Citation Nr: 21022418 Decision Date: 04/15/21 Archive Date: 04/15/21 DOCKET NO. 16-41 848A DATE: April 15, 2021 ORDER As the overpayments and resultant debts in the amounts of $6,031.35 and $1,748.73, for payment of educational assistance benefits under Chapter 33, Title 38, United States Code (known as the Post-9/11 GI Bill), were not properly created, the appeal is granted. FINDINGS OF FACT 1. The Veteran was enrolled at St. Vincent College/Seminary for 14 resident credit hours for the period from August 31, 2015, through December 17, 2015; for this term, VA paid tuition and fees in the amount of $12,654.00 on the Veteran’s behalf. The Veteran also received $4,629.00 in housing allowance payments. 2. The Veteran withdrew from St. Vincent College/Seminary, effective October 26, 2015. 3. The Veteran’s October 26, 2015 withdrawal was his first instance of withdrawal. 4. The 6-credit hour exclusion is for application in this case; as such, educational assistance as to at least 6 credit hours should have been terminated October 31, 2015. 5. As VA erroneously calculated the amounts overpaid to the Veteran and as VA terminated the Veteran’s VA educational assistance benefits in full effective October 26, 2015, the overpayments in the amounts of $6,031.35 and $1,748.73 and resulting debts were not validly created. CONCLUSION OF LAW The debts created by overpayment of educational assistance benefits in the amounts of $6,031.35 for tuition and fees and $1,748.73 for housing allowance are not valid. 38 U.S.C. § 3034(a), 3323(a), 3680(a)(1); 38 C.F.R. § 21.9635(b). REASONS AND BASES FOR FINDINGS AND CONCLUSION The Veteran served on active duty in the United States Navy from November 2006 to December 2013. This appeal to the Board of Veterans’ Appeals (Board) arose from a March 2016 decision of the Department of Veterans Affairs (VA) Debt Management Center’s Committee on Waivers and Compromises (COWC) in St. Louis, Missouri, that denied the Veteran’s request for waiver of recovery of an overpayment of tuition and fees in the amount of $6,031.35 and of housing allowance in the amount of $1,748.73. The Veteran disagreed with the COWC’s denials of his waiver request and perfected an appeal to the Board. The instant case was most recently before the Board in April 2020, at which time it was remanded for further development and readjudication. Upon completion of that development, the agency of original jurisdiction (AOJ) issued a January 2021 supplemental statement of the case (SSOC) in which it continued to find that debts in the amounts of $6,031.35 and $1,748.73 for overpayments of tuition and fees and housing allowance under Chapter 33 were properly created. The matter was thereafter returned to the Board for further appellant adjudication. Validity of Debt At the outset, the Board notes that it does not appear as though the Veteran specifically disagreed with the validity of debt created in this case. Nevertheless, because the issue of the validity of a debt is a threshold determination that must be made prior to a decision on a request for waiver of the indebtedness, the Board must consider whether the debt was validly created. See Schaper v. Derwinski, 1 Vet. App. 430 (1991)). A review of the record reveals that the Veteran was approved for receipt of educational assistance benefits under the Post-9/11 GI Bill via letter dated in October 2014. St. Vincent College/Seminary then certified that the Veteran was enrolled in for 14 resident credit hours for the period from August 31, 2015, through December 17, 2015. On November 20, 2015, however, St. Vincent College/Seminary informed VA that the Veteran had withdrawn from all courses, effective October 26, 2015. As his withdrawal was after the drop period, non-punitive grades were assigned. Via letter dated in November 2015, VA notified the Veteran that due to his change in enrollment status, he was paid more in tuition and fees and housing benefits than he was owed, resulting in debts in the amounts of $6,031.35 for overpayment of tuition and fees and $1,748.73 for overpayment of a housing allowance. The letter further indicated that based on the information received, the Veteran was not required to repay VA benefits for the time he attended school, but was required to repay any benefits received for the portion of the term he did not attend. As noted above, the matter was remanded in August 2020. In that action, the Board stated that although the claims file contained an audit of the Veteran’s benefit payments account, it was not evident from such audit how the debts in the amounts of $6,031.35 and $1,748.73 were calculated. The Board thus remanded the matter for the AOJ to create a detailed yet straightforward accounting showing how the total overpayment debt was calculated. The Board further instructed that the AOJ was to discuss whether the withdrawal in question was the Veteran’s first instance of withdrawal and, if so, whether that entitled him to payment of benefits through October 31, 2015, in accordance with 38 C.F.R. § 21.9635(b). The record shows that in December 2020, the AOJ provided the Veteran with a detailed accounting of how the debt amounts were calculated, to include showing how the respective sums for tuition/fees and housing allowance were determined. The AOJ also informed the Veteran that mitigating circumstances “were accepted, which made [him] eligible for payments through [his] last day of attendance.” Notably, the AOJ explained that because the withdrawal in question was the Veteran’s first instance of withdrawal, six credit hours were excused without mitigating circumstances; mitigating circumstances were then applied to the withdrawal from the eight remaining credit hours. As such, the Veteran was eligible for payment of VA educational assistance benefits through October 25, 2015, the last day on which he attended courses. The AOJ then went on to note that the original term from August 31, 2015, through December 17, 2015, consisted of 107 days. For this term, it was stated that the Veteran was enrolled for 14 credit hours, for which VA paid Chapter 33 educational assistance benefits in the amount of $12,654.00 in tuition and fees and $4,629.00 in housing allowance. However, because the Veteran attended only 55 days of the term (from August 31, 2015, through October 25, 2015), or 52.34% of the term, the AOJ determined that he was not entitled to payment of 47.66% of the tuition and fee and housing allowance paid. The AOJ stated that this resulted in an overpayment of $6,031.35 for tuition and fees and $1,748.73 for housing