Student loan debt among military service members is mounting and the Pentagon has recently announced its concern over the issue.
A report recently released says that military members are having trouble understanding the student loan benefits they can receive. Because of this misunderstanding, they are incurring tens of thousands more dollars in debt than they need to.
The Pentagon’s Concern
About 41 percent of military members have student loan debt, according to one survey. Financial troubles are among the primary reasons why a service member’s security clearance is jeopardized. This means that too much debt could harm one’s military career, and it seems that paying it off isn’t getting easier.
“It should be easier, not tougher, for servicemembers to pay off their student debts,” Defense Secretary Leon Panetta said at a Pentagon briefing with Holly Petraeus, assistant director for the Office of Servicemember Affairs at the federal Consumer Financial Protection Bureau (CFPB).
Panetta said that troops often fall victim to “unscrupulous financial practices” in their attempts to pay off their loans. Many military members complained that financial institutions did not properly explain what benefits soldiers receive, or what would happen to a loan if, for instance, payment was deferred. One service member found that his $61,000 in student loans rose to $85,000 after he deferred his payment for five months, the report said.
Paying Off Student Debt
In response the U.S. government is starting a program to help military members with student loan debt become aware of what benefits they have and how they can lower their debt. The Pentagon will partner with the Consumer Financial Protection Bureau.
The benefits military members can receive are:
- Reductions in monthly payments based on income and family size
- Loan forgiveness after a certain number of payments for some loans
- A reduction in the amount of principal for each year of military service
- A reduction in the interest rate to 6 percent during active duty service on loans taken on prior to joining
- Payment deferrals during active duty service
In addition to the benefits, it helps to know some strategies to help pay down student loan debt.
Photo courtesy Utah National Guard