The U.S. military expresses worry over mounting student loan debts of American troops, claiming that loan companies seem to take advantage of the U.S. forces.
According to a survey, about 41 percent of the U.S. armed forces have taken out student loans, and according to Pentagon Officials, financial troubles are the top common problems among troops. Sometimes, official said, it even tops anxiety over war itself.
Defense Secretary Leon Panetta, in an interview, told reporters that the top reason why many troops are not able to secure security clearances was financial troubles, such as mounting credit card bills, student loans and mortgages. Panetta said that this problem is one of the important things that the military will have to address soon, adding that paying off their college debt and other debts shouldn’t be tough considering the privileges that are given to active duty service members.
However, it appears that the growing student loan burden in the military is the trend in the U.S. generally, especially since the recession. In fact, a study by the College Access and Success in California shows that two-thirds of those who finished college last year had taken out student loans, and that each of these borrowers had borrowed an average of $26,000.
The Pentagon report also shows that in 2008, many active duty service members graduating from college had a student loan of $25,566.
High Interest Rates
What the military is concerned about, however, is the interest rates charged on their loans. Active duty service members, according to the Pentagon, should benefit from laws such as the Servicemembers Civil Relief Act (SCRA), which is meant to help them manage their student loans. During active service, the interest rates charged on a member’s loan incurred even prior to service should be cut to 6 percent.
Panetta further added that the U.S. military report serves as warning to lenders that guiding the troops into unfavorable debt repayment plans or refusing them of their legal benefits clearly violates the law.
Holly Petraeus, an official with the U.S. Consumer Protection Bureau, has also noted reports on 300 improper foreclosure, in addition to reports on rising amount of students loans taken out by young service members.