Student Loans While on Active Duty

Not all service members elect for the traditional process of leaving the military before going back to school. Many decide that they have the time, commitment and follow through to start taking classes while still on active duty. While those adventurous few go down the path towards academically improving themselves, there are many questions to be asked about paying for school.

Active duty surely has its perks. For those who joined after September 10, 2001, they are eligible for the Post-911 GI Bill. This includes the yellow ribbon program and the ability to transfer it to a family member. Those prior, or who originally signed up for the MGI-Bill, can also transition to the Post-911 GI Bill if they met the service requirements.

For many though, the prospect of using the Post-911 GI Bill and losing the housing stipend seems too much to bear, so they take on the student loans to help pay for school. The Department of Education has a benefit specific to Active Duty Service members. It stipulates that they shall not pay more than six percent interest on student loans. The problem, is that many of the organizations that provide the loans are under no obligation to utilize the Department of Defense’s database of active troops for screening purposes.

student-loansThis requires that a service member actively be aware of the requirement, and follow up with the financial institution to receive their six percent or less interest rate. While it is important that service members be aware of their rights, this is not covered under the Servicemembers Civil Relief Act (SCRA). Therefore, it is not a common knowledge.

A recent inquiry by the GAO determined that many of the documents available on the Department of Defense website to inform service members were neither complete, nor did they fully explain the rights in regards to student loans.

When the lack of knowledge is combined with the lack of requirements for financial institutions to utilize the database, the onus fell to the service member. Requests by service members to have their records reviewed by financial institutions to fix their loan rates increased from 107 in October 2008 to 108,710 in 2015. The number of people who benefited from having their caps corrected increased from 14,970 in September 2014 to 33,309 in March of 2016.

These numbers are sincerely staggering. Each of those 108,710 inquiries requires time for people to check a military identification against the database. The reality is that this should have been an automated process done at the beginning. Since the financial institutions require name and social security information to issue loans in the first place, it is an easy process to verify at the beginning of the process. Requiring it to be done later only adds to the burden on the service member and the process as a whole.

As any corrections are retroactive, financial institutions have a sincere benefit to checking the information at the beginning. Changes in quarterly earnings reflects a loss in shareholder confidence for significant corrections. It is also difficult to estimate profit over time and therefore determine risk when proper assessments are not being performed. It is therefore in the best interest of all parties involved to incorporate this step into the SCRA and to require it to be implemented at the very beginning of the loan process.

Disclaimer: The content in this article is the opinion of the writer and does not necessarily reflect the policies or opinions of US Patriot Tactical.

Kyle Soler

Kyle Soler is an active duty Infantry Officer serving in the US Army. He has served in the military for more than 10 years, working his way from an Infantry Squad Leader to a Company Commander with multiple combat deployments to both Iraq and Afghanistan in between. Kyle earned his bachelor’s degree in History from Willamette University, and three Master degrees from Jones International University in Information Security Management, Health Care Management, and International Business. He also holds certifications in Six Sigma Lean and Six Sigma Lean Black Belt. His primary focus is realigning organizational priorities to get the most out of the time available in terms of training and development. Prior to entering military service, he worked as a fire fighter and an EMT. His areas of knowledge include military, training, leadership, disaster and continuity planning.
Kyle Soler

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