I bought a E-Flight T34 Mentor, the plane came with a charger and a battery. My problem is that the batteries seem to go bad after about three charges. The charger is set at 3 Cells @ 1.5Amps. Two batteries have swollen up and the other will not come to a full charge.

I'd take them back where you bought them - thats not right. I have a EFlite MCX heli and I've used the lipo thatcame with it 100s of times. I'm just getting started with CX2, but its lipo has already been charged over 10times.

Take the charger with you, have them check it out - it could be charger is bad.

You should be getting a lot more charges than what you're seeing.

I talked to the Technician at Horzon Hobby and he said that if you go out and fly and don't recharge the battery soon after, the charge level can drop below threshold and cause the battery to swell.
I'm not sure if this is what happened but I don't moniter the voltage as they suggested.
B.Byrd

You can't overdischarge lipo - running them below ~3v/cell can cause damage (swelling). You need some kind of warning. There's an audible alarm with a flashing light that generates various combos of alarm and light based on what batt voltage. You need something like that or maybe just a timed flight so it's short enough to keep your lipos from overdischarging.

Its not a good idea to just run them as low as you want to and depend on immediate recharging to keep them from swelling. Dropping below ~3v/cell will cause damage, if it doesn't swell, cycle life will be reduced.