PROGRAM.

IT THUS IS CLEAR THAT THE CONGRESS INTENDED TO PERMIT CANCELLATION OF A STUDENT WAR LOAN IN ONLY THE ONE LIMITED CASE, WHERE THE STUDENT WAS ORDERED INTO THE MILITARY SERVICE UNDER THE SELECTIVE TRAINING AND SERVICE ACT OF 1940, AS AMENDED. CONSIDERING THE LEGISLATIVE HISTORY AS A WHOLE AND THAT, IF THE LAW WAS OTHERWISE CONSTRUED, A STUDENT COULD INTENTIONALLY EVADE REPAYMENT OF HIS LOAN BY VOLUNTARILY ENTERING THE MILITARY SERVICES BEFORE COMPLETING HIS COURSE, WE FEEL THAT THE ADMINISTRATIVE INTERPRETATION OF THE LAW AND THE REGULATIONS THEREUNDER ARE PROPER.

IT APPEARS FROM YOUR LETTER THAT YOU VOLUNTARILY ENLISTED IN THE UNITED STATES NAVAL RESERVE ON APRIL 15, 1943, IN EXPECTATION OF BEING DRAFTED, AND THAT YOU WERE COMMISSIONED AS AN ENSIGN IN THE UNITED STATES NAVAL RESERVE. THE RECORD, HOWEVER, DOES NOT ESTABLISH THAT YOU WERE INVOLUNTARILY ORDERED (DRAFTED) INTO THE MILITARY SERVICE PURSUANT TO THE SELECTIVE TRAINING AND SERVICE ACT OF 1940, AS AMENDED, PRIOR TO JUNE 1944 WHEN YOU EXPECTED TO GRADUATE FROM MANHATTAN COLLEGE, NEW YORK, NEW YORK, AND HENCE ENTITLED UNDER THE CANCELLATION PROVISION OF THE LAW AND REGULATIONS TO HAVE YOUR LOAN EXTINGUISHED.

THEREFORE, WE CONCLUDE, ON THE PRESENT RECORD, THAT YOU ARE INDEBTED TO THE FEDERAL GOVERNMENT IN THE PRINCIPAL AMOUNT OF $487.24 PLUS INTEREST AT A RATE OF 2 1/2 PERCENTUM PER ANNUM SET OUT IN THE PROVISION OF LAW QUOTED ABOVE. BY LETTER OF TODAY YOUR CHECK IN THE AMOUNT OF $667.67 IS ACCORDINGLY BEING SENT TO THE OFFICE OF EDUCATION FOR APPLICATION ON THE SAID INDEBTEDNESS.