The DoD is in control of transfer eligibility (since they must certify that the member has served at least 6 years and agreed to serve 4 more years - different mechanisms of confirmation exist for each service).
This website provides general links and explanations concerning the DoD side of the transferability program:
Defense.gov - Special Report - Post 9/11 GI Bill
Under "Transferability Policy" there is a link to a DoD Memorandum outlining the regulations for transferability among the services.
There are some important points for clarification within the DoD memorandum:
DTM 09-003 p.14, Attachment 2, Section 3, Item 'a' states:
a. Eligible Individuals. Any member of the Armed Forces on or after August 1st, 2009, who, at the time of the approval of the individual's request to transfer entitlement to educational assistance under this section, is eligible for the Post 9/11 G.I. Bill, and
(1) [Omitted]
(2) Has at least 10 years of service in the Armed Forces (active duty and/or Selected Reserve) on the date of election, is precluded by either standard policy (Service or DoD) or statute from committing to 4 additional years, and agrees to serve for the maximum amount of time allowed by such policy or statute, or
(3) [Omitted]
This does not apply to the original poster's husband but it does apply (in my opinion) to future forum members. Any member is who found unfit by the PEB is precluded by both service regulations, DoD regulations, and statute from committing to an additional four years - the member also implicitly agrees to serve the maximum time allowed by such regulation(s)/statute(s) as he awaits his/her medical separation or retirement. So essentially, if you are over 10 years of service and are facing a MEB/PEB you are safe for transferability of your Post 9/11 G.I. Bill benefits (so long as you transfer them before you are retired/separated from active duty).
This is also important - DTM 09-003 p. 18, Attachment 2, Section 3, Item 'h':
h. Additional Administrative Matters.
(1) -(4) Omitted
(5) Failure to Complete Service Agreement
(a) Excepted as provided in paragraph 3.h.(5)(b) of this attachment, if an individual transferring entitlement under this section fails to complete the service agreed to by the individual under paragraph 3.a of this attachment in accordance with the terms of the agreement of the individual under that paragraph, the amount of any transferred entitlement under section 3 that is used by a dependent of the individual as of the date of such failure shall be treated as an overpayment of educational assistance and will be subject to collection by the DVA.
(b) Paragraph 3.h.(5)(a) of this attachment shall not apply in the case of an individual who fails to complete service agreed to by the individual due to:
1. The death of the individual,
2. Discharge or release from active duty or Selected Reserve for a medical condition which pre-existed the service of the individual and was not service- connected,
3. Discharge or release from active duty or Selected Reserve for hardship as determined by the Secretary of the Military Department concerned,
4. Discharge or release from active duty or Selected Reserve for a physical or mental condition, not a disability, that did not result from the individual's own willful misconduct, but did interfere with the performance of duty.
This regulation (as I originally had guessed) omits an EXTREMELY important piece of information - if the individual is released from service due to a service-connected disability, than the benefits are not subject to collection by the DVA. See the following post from the VA official Post 9/11 GI Bill Q&A section:
https://www.gibill2.va.gov/cgi-bin/...Xh0PW1lZGljYWwgZGlzY2hhcmdl&p_li=&p_topview=1
I checked the link and it should work. If not, the post states the following:
Currently, only the Army offers a Transfer of Entitlement program. If the person making the transfer fails to complete the 4 years (or more) of active duty service agreed to for transferability purposes, VA will treat any benefits paid to dependents as an overpayment and will collect the amount of the overpayment from the service member.
Exceptions to this rule apply if:
(1) The person making the transfer dies before completing the service.
(2) The person making the transfer is discharged from active duty under one of the following conditions:
- Service-connected disability;
- Medical condition that preexisted service;
- Hardship; or
- Physical or mental condition not characterized as a disability which interfered with the performance of duty and was not the result of the individual’s misconduct.
NOTE: Early discharge for convenience of the government or reduction in force does not qualify as one of the exceptions. Such a discharge will cause an overpayment of all benefits paid to dependents and result in collection of the overpayment.
For more information see
HERE.
So to reinforce Chinook's answer - I think your husband is safe so long as he transfers the benefits before he gets out! Great question!