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ISCR 22-02065: Guideline F security clearance hearing, denied (2024) · CASE

ISCR Case 22-02065denied

Case headnote

ISCR Case No. 22-02065

deniedAug 26, 2024· Hon. Nichole L. Noel· hearing

Summary

A 45-year-old engineer was denied a security clearance under Guideline F (Financial Considerations) due to delinquent student loans totaling $110,635. The Department of Defense's Statement of Reasons alleged that the applicant had not taken any steps to rehabilitate these loans despite available opportunities.

The judge found that the applicant failed to address his significant student loan debt. Specifically, he did not take any steps to rehabilitate the loans, nor did he present a legitimate repayment plan to resolve the outstanding debts. These omissions raised concerns regarding his reliability and trustworthiness.

Consequently, the applicant's security clearance was denied, with the decision citing his failure to mitigate the financial concerns outlined in the allegations.

Why the applicant was denied

The applicant did not take any steps to rehabilitate his student loans despite having opportunities to do so.
He failed to present a legitimate plan to resolve his debts, which raised concerns about his reliability and trustworthiness.

Conditions referenced

Disqualifying

AG ¶ 19(a)raisedInability to Satisfy Debts
AG ¶ 19(c)raisedA History of Not Meeting Financial Obligations

Key rule quoted

“Security clearance adjudications are not debt collection proceedings. Rather the purpose of the adjudication is to make an examination of a sufficient period of a person’s life to make an affirmative determination that the person is an acceptable security risk.”

Procedural posture

SOR issuedNov 18, 2022
Answer filed—
Hearing heldDec 6, 2023
Decision dateAug 26, 2024

Cite for

Failure to Rehabilitate Delinquent Debts Under Guideline F
Lack of a Legitimate Repayment Plan as a Basis for Denial
Consideration of Financial Obligations in Security Clearance Adjudications

Editorial summary generated for research. Not legal advice; not a prediction. Verify against the full decision before relying on any quoted language.

From the decision

Facts this decision states, each with the exact sentence it comes from. Descriptive of the record, not an assessment.

Tenure: ~5 years: “Applicant, 45, has worked as an engineer for a federal contracting company since November 2019.”
Held a clearance before: Yes: “He was initially granted access to classified information in 2015 in connection with his service in the U.S. Navy Reserve from October 2011 to 2022.”
Delinquent debt cited: $110,635 (on a payment plan; bankruptcy discharged): “The record establishes the Government’s prima facie case that Applicant owed $110,635 on seven student loans, which were in delinquent status before the Covid-19 emergency student loan relief in March 2020.”

Standardized Decision Profile

SEAD-4 Guideline F · descriptive summary of a decided case

Posture: HearingDecided: denied

The judge found that the applicant has not taken any steps to rehabilitate his student loans, which total $110,635, and has a history of not meeting financial obligations. As a result, the application for a security clearance was denied due to financial considerations under Guideline F.

The sub-allegation breakdown is part of the Professional plan. See what it includes.

¶	Allegation	Finding	Type	Response	Disqualifying (¶19)	Mitigating applied (¶20)	Mitigation

Descriptive standardized rendering of a decided public case. The verbatim source decision is shown in full below.

Full decision

The complete, official text, footnotes and signatures included, is in the original PDF.

Decision text, by section

DEFENSE OFFICE OF HEARINGS AND APPEALS

HEARING

APPEARANCES

DEPARTMENT OF DEFENSE DEFENSE OFFICE OF HEARINGS AND APPEALS

______________ ______________ In the matter of: )

)

ISCR Case No. 22-02065

) Applicant for Security Clearance )

Appearances For Government: Jeff Kent, Esq., Department Counsel For Applicant: Pro se 08/26/2024

STATEMENT OF CASE

NOEL, Nichole L., Administrative Judge: Applicant contests the Department of Defense’s (DOD) intent to deny his eligibility for a security clearance to work in the defense industry. Applicant has not taken any steps to rehabilitate his student loans, despite having the opportunity to do so. He has no plan regarding the repayment of the loans. Clearance is denied. Statement of the Case On November 18, 2022, the DOD issued a statement of reasons (SOR) detailing security concerns under the financial considerations guideline. This action was taken under Executive Order (EO) 10865, Safeguarding Classified Information within Industry, signed by President Eisenhower on February 20, 1960, as amended; as well as DOD Directive 5220.6, Defense Industrial Personnel Security Clearance Review Program, dated January 2, 1992, as amended (Directive); and the Adjudicative Guidelines for Determining Eligibility for Access to Classified Information, implemented on June 8, 2017. DOD adjudicators were unable to find that it is clearly consistent with the national interest to continue Applicant’s security clearance and recommended that the case be submitted to a Defense Office of Hearings and Appeals (DOHA) administrative judge for

