By Emily Baker

Killeen Daily Herald

FORT HOOD – Money problems are not uncommon in the military, and Fort Hood's financial experts hope several programs available to soldiers will prevent the need for expensive payday lending, which has come under scrutiny by the Pentagon in the past month.

With financial problems on the rise in the military – as illustrated by the 1,600-percent jump in the past five years in security clearances pulled or denied in the Navy and Marine Corps because of financial problems – the Defense Department submitted a report Aug. 10 to Congress asking for a 36 percent interest cap on payday loans to military personnel.

According to the report, 17 percent of military personnel have used payday loan companies, which typically build more stores near military installations than in non-military towns.

The report listed Fort Campbell, Ky.; Fort Hood; Fort Lewis and McChord Air Force Base, Wash.; the San Diego area; Duval County, Fla. (which contains a Naval air station); and the Tidewater, Va. region (which also contains a Naval air station) as having the highest concentration of payday lending businesses.

To obtain a payday loan, a postdated personal check for, say, $115 is written, and the person seeking the loan is given $100. The check is cashed in two weeks and, if the person seeking the loan is not able to cover that check, a cycle of fees begins until the full amount, with interest, is paid, said Karen Bradshaw, manager of Army Community Service's financial readiness branch at Fort Hood.

"That's not bad if you are able to pay it in two weeks," Bradshaw said. "But, if you can't, the APR on that is 390 percent."

The Army offers two types of interest-free loans to active-duty soldiers. The commander's referral program provides a $1,000 interest-free loan with little paperwork.

"It is the closest thing to a signature loan we can offer," Bradshaw said.

Soldiers can get up to two commander's referral loans per year, but they must pay off the first before they can receive the second, she said.

The loan application simply requires the signature of a soldier's company-level commander or first sergeant. The money can be applied only to the areas covered by Army Emergency Relief loans, the second type of interest-free loans available to active-duty soldiers.

The AER loans can be obtained for help with food, rent, utilities, emergency transportation and vehicle repairs, funeral expenses, medical and dental bills and to help with necessary bills when pay is delayed or stolen.

Grants that do not need to be paid back also are available through AER to help with the same expenses.

While the commander's referral program is open only to active-duty soldiers, the AER loans and grants are open to active-duty dependents, Army National Guardsmen and Reservists on 30 days or more continuous active duty and their dependents, Guardsmen and Reservists who retire at age 60 and their dependents, spouses and orphans of retirees or soldiers who died while on active duty and retirees and their dependents.

More than $4 million in assistance was given to Fort Hood soldiers and dependents during the past fiscal year, which began Oct. 1, 2005 and ended Saturday.

Of that, nearly $2.4 million was in commander's referral loans.

For the AER loans, the majority of the loans – about $552,000, or about 32 percent of all loans – was spent on rent. The next highest amount – about $467,000, or about 28 percent of all loans – was spent on car repairs.

The Army also offers its own payday loan with a $6 flat fee for a loan of $500 or 80 percent of a person's net pay through the Pentagon Federal Credit Union Foundation. Soldiers who receive these loans must receive financial counseling through Bradshaw's office.

Questions e-mailed to III Corps' Judge Advocate General about how many soldiers request legal help for their debt had not been answered by the close of business Friday.

For more information on commander's referral or AER loans or for information about classes open to military personnel, dependents and retirees about financial planning and debt management, contact Bradshaw at 287-8500.

Contact Emily Baker at

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