Military Families and Financial Readiness

Changes from December 9, 2021 to January 12, 2022

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Military Families and Financial Readiness
~~December 9, 2021~~January 12, 2022
DOD identifies DOD identifies financial readiness as one of the major components of military family readiness as one of the major components of military family readiness
and, ultimately, operational readiness. It has been defined as, “the state in which successful and, ultimately, operational readiness. It has been defined as, “the state in which successful
Kristy N. Kamarck
management of personal financial responsibilities supports a servicemember’s ability to perform management of personal financial responsibilities supports a servicemember’s ability to perform
Specialist in Military Specialist in Military
their wartime responsibilities.” Congress, under its constitutional authority to regulate the their wartime responsibilities.” Congress, under its constitutional authority to regulate the
Manpower Manpower
military, has oversight for readiness issues and related DOD efforts. Over the past several military, has oversight for readiness issues and related DOD efforts. Over the past several

decades, Congress and DOD have taken action through law and regulation to improve military decades, Congress and DOD have taken action through law and regulation to improve military
readiness, including enhancing military consumer protections, increasing financial literacy of readiness, including enhancing military consumer protections, increasing financial literacy of

servicemembers and dependents, and providing direct financial support to the lowest-income or servicemembers and dependents, and providing direct financial support to the lowest-income or
otherwise vulnerable families during times of need or national emergency. otherwise vulnerable families during times of need or national emergency.
While servicemember compensation compares favorably to civilian compensation for employees with the same levels of While servicemember compensation compares favorably to civilian compensation for employees with the same levels of
education and experience, total compensation is just one determinant of financial readiness. Financial readiness for military education and experience, total compensation is just one determinant of financial readiness. Financial readiness for military
families also depends on other factors like budgeting, debt management, and sound financial planning. Certain aspects of families also depends on other factors like budgeting, debt management, and sound financial planning. Certain aspects of
military service can make personal financial management more challenging (e.g., frequent or unpredictable deployment military service can make personal financial management more challenging (e.g., frequent or unpredictable deployment
cycles and permanent change-of-station moves). Approximately 40% of the total DOD military force is 25 years old or cycles and permanent change-of-station moves). Approximately 40% of the total DOD military force is 25 years old or
younger. DOD survey data have found generally that junior enlisted servicemembers experience lower levels of financial younger. DOD survey data have found generally that junior enlisted servicemembers experience lower levels of financial
well-being than officers. Data also suggest that Reserve Component (RC) members may experience financial instability at well-being than officers. Data also suggest that Reserve Component (RC) members may experience financial instability at
higher rates than active duty members; moreover, depending on their duty status, RC members may not be consistently higher rates than active duty members; moreover, depending on their duty status, RC members may not be consistently
eligible for the same military-specific consumer protections as their active duty counterparts. eligible for the same military-specific consumer protections as their active duty counterparts.
The Armed Services Committees may consider initiatives to improve military family financial readiness or to modify The Armed Services Committees may consider initiatives to improve military family financial readiness or to modify
compensation and benefits during the annual defense authorization and appropriations processes. While Armed Services are compensation and benefits during the annual defense authorization and appropriations processes. While Armed Services are
the primary committees of jurisdiction for military regulations, the Senate Banking, Housing, and Urban Affairs and House the primary committees of jurisdiction for military regulations, the Senate Banking, Housing, and Urban Affairs and House
Financial Services committees have purview over financial market regulations. These latter committees might consider Financial Services committees have purview over financial market regulations. These latter committees might consider
legislation regarding military-specific financial regulations, their implementation, and enforcement. legislation regarding military-specific financial regulations, their implementation, and enforcement.

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Contacts
Author Information ........................................................................................................................ 2324

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Military Families and Financial Readiness

