I used to work with a guy who received over $300 a month - for life - because he fainted during a induction physical. (Like this lady, he was never sworn into any branch of armed forces)
If the termination was for medical reasons, that arose after her signing a contract, if she had performed in good faith and as reasonably requested, and there is nothing in the contract that clearly states that any failure to complete will result in repayment; there is someone out there who can get her home free and maybe with a nest egg.
Even if it states that repayment is due (immediately) if the student gets sick - particularly as a result of the training required by the USN - even the government would be hard pressed to enforce such a clearly discriminatory contract.
Having had to deal with the VA as well as the government in general, I've got to believe that this is a case of bureaucracy doing what it does best by screwing up an interpretation of policy to the detriment of the individual.
Never happen. You don’t get a va service connected disability if you never served. whoever told you that is an outright liar.