a determination whether to grant his security clearance. Applicant timely answered the SOR and requested a hearing. At the hearing, convened on December 6, 2023, I appended to the record as Hearing Exhibit (HE) I, the disclosure letter, dated March 1, 2023. I admitted Government’s Exhibits (GE) 1 through 6 without objection. Applicant did not submit any documentation. After the hearing, I left the record open until January 5, 2024, to allow Applicant to submit additional documentation. He did not. DOHA received the transcript on December 18, 2023. Procedural Issues At the hearing, I informed the parties that I intended to take administrative notice of information published by the Department of Education regarding the Covid-19 Emergency Relief and Federal Student Aid as provided to the public at https://studentaid.gov/announcements-events/covid-19, which is admitted to the record as HE II. I left the record open as indicated above to allow the parties to submit their response to the information provided. Department Counsel provided a response dated January 3, 2024, which is admitted to the record as HE III. Applicant did not provide a response. (Tr. 19-20)

FINDINGS OF FACT

Applicant, 45, has worked as an engineer for a federal contracting company since November 2019. He was initially granted access to classified information in 2015 in connection with his service in the U.S. Navy Reserve from October 2011 to 2022. He accepted a commission in the U.S. Air Force Reserve in April 2022. He completed his most recent security clearance application in May 2021. He did not disclose any derogatory information. A September 2022 credit report obtained during the investigation showed that Applicant obtained a Chapter 7 bankruptcy discharge of his debts in November 2013 and that he had seven student loans that were reported as being in a delinquent status. These financial issues are alleged in the SOR. (Tr. 20-23; GE 1-2, 4) Applicant’s financial problems began during his first marriage, which lasted from December 2001 to September 2011. He was underemployed between 2007 and 2011, causing the couple to struggle with their two largest expenses — housing and childcare. Between August 2009 and September 2013, he worked as an adjunct professor, initially earning $18 per hour. When he earned his master’s degree in May 2011, his pay increased to $21 per hour. The couple paid $1,200 each month in childcare expenses for their three children. He admitted the couple had ongoing financial problems. (Tr. 26- 30) When the couple separated, Applicant’s recurring personal expenses increased because he had to pay his own living expenses in addition to his child support obligation. When the couple divorced in 2011, Applicant was assigned some of the marital debt. Still earning $21 per hour, he decided to file for bankruptcy protection in

August 2013, seeking relief from $131,866 of debt, including $24,395 in consumer debt, a $36,902 home equity line of credit, and $70,569 in student loan debt, which was not eligible for discharge. (Tr. 30; GE 2) Applicant obtained full employment in October 2013 as a field engineer for a private company. He earned $27 per hour as well as income from his monthly reserve duty. He prioritized paying his $2,300 monthly child support obligation over his other financial obligations. He admitted that he did not make consistent payments on his student loans. He made occasional $100 good-faith payments toward the loans between 2013 and 2019, but admitted that he had never made more than three consecutive payments. He was not sure about the status of his student loans at the end of 2019. He claims that he tried to make payment arrangements with the servicer but stated that the proposed payment was unaffordable. According to GE 5, a credit reported dated November 20, 2023, the loans were delinquent since March 2019. He did not make any payments between March 2019 and December 2019. (Tr. 30-34, 43- 45; GE 1-2,5) In March 2020, the Department of Education issued student loan relief, which placed all student loans, including those in delinquent or defaulted status, into administrative forbearance. Although the emergency relief ended on September 1, 2023, the payments on most defaulted student loans will remain in administrative forbearance through September 2024 (see, https://studentaid.gov/announcements- events/covid-19). The Department of Education launched the Fresh Start Program to allow borrowers to rehabilitate defaulted student loans. Applicant testified that he made inquiries about the program but did not enroll. (Tr. 47-48; HE II) Applicant testified that after paying his recurring financial expenses, he has only $134 in discretionary income each month. He expects his child support obligation to decrease in 2025 because two of his four children will be over 18 years old. Although, the court-ordered obligation will decrease, his education expenses for his children may increase. He has one child entering college in Fall 2024, with another expected to follow in Fall 2025. The amount of his financial obligation is unknown, but expects to prioritize the expense over other financial obligations. (Tr. 37-43, 51-52, 56-62; GE 3)

