Yes, but it's taken out in enlisted service. I'm not aware of having to compensate the US Treasury by writing a check.
My college roommate left the Naval Academy a few weeks into his cow (Junior) year. He had to do 18 months on the deck of the USS Independence as "payback". They cut him loose after a single Eastern Med cruise, so he probably only did about half of the obligation.
If we are getting all of the information, then it is horrible for this cadet. First, you are beaten up while talking on a cell phone because you got too close to some diva’s luggage. You get to wake up with STAPLES in your head only to be told, “guess what, you’re demoted. Everything you busted your butt for up to now is gone”. If West Point demoted based on bad publicity or something stupid like that, SHAME on them. This story just keeps getting worse and worse.