Navy LT considered resigning commission to attend Dartmouth?

This is complicated.

First, when he joined the Naval Academy, he takes on an obligation time frame just like an enlisted does. In this case it appears to be 5 years.

Second, we all have goals. One of his primary goals was to get a Masters Degree. An opportunity presented where he could get one at a "top tier" school. That put him into a position where his primary goal was in direct conflict with his Naval Career.

It did not however place him in conflict with his obligation time frame. He had already paid back the time he owed. So he's stuck in the choice of choosing between himself and the Navy. What do you do? The Navy will not always be there for you. He pursued his primary goal with the better long term payout. And I can't blame him for that.

Now, his CoC actually asked him what was going on. Good on them. They found out he didn't actually want to get out, but he had an opportunity which was too good to pass up, and there was a case of "who you know" which made things work.

Sec Mabus & Sec Carter have been talking about how we are losing too many people because of these conflicts for about a year. They're right. We have. I had to make a similar decision 13 years ago. I don't regret it, but I do wonder what might have been, and if I got a phone call today, I'd be wearing a uniform tomorrow, regardless the number of stripes on my sleeves.

So, what we really have here, is the Navy holding onto an "investment" they already made. As you said, they already spent half a million dollars on him. He's going to walk out the door. And there's nothing they can do about it... or... they can. They can "make all his dreams come true." And in 2 years when he finishes this grad program, he's got another 5 year payback, and 12~ years in, and over the half-way mark, sitting on LCdr, thinking "I can do 20, no sweat."

1) His picture clearly shows a SWO pin, not pilot's wings, meaning his contract was expired. Most SWOs leave at the end of their first contract.
2) His command showed interest in him for a program specifically designed to keep people like him in the Navy, which I reiterate would not otherwise happen because his contract was up, and they pushed it through because it was mutually beneficial. You would undoubtedly appreciate the same from your command.
3) Have a Snickers. You get angry when you're hungry.

So, he has already served out his commitment. If he were just getting out and not going to Dartmouth, would you have a problem with it?

To me, this seems pretty consistent with what the DoD has been trying to implement with the "career intermission" program...allow people to take a year or two off in order to pursue a personal goal, then come back to the military. This seems like a win to me...instead of losing what is, according to the story, a sharp young officer just because he doesn't want to lose the chance to go to graduate school, instead we gain a mid-level CGO with a new commitment timeline and a healthy civilian education, which will help him bring new ideas and innovations to the table. And it still costs less than producing a new officer from scratch.