B-144938, FEB. 13, 1961

B-144938: Feb 13, 1961

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WOODWARD: REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 17. WHILE YOU WERE ENROLLED AS A STUDENT AT MISSISSIPPI STATE COLLEGE. IT APPEARS THAT AFTER BEGINNING YOUR SENIOR YEAR YOU WERE CALLED TO ACTIVE DUTY AND SERVED THROUGH WORLD WAR II IN THE ARMY AIR FORCES. WELFARE THAT THE DEBT HAD BEEN CANCELLED BECAUSE YOU WERE CALLED OUT BEFORE COMPLETING YOUR COLLEGE WORK. WELFARE THAT THE LOAN WAS OUTSTANDING WITH THE REQUEST FOR PAYMENT OF THE LOAN PLUS INTEREST. THAT THE EARLIEST RECORD YOU HAVE SHOWING THIS IS APRIL 9. 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.

B-144938, FEB. 13, 1961

TO MR. JONES D. WOODWARD:

REFERENCE IS MADE TO YOUR LETTER DATED JANUARY 17, 1961, REQUESTING REVIEW OF THE GOVERNMENT'S CLAIM AGAINST YOU IN THE AMOUNT $272, PLUS INTEREST AT 2 1/2 PERCENT, WHICH REPRESENTS AN UNPAID STUDENT WAR LOAN MADE PURSUANT TO THE PROVISIONS OF PUBLIC LAW 647, 77TH CONGRESS, 56 STAT. 576, WHILE YOU WERE ENROLLED AS A STUDENT AT MISSISSIPPI STATE COLLEGE.

IT APPEARS THAT AFTER BEGINNING YOUR SENIOR YEAR YOU WERE CALLED TO ACTIVE DUTY AND SERVED THROUGH WORLD WAR II IN THE ARMY AIR FORCES. YOU SAY THAT AFTER LEAVING COLLEGE YOU RECEIVED NOTIFICATION FROM THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE THAT THE DEBT HAD BEEN CANCELLED BECAUSE YOU WERE CALLED OUT BEFORE COMPLETING YOUR COLLEGE WORK; THAT SOMETIME LATER, YOU RECEIVED A NOTICE FROM THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE THAT THE LOAN WAS OUTSTANDING WITH THE REQUEST FOR PAYMENT OF THE LOAN PLUS INTEREST; AND THAT THE EARLIEST RECORD YOU HAVE SHOWING THIS IS APRIL 9, 1956. YOU FEEL THAT THE DEBT SHOULD BE CANCELLED SINCE YOU HAD TO RETURN TO COLLEGE AFTER THE WAR TO COMPLETE YOUR EDUCATION.

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 PER CENTUM 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, FEDERAL SECURITY AGENCY, 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 THEREON SHALL BE CANCELLED. 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 12, 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 NOVEMBER 3, 1942, YOU APPLIED FOR A STUDENT WAR LOAN, INDICATING YOUR EXPECTED DATE OF GRADUATION AS SEPTEMBER 1943; THAT ON NOVEMBER 12, 1942, YOU EXECUTED A NOTE UNDER THAT PROGRAM AGREEING TO MAKE PAYMENT OF THE PRINCIPAL AND ACCRUED INTEREST AT THE RATE OF 2 1/2 PER CENTUM PER ANNUM IN FOUR EQUAL ANNUAL INSTALLMENTS BEGINNING 1 YEAR AFTER YOUR DISCONTINUANCE AS A FULL-TIME STUDENT IN THE PROGRAM FOR WHICH THE LOAN WAS GRANTED; AND THAT ADVANCES TOTALING $272 WERE MADE TO YOU THEREUNDER. IT FURTHER SHOWS THAT HAVING PREVIOUSLY ENLISTED IN THE ARMY AIR CORPS RESERVES YOU WERE ORDERED TO ACTIVE DUTY THEREIN EFFECTIVE FEBRUARY 25, 1943. PURSUANT THERETO, ON MARCH 30, 1943, THE DEFERMENT--- NOT CANCELLATION -- OF YOUR NOTE WAS APPROVED FOR THE U.S. COMMISSIONER OF EDUCATION. IT WOULD APPEAR THAT THE OFFICIAL NOTICE OF SUCH ACTION WAS MISINTERPRETED BY YOU TO INVOLVE CANCELLATION OF THE INDEBTEDNESS. UNDER SUCH DEFERMENT PERIODS OF MILITARY SERVICE BY THE BORROWER DURING WORLD WAR II ARE EXCLUDED IN THE COMPUTATION OF THE TIMES OF MATURITY OF THE FOUR ANNUAL PAYMENTS BUT HAVE NO EFFECT UPON THE RUNNING OF INTEREST.

THE RECORD FURTHER SHOWS THAT LETTER DATED NOVEMBER 25, 1955, WAS SENT YOU BY THE OFFICE OF EDUCATION, DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE, REQUESTING PAYMENT OF YOUR INDEBTEDNESS, WHICH WAS FOLLOWED BY THE LETTER DATED APRIL 9, 1956, TO WHICH YOU REFER, AND FURTHER CORRESPONDENCE ENSUED BETWEEN YOU AND THE DEPARTMENT OF HEALTH, EDUCATION, AND WELFARE. ON AUGUST 23, 1960, YOUR INDEBTEDNESS WAS REFERRED HERE BY THE OFFICE OF EDUCATION AFTER HAVING EXHAUSTED EVERY EFFORT TO COLLECT THE PRINCIPAL BALANCE, PLUS INTEREST, ON YOUR NOTE.

INASMUCH AS THE RECORD CLEARLY ESTABLISHES THAT THE INTERRUPTION TO YOUR COURSE OF STUDY 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 UNDER WHICH YOUR INDEBTEDNESS MAY BE CANCELLED UNDER THE LAW AND REGULATIONS AS EXPLAINED ABOVE.

ACCORDINGLY, WE REQUEST THAT YOU INFORM OUR OFFICE WHETHER YOU DESIRE TO LIQUIDATE THE INDEBTEDNESS. UNLESS AN AFFIRMATIVE ANSWER IS RECEIVED WITHIN 15 DAYS OF THE RECEIPT OF THIS LETTER, ACCOMPANIED BY A SUBSTANTIAL PART PAYMENT, WE WILL HAVE NO ALTERNATIVE BUT TO REFER THE MATTER TO THE DEPARTMENT OF JUSTICE FOR APPROPRIATE LEGAL ACTION TO ENFORCE COLLECTION. YOUR REPLY SHOULD BE ADDRESSED TO THE CLAIMS DIVISION, UNITED STATES GENERAL ACCOUNTING OFFICE, P. O. BOX 2610, WASHINGTON 13, D.C., AND THE CHECK OR MONEY ORDER SHOULD BE DRAWN TO THE ORDER OF "U.S. GENERAL ACCOUNTING OFFICE.'