Introduction
As the Department of Defense (DOD) develops policies and programs for recruitment, retention, As the Department of Defense (DOD) develops policies and programs for recruitment, retention,
morale, and operational readiness it takes into account servicemember and military family morale, and operational readiness it takes into account servicemember and military family
readiness.1 DOD identifies readiness.1 DOD identifies financial readiness as one of the major components of family as one of the major components of family
readiness, and ultimately operational readiness. It has been defined as, “the state in which readiness, and ultimately operational readiness. It has been defined as, “the state in which
successful management of personal financial responsibilities supports a servicemember’s ability successful management of personal financial responsibilities supports a servicemember’s ability
to perform their wartime responsibilities.”2 DOD evaluates financial readiness through measures to perform their wartime responsibilities.”2 DOD evaluates financial readiness through measures
of financial stability and security. of financial stability and security.
For servicemembers, financial instability can damage well-being, morale, productivity, and job For servicemembers, financial instability can damage well-being, morale, productivity, and job
performance. DOD surveys have found that those who report financial management challenges performance. DOD surveys have found that those who report financial management challenges
are more likely to express dissatisfaction with military compensation, coworkers, and the overall are more likely to express dissatisfaction with military compensation, coworkers, and the overall
military way of life. Serious financial issues, like over-indebtedness or bankruptcy, can lead to military way of life. Serious financial issues, like over-indebtedness or bankruptcy, can lead to
loss of security clearance3, administrative sanctions, or even involuntary discharge from the loss of security clearance3, administrative sanctions, or even involuntary discharge from the
military.4 In 2014, DOD estimated that 80% of security clearance revocations and up to 4,703 military.4 In 2014, DOD estimated that 80% of security clearance revocations and up to 4,703
separations each year are related to financial difficulties. Unplanned personnel losses are costly to separations each year are related to financial difficulties. Unplanned personnel losses are costly to
the military in terms of the loss of investment in the servicemember’s recruitment, training, and the military in terms of the loss of investment in the servicemember’s recruitment, training, and
education. Individual financial woes may also contribute to unit readiness issues if the affected education. Individual financial woes may also contribute to unit readiness issues if the affected
personnel are ineligible to participate in training and operations due to losing a security clearance, personnel are ineligible to participate in training and operations due to losing a security clearance,
or if administrative burdens draw leaders’ attention away from mission-essential tasks. or if administrative burdens draw leaders’ attention away from mission-essential tasks.
Congress, under its constitutional authority to regulate the military, has oversight of readiness Congress, under its constitutional authority to regulate the military, has oversight of readiness
issues and can mandate policies and programs for DOD implementation. The Armed Services issues and can mandate policies and programs for DOD implementation. The Armed Services
committees may consider initiatives to improve military family financial readiness or to modify committees may consider initiatives to improve military family financial readiness or to modify
compensation and benefits during defense authorization and appropriations processes. While compensation and benefits during defense authorization and appropriations processes. While
Armed Services are the primary committees of jurisdiction for military regulations, the Senate Armed Services are the primary committees of jurisdiction for military regulations, the Senate
Banking, Housing, and Urban Affairs and House Financial Services committees have purview Banking, Housing, and Urban Affairs and House Financial Services committees have purview
over financial market regulations. These latter committees might consider legislation regarding over financial market regulations. These latter committees might consider legislation regarding
military-specific financial regulations, their implementation, and enforcement. military-specific financial regulations, their implementation, and enforcement.
This report focuses primarily on legislative history and policy options for improving financial This report focuses primarily on legislative history and policy options for improving financial
readiness of military servicemembers and their families, including servicemember-specific readiness of military servicemembers and their families, including servicemember-specific
consumer protections and financial literacy initiatives. This report does not address the financial consumer protections and financial literacy initiatives. This report does not address the financial
health and financial support programs that support military veterans or DOD civilians. It also health and financial support programs that support military veterans or DOD civilians. It also
does not address financial sector law and regulations that provide consumer protections more does not address financial sector law and regulations that provide consumer protections more
broadly for all U.S. citizens.5 broadly for all U.S. citizens.5

