Army Officials to Enlisted Juniors: Borrow Us, Not Payday Lenders

A change to ArmyThe Air Force loan program seeks to steer young soldiers away from payday lenders by giving them easier access to emergency funds, the service’s senior enlisted officer said this week.

The change, which comes into effect on September 9, removes a rule requiring soldiers in enlisted ranks E-1 through E-4 to obtain approval from their commanding officer or first sergeant before applying for a loan through Army Emergency Relief. (AER) program.

Under the new policy, any enlisted soldier who has served at least one year, has completed Basic and Advanced Individual Training (AIT) and is not listed as high financial risk can apply directly to the AER for a loan. .

“Many soldiers, especially those in grades E-1 to E-4, are reluctant to seek help from the army’s emergency services,” said Sgt. Army Maj. Daniel Dailey wrote to senior enlisted leaders via an email recently obtained by “Often this is due to an undue negative stigma associated with applying for financial assistance as well as the perceived and intimidating review process involving unit heads.”

He added: “I fully support this policy change and expect all leaders to embrace it to help rid our ranks of the undue negative stigma associated with seeking help through the AER.

Payday lenders often open a store directly outside of military bases, creating a convenient way for the military to receive quick loans. But these loans often carry very high interest rates, sometimes over 300%, according to a 2014 report from the Consumer Financial Protection Bureau. Many of them send troops into a spiral of debt.

“The idea is to make assistance more accessible to soldiers and their families,” said Guy Shields, an AER spokesperson. “We believe it is the right thing to do.”

The change was approved in July by the AER board of directors made up of 20 directors, including Dailey.

The AER provides soldiers with interest-free loans or grants on a case-by-case basis for needs such as emergency travel, food, utilities, rent, or medical expenses. Applicants complete an application form and provide documents indicating their needs. There is no loan cap, although soldiers are limited to two AER loans per year without command approval. Troops, regardless of rank, can also go through their commanding officer for immediate loan approval of up to $ 1,500.

Loans are usually repaid by awarding paychecks, which cannot be cleared by the soldier. Soldiers who refuse to reimburse may be sanctioned through their chain of command.

Under the new policy, AER employees will have the discretion to require the commander’s or first sergeant’s approval for a new loan if they determine the soldier is at high financial risk, Shields said. Soldiers will also continue to be referred by loan officers to army community service financial advice, when appropriate, he said.

Supporters of the military family hailed the change.

“We believe anything is better than a high interest rate loan,” said Amanda Anderson, spokesperson for the Association of the United States Army. “It’s great that the AER is offering this to families so that they have another place to turn to instead of going to these places. Junior enlisted members don’t always have the savings when an emergency arises. . It’s great that a trusted organization like AER can step in – and help them. “

In 2014, the AER distributed over $ 57 million in loans and nearly $ 16 million in grants and scholarships. That year, the soldiers of Fort Hood, Texas, received over $ 5.3 million in loans and grants – more aid than troops at any other base.

The AER is funded by donations, often made through allocations of soldiers’ paychecks. In 2014, the AER received $ 9.7 million in donations, while approximately $ 53.6 million in loans were repaid by soldiers.

An earlier version of this story incorrectly stated how loan repayments can be collected. Unlike other public debts, AER loans are not subject to the IRS.

– Amy Bushatz can be reached at [email protected].

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