allowance. Upon review of the accounting provided to the Veteran, the Board cannot conclude that the AOJ properly calculated the Veteran’s debt. Notably, by the Board’s calculations, the term running from August 31, 2015, through December 17, 2015, consists of 109 calendar days, and not 107, as reported by the AOJ. Further, even if the AOJ’s calculation of the term length and Veteran’s attendance was correct, the percentages reported by the AOJ regarding the Veteran’s attendance and non-attendance are incorrect. Indeed, the AOJ has indicated that the Veteran attended 55 out of the 107 days, or 52.34% of the term. However, attending 55 out of 107 days is only 51.4% (55 ÷ 107 = 0.5140 or 51.4%), which would mean that the Veteran did not attend 48.6% of the term. Moreover, even considering the percentages arrived at by the AOJ, 47.66% of $12,654.00 is $6,030.90, and not $6,031.35, as calculated by the AOJ. Although the difference is small, the fact remains that the AOJ’s calculations are inaccurate regarding the overpayment of VA educational assistance benefits such that the Board cannot conclude that the debt amounts were validly created. Furthermore, pertaining to effective dates of a reduction or discontinuance of educational assistance, 38 C.F.R. § 21.9635(b) provides that “in the first instance of a withdrawal from a course or courses for which the eligible individual received educational assistance, VA will consider mitigating circumstances to exist with respect to the withdrawal of a course or courses totaling no more than six semester hours or the equivalent.” 38 C.F.R. § 21.9635(b). The regulation further provides that “[i]f mitigating circumstances are considered to exist in accordance with this paragraph, VA will terminate or reduce educational assistance effective the end of the month during which the withdrawal occurred.” Id. In other words, veterans who withdraw for the first time from an educational course paid for using Post-9/11 GI Bill benefits are entitled to receive one-time forgiveness of educational debt of up to 6 total credit hours without being required to present evidence of mitigating circumstances in order to avoid being required to repay the overpayment created by this withdrawal. Despite the Board directing consideration of 38 C.F.R. § 21.9635(b), the January 2021 SSOC contains no discussion of this regulation (aside from noting the Board’s remand directive) or its application to the facts of this case. Rather, the AOJ stated that “[t]he debt for Tuition and Fees is prorated based on the percentage of the term the claimant did not attend.” Specifically, it was determined that because the Veteran had attended only 55 days of the term, he had been overpaid tuition and fees in the amount of $6,031.35 for the period from October 26, 2015, through December 17, 2015. In this regard, the Board notes that 38 C.F.R. § 21.9635(c)(2) provides that if an eligible individual withdraws from all courses with mitigating circumstances or withdraws from all courses for which a punitive grade is or will be assigned, VA will terminate educational assistance for residence training effective the last date of attendance. However, in accordance with 38 C.F.R. § 21.9635(b), pertaining to first instances of withdrawal, “[i]f mitigating circumstances are considered to exist in accordance with this paragraph, VA will terminate or reduce educational assistance effective the end of the month during which the withdrawal occurred.” Here, the AOJ has determined that mitigating circumstances existed. Although there is a discrepancy in the regulatory language of these two subsections, because it has been determined that the withdrawal in question was the Veteran’s first withdrawal, the Board concludes that 38 C.F.R. § 21.9635(b) controls and thus, the termination of VA educational assistance benefits, at least as to 6 credit hours, should have been made effective October 31, 2015, and not October 26, as determined by the AOJ. Indeed, 38 C.F.R. § 21.9635(b) provides for the automatic grant of mitigating circumstances for up to 6 credits the first time a student reduces or terminates and mitigating circumstances must be considered. As explained by VA “[t]his automatic grant is called the 6-Credit Hour Exclusion” and “is a one-time grant made the first-time mitigating circumstances must be considered for the student.” https://gibill.custhelp.va.gov/app/answers/detail/a_id/1450/kw/6%20credit%20hour%20exclusion. Regarding application of the 6-Credit Hour Exclusion, VA has provided the following examples: (1) If the student withdraws from 3 credits, the exclusion will be granted for 3 credits and the student’s one-time exclusion is used; (2) If the student withdraws from 12 credits, the exclusion will be granted for 6 credits, the student’s one-time exclusion is used, and the student must provide mitigating circumstances for the other 6 credits. Id. This makes clear that the Veteran need not provide evidence of mitigating circumstances for the first-time withdrawal of up to six credits. As the Veteran’s withdrawal from courses, effective October 26, 2015, was his first course withdrawal, his VA educational assistance benefits, at least as to six credit hours, were to be terminated effective October 31, 2015. 38 C.F.R. § 21.9635(b). The AOJ thus erred in terminating his VA educational assistance benefits, in full, effective October 26, 2015, and the overpayment and resulting debt was, therefore, not properly created. Accordingly, given the deficiencies addressed above, the Board cannot conclude that the overall debt charged to the Veteran was validly created and the Veteran is not responsible for repayment of $6,031.35 for overpayment of tuition and fees and $1,748.73 for overpayment of a housing allowance. See 38 U.S.C. § 5112(b); 38 C.F.R. § 21.9635 (b). In finding that the debts in the amounts of $6,031.35 for overpayment of tuition and fees and $1,748.73 for overpayment of a housing allowance were not validly created, the Board acknowledges that the Veteran may be responsible for a portion of those debts. While the AOJ is free to pursue collection of any remaining valid debt, the Board will not, at this juncture, address whether any, and, if so, what, amounts remain due. K. Conner Veterans Law Judge Board of Veterans’ Appeals Attorney for the Board K. Neilson, Counsel The Board’s decision in this case is binding only with respect to the instant matter decided. This decision is not precedential and does not establish VA policies or interpretations of general applicability. 38 C.F.R. § 20.1303.