1 DOD, 1 DOD, Military Family Readiness, DODI 1342.22, August 5, 2021. , DODI 1342.22, August 5, 2021.
2 Office of the Undersecretary of Defense for Personnel and Readiness, 2 Office of the Undersecretary of Defense for Personnel and Readiness, Directive-type Memorandum (DTM) 19-009 –
—Financial Readiness Common, August 13, 2019. , August 13, 2019.
3 A credit history is component of all national security background investigations. See, DOD, 3 A credit history is component of all national security background investigations. See, DOD, Procedures for the DOD
Personnel Security Program (PSP), DODM 5200.02, October 29, 2020. , DODM 5200.02, October 29, 2020.
4 Department of Defense, “Limitations on Terms of Consumer Credit Extended to Service Members and Dependents,” 4 Department of Defense, “Limitations on Terms of Consumer Credit Extended to Service Members and Dependents,”
Federal Register, DOD-2013-OS-0133, November 28, 2014. Federal Register, DOD-2013-OS-0133, November 28, 2014.
5 For more on consumer finance and consumer protection policies, see CRS Report R45813, 5 For more on consumer finance and consumer protection policies, see CRS Report R45813, An Overview of Consumer
Finance and Policy Issues, by Cheryl R. Cooper. , by Cheryl R. Cooper.
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Military Compensation
The perceived adequacy of military compensation is often a subject of concern from broad swaths The perceived adequacy of military compensation is often a subject of concern from broad swaths
of the electorate. There is general consensus that military servicemembers should be adequately of the electorate. There is general consensus that military servicemembers should be adequately
compensated for particular hazards and hardships associated with service, including deployments compensated for particular hazards and hardships associated with service, including deployments
to hostile environments, frequent moves, long and inflexible hours, and other strenuous work to hostile environments, frequent moves, long and inflexible hours, and other strenuous work
conditions. As such, reports of military servicemembers facing financial instability, visiting food conditions. As such, reports of military servicemembers facing financial instability, visiting food
banks or qualifying for welfare programs often lead to calls for congressional action to increase banks or qualifying for welfare programs often lead to calls for congressional action to increase
military pay.6 Yet, several recent studies have found that military compensation compares military pay.6 Yet, several recent studies have found that military compensation compares
favorably with civilian compensation for those with the same level of education and experience. favorably with civilian compensation for those with the same level of education and experience.
Past Congresses have taken action to modify military pay scales or otherwise increase cash and Past Congresses have taken action to modify military pay scales or otherwise increase cash and
noncash benefits to make servicemember pay competitive with civilian pay for equivalent noncash benefits to make servicemember pay competitive with civilian pay for equivalent
education and experience. Meaningful comparisons with civilian compensation are predicated on education and experience. Meaningful comparisons with civilian compensation are predicated on
an understanding of the elements of military pay. Every servicemember is entitled to military an understanding of the elements of military pay. Every servicemember is entitled to military
basic pay and the level of pay depends on the member’s paygrade (rank) and years of service.7 and the level of pay depends on the member’s paygrade (rank) and years of service.7
Basic pay is typically the largest component of cash compensation for servicemembers.8 Basic pay is typically the largest component of cash compensation for servicemembers.8
However, when making comparisons with civilian compensation, analysts typically use a measure However, when making comparisons with civilian compensation, analysts typically use a measure
called called Regular Military Compensation (RMC), which takes into account the total cash value (RMC), which takes into account the total cash value
servicemembers receive from the government. RMC is statutorily defined and includes (1) basic servicemembers receive from the government. RMC is statutorily defined and includes (1) basic
pay, (2) basic allowance for housing, (3) basic allowance for subsistence, and (3) the federal tax pay, (2) basic allowance for housing, (3) basic allowance for subsistence, and (3) the federal tax
advantage accruing to allowances that are not subject to federal income tax.9 advantage accruing to allowances that are not subject to federal income tax.9 See Table 1 for a for a
sample comparison of basic pay and RMC. sample comparison of basic pay and RMC.
Table 1. Sample Comparison of Annual Basic Pay and RMC for Single
Servicemembers
2021 2021
Pay Grade and Years of Service
Annual Basic Pay
Estimated Annual RMC
E-3 (enlisted) with under 2 years of service E-3 (enlisted) with under 2 years of service
$25,247 $25,247
$48,844 $48,844
E-7 (enlisted) with 16 years of service E-7 (enlisted) with 16 years of service
$58,741 $58,741
$91,534 $91,534
O-2 (officer) with 2 years of service O-2 (officer) with 2 years of service
$53,312 $53,312
$83,454 $83,454
O-4 (officer) with 12 years of service O-4 (officer) with 12 years of service
$96,800 $96,800
$136,000 $136,000
Source: DOD, Selected Military Compensation Tables, January 1, 2021, Cash Allowance Tables by Pay Grade DOD, Selected Military Compensation Tables, January 1, 2021, Cash Allowance Tables by Pay Grade
and Family Size. and Family Size.
DOD’s benchmark goal for RMC is the 70th percentile for comparable civilian wages and DOD’s benchmark goal for RMC is the 70th percentile for comparable civilian wages and
salaries.10 This is the level at which prior research determined that DOD could be competitive in salaries.10 This is the level at which prior research determined that DOD could be competitive in

