Chicago Tribune Editorial Focuses on Solider Training to Combat Payday Loan Dilemma
By J.J. CameronPayday Loan Writer
We must place restrictions on military payday loans. This is an increasingly common cry from legislators around the nation.
While this is an important issue - because too many soldiers are denied security clearance due to financial issues that began by applying for some kind of payday loan online - there are alternatives to legilating the industry.
For example, a recent Chicago Tribune article focused on the need to simply educate military men on fiscal dilemmas. The solution makes sense to us.
The editorial began by talking about the Department of Defense and how it wants Congress to enact interest rate caps and other restrictions on cheap payday loans to military personnel. However, the piece is quick to point out, this is a problem the military should solve for itself.
Last year, the Navy and Marine Corps denied clearances to 2,000 personnel because of money problems, a 1,600 percent increase over five years. The Pentagon says those soldiers can't be sent overseas because their financial worries can be a serious distraction - or even a temptation to steal or commit espionage.
It's appalling, no doubt, that an Air Force E-4 could borrow $300 against his next paycheck and end up bankrupt after paying $2,700 over 18 months, to cite one example in the Pentagon report.
But there's an awful lot of bad judgment on display in the report's sob stories. Aren't soldiers aware of how dangerous payday cash advances can be?
The Center for Responsible Lending says military personnel are three times as likely as civilians to take out payday loans. Nearly one in five did so in 2004. It's easy to see why: They had few other options. The lenders may charge rates that many find excessive, but they serve a market most other lenders avoid: working people (often with bad credit) who need a few hundred dollars quickly.
Because they are young, financially inexperienced and conveniently congregated together, soldiers are particularly vulnerable to the debt trap, the Pentagon says. But training the troops is a far better solution than legislating faxless payday advance lenders.
Men and women who are ready to commit to defending their country should be presumed ready to make their own financial decisions - and their own mistakes.
