Soldiers from the California Army National Guard have been ordered to return enlistment bonuses they received a decade ago. (Credit: California Army National Guard)

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House and Senate negotiators announced a compromise Tuesday that would permit the Pentagon to forgive debts owed by thousands of California National Guard soldiers who received improper bonuses during the height of the wars in Iraq and Afghanistan.

The agreement, included in a defense bill due to be voted on by the House on Friday and the Senate next week, seeks to strike a balance between the Pentagon’s concerns about fraud in the bonus system and lawmakers’ attempts to resolve a scandal that has hurt thousands of military veterans and sparked a public furor.

The compromise calls on the Pentagon to forgive the enlistment bonuses and student loan benefits unless the soldier who received the money “knew or reasonably should have known” that he or she was ineligible for it.

The provision stops short of requiring the Pentagon to forgive debts owed by all California Guard soldiers as long as they fulfilled the terms of their enlistment contracts and did not commit fraud — a far more sweeping waiver that members of the California delegation had proposed.

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