6 See for example, Dorian Merina, “When Active-Duty Service Members Struggle to Feed Their Families,” 6 See for example, Dorian Merina, “When Active-Duty Service Members Struggle to Feed Their Families,” National
Public Radio, April 19, 2017; and Cynthia McFadden, Christine Romo, and Kenzi Abou-Sabe, “Why are many of , April 19, 2017; and Cynthia McFadden, Christine Romo, and Kenzi Abou-Sabe, “Why are many of
America's military families going hungry?,” America's military families going hungry?,” NBC News, July 12, 2019. , July 12, 2019.
7 See military pay tables at https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables/. 7 See military pay tables at https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables/.
8 Congressional Budget Office, 8 Congressional Budget Office, Approaches to Changing Military Compensation, January 2002, , January 2002,
https://www.cbo.gov/system/files/2020-01/55648-CBO-military-compensation.pdf. https://www.cbo.gov/system/files/2020-01/55648-CBO-military-compensation.pdf.
9 37 U.S.C. §101(25). For more on RMC and military pay, see CRS Report RL33446, 9 37 U.S.C. §101(25). For more on RMC and military pay, see CRS Report RL33446, Military Pay: Key Questions and
Answers, by Lawrence Kapp and Barbara Salazar Torreon, and CRS In Focus IF10532, , by Lawrence Kapp and Barbara Salazar Torreon, and CRS In Focus IF10532, Defense Primer: Regular
Military Compensation, by Lawrence Kapp. , by Lawrence Kapp.
10 10 Report of the Ninth Quadrennial Review of Military Compensation, Volume 1, March 2002. , Volume 1, March 2002.
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Military Families and Financial Readiness

recruiting and retaining the required quality and quantity of personnel.11 Recent studies have recruiting and retaining the required quality and quantity of personnel.11 Recent studies have
found that military compensation meets or exceeds this benchmark; with enlisted RMC at about found that military compensation meets or exceeds this benchmark; with enlisted RMC at about
84th to 90th percentile of civilian wages and officer RMC between the 70th to 80th percentile.12 84th to 90th percentile of civilian wages and officer RMC between the 70th to 80th percentile.12
Along with RMC, servicemembers and their eligible family members also receive several other Along with RMC, servicemembers and their eligible family members also receive several other
benefits such as discounted groceries and household items at military commissaries, free or benefits such as discounted groceries and household items at military commissaries, free or
reduced price access to gym and recreation facilities, subsidized childcare, and no-cost or low-reduced price access to gym and recreation facilities, subsidized childcare, and no-cost or low-
cost medical and dental care. Finally, some members also receive deferred compensation in the cost medical and dental care. Finally, some members also receive deferred compensation in the
form of a life-long pension and health benefits for military retirees, and certain benefits from the form of a life-long pension and health benefits for military retirees, and certain benefits from the
Department of Veterans’ Affairs for eligible retirees and veterans.13 Department of Veterans’ Affairs for eligible retirees and veterans.13
Servicemember Financial Management Challenges
Compensation and benefits are one component of financial readiness; however, financial security Compensation and benefits are one component of financial readiness; however, financial security
for military families also depends on other factors. According to one study’s findings, “financial for military families also depends on other factors. According to one study’s findings, “financial
problems [among servicemembers] are shaped by spending patterns and management skills rather problems [among servicemembers] are shaped by spending patterns and management skills rather
than by income itself.”14 Certain aspects of military service can make personal financial than by income itself.”14 Certain aspects of military service can make personal financial
management more challenging than it is for many civilians. For example, frequent or management more challenging than it is for many civilians. For example, frequent or
unpredictable deployment cycles, and limited access to digital or postal communications while unpredictable deployment cycles, and limited access to digital or postal communications while
deployed, could lead to delays in meeting financial commitments (e.g., loan or utility deployed, could lead to delays in meeting financial commitments (e.g., loan or utility
payments).15 Frequent change-of-station moves can make it more difficult for a member’s spouse payments).15 Frequent change-of-station moves can make it more difficult for a member’s spouse
to maintain consistent employment and earnings.16 A family accustomed to budgeting with two to maintain consistent employment and earnings.16 A family accustomed to budgeting with two
income streams might struggle with debt payments following a move to a duty station where the income streams might struggle with debt payments following a move to a duty station where the
military spouse is unable to find employment or where remuneration levels are significantly military spouse is unable to find employment or where remuneration levels are significantly
lower for similar work. As noted by one Marine Corps spouselower for similar work. As noted by one Marine Corps spouse,
The bills we built on two incomes quickly led us to debt,” she said. “Debt led us to be The bills we built on two incomes quickly led us to debt,” she said. “Debt led us to be
unable to do certain things, like pay bills on time, and spiraled to almost having a car unable to do certain things, like pay bills on time, and spiraled to almost having a car
repossessed. We got to a place where we couldn’t afford groceries for daily needs.17 repossessed. We got to a place where we couldn’t afford groceries for daily needs.17