POLICIES

When evaluating an applicant’s suitability for a security clearance, the administrative judge must consider the adjudicative guidelines. In addition to brief introductory explanations for each guideline, the adjudicative guidelines list potentially disqualifying conditions and mitigating conditions, which are to be used in evaluating an applicant’s eligibility for access to classified information. These guidelines are not inflexible rules of law. Instead, recognizing the complexities of human behavior, administrative judges apply the guidelines in conjunction with the factors listed in the adjudicative process. The administrative judge’s overarching adjudicative goal is a fair, impartial, and commonsense decision. According to AG ¶ 2(a), the entire process is a conscientious scrutiny of a number of variables

known as the “whole-person concept.” The administrative judge must consider all available, reliable information about the person, past and present, favorable and unfavorable, in making a decision. The protection of the national security is the paramount consideration. AG ¶ 2(b) requires that “[a]ny doubt concerning personnel being considered for national security eligibility will be resolved in favor of the national security.” In reaching this decision, I have drawn only those conclusions that are reasonable, logical, and based on the evidence contained in the record. Under Directive ¶ E3.1.14, the Government must present evidence to establish controverted facts alleged in the SOR. Under Directive ¶ E3.1.15, the applicant is responsible for presenting “witnesses and other evidence to rebut, explain, extenuate, or mitigate facts admitted by the applicant or proven by Department Counsel.” The applicant has the ultimate burden of persuasion to obtain a favorable security decision. A person who seeks access to classified information enters into a fiduciary relationship with the Government predicated upon trust and confidence. This relationship transcends normal duty hours and endures throughout off-duty hours. The Government reposes a high degree of trust and confidence in individuals to whom it grants access to classified information. Decisions include, by necessity, consideration of the possible risk the applicant may deliberately or inadvertently fail to safeguard classified information. Such decisions entail a certain degree of legally permissible extrapolation of potential, rather than actual, risk of compromise of classified information. Section 7 of EO 10865 provides that adverse decisions shall be “in terms of the national interest and shall in no sense be a determination as to the loyalty of the applicant concerned.” See also EO 12968, Section 3.1(b) (listing multiple prerequisites for access to classified or sensitive information).

ANALYSIS

Guideline F, Financial Considerations Failure to meet one’s financial obligations may indicate poor self-control, lack of judgment, or unwillingness to abide by rules and regulations, all of which can raise questions about an individual’s reliability, trustworthiness, and ability to protect classified or sensitive information. An individual who is financially overextended is at a greater risk of having to engage in illegal or otherwise questionable acts to generate funds. (AG ¶ 18) The record establishes the Government’s prima facie case that Applicant owed $110,635 on seven student loans, which were in delinquent status before the Covid-19 emergency student loan relief in March 2020. He admitted that he had not made consistent payments on the student loans since at least November 2013, despite having all his other debts discharged through Chapter 7 bankruptcy protection in November 2013.

________________________ The following financial considerations disqualifying conditions apply: AG ¶ 19(a) inability to satisfy debts; and AG ¶ 19(c) a history of not meeting financial obligations. None of the financial considerations mitigating conditions apply. The Covid-19 emergency student loan relief gave borrowers such as Applicant a once-in-a-lifetime opportunity to rehabilitate their finances by not having to make student loan payments between March 2020 and September 2023. The relief program also provided borrowers like Applicant the opportunity to rehabilitate their student loans through the Fresh Start program. Applicant failed to take advantage of these opportunities. He did not present a plan to resolve his student loan accounts, and it appears he does not have the means to do so. Based on the record, I have significant reservations about Applicant’s security worthiness. In reaching this conclusion, I have also considered the whole-person factors at AG ¶ 2(d). Security clearance adjudications are not debt collection proceedings. Rather the purpose of the adjudication is to make “an examination of a sufficient period of a person’s life to make an affirmative determination that the person is an acceptable security risk.” (AG ¶ 2(a)) Furthermore, applicants are not held to a standard of perfection. All that is required is that he develop a plan for handling his delinquent accounts and executing a plan to do so. He has not provided a legitimate plan for resolving his delinquent debts. Accordingly, he has failed to meet his burdens of production and persuasion to mitigate the alleged concerns.

FORMAL FINDINGS

Formal findings for or against Applicant on the allegations set forth in the SOR, as required by section E3.1.25 of Enclosure 3 of the Directive, are: Paragraph 1, Financial Considerations: AGAINST APPLICANT Subparagraphs 1.a – 1.h: Against Applicant

CONCLUSION

In light of all of the circumstances presented, it is not clearly consistent with the national interest to grant Applicant a security clearance. Applicant’s eligibility for access to classified information is denied. Nichole L. Noel Administrative Judge