11 Beth J. Asch, 11 Beth J. Asch, Setting Military Compensation to Support Recruitment, Retention, and Performance, RAND , RAND
Corporation, Santa Monica, CA, 2019. Corporation, Santa Monica, CA, 2019.
12 Comparisons are based on weighted averages taking into account education level and age. 12 Comparisons are based on weighted averages taking into account education level and age. Report of the Thirteenth
Quadrennial Review of Military Compensation, Volume 1. Main Report, December 2020, p. 6. Congressional Budget , Volume 1. Main Report, December 2020, p. 6. Congressional Budget
Office, Office, Approaches to Changing Military Compensation, January 2020, p. 16. , January 2020, p. 16.
13 See CRS Report RL34751, 13 See CRS Report RL34751, Military Retirement: Background and Recent Developments, by Kristy N. Kamarck, CRS , by Kristy N. Kamarck, CRS
Report R42747, Report R42747, Health Care for Veterans: Answers to Frequently Asked Questions, by Sidath Viranga Panangala and , by Sidath Viranga Panangala and
Jared S. Sussman, CRS Infographic IG10009, Jared S. Sussman, CRS Infographic IG10009, The Road to Veterans Benefits, by Kristy N. Kamarck and Sidath , by Kristy N. Kamarck and Sidath
Viranga Panangala, and CRS Report RS22804, Viranga Panangala, and CRS Report RS22804, Veterans’ Benefits: Pension Benefit Programs, by Scott D. Szymendera , by Scott D. Szymendera
and Carol D. Davis. and Carol D. Davis.
14 Richard Buddin and D. Phong Do, 14 Richard Buddin and D. Phong Do, Assessing the Personal Financial Problems of Junior Enlisted Personnel, RAND , RAND
Corporation, January 2002. Corporation, January 2002.
15 Richard Buddin and D. Phong Do, 15 Richard Buddin and D. Phong Do, Assessing the Personal Financial Problems of Junior Enlisted Personnel, RAND , RAND
Corporation, January 2002, p. xiv. Although there have been advances in online banking and bill-paying, Corporation, January 2002, p. xiv. Although there have been advances in online banking and bill-paying,
servicemembers may not have unfettered access to digital communication while in a deployed or operational status. servicemembers may not have unfettered access to digital communication while in a deployed or operational status.
16 For more on spouse employment, see CRS Report R46498, 16 For more on spouse employment, see CRS Report R46498, Military Spouse Employment, by Kristy N. Kamarck, , by Kristy N. Kamarck,
Barbara L. Schwemle, and Sofia Plagakis. Barbara L. Schwemle, and Sofia Plagakis.
17 Karen Jowers, "First lady says more money needed to fight hunger in military families," 17 Karen Jowers, "First lady says more money needed to fight hunger in military families," MilitaryTimes, October 15, , October 15,
2021. 2021.
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Permanent change-of-station (PCS) moves, while paid for by the military, may impose additional Permanent change-of-station (PCS) moves, while paid for by the military, may impose additional
financial burdens for example, with the costs of establishing a new household (e.g., financial burdens for example, with the costs of establishing a new household (e.g.,
security/utility deposits), or fees associated with buying/selling a home. security/utility deposits), or fees associated with buying/selling a home.
The military has a relatively young workforce; approximately 40% of the total DOD military The military has a relatively young workforce; approximately 40% of the total DOD military
force is 25 years old or younger.18 There is some evidence that junior enlisted servicemembers force is 25 years old or younger.18 There is some evidence that junior enlisted servicemembers
with less income and lower financial literacy19 may struggle with managing their finances or be with less income and lower financial literacy19 may struggle with managing their finances or be
more susceptible to prohibited consumer lending practices.20 Given that junior enlisted more susceptible to prohibited consumer lending practices.20 Given that junior enlisted
servicemembers (grades E-1 to E-4) tend to be younger and not college educated, these findings servicemembers (grades E-1 to E-4) tend to be younger and not college educated, these findings
comport with research suggesting lower financial literacy levels among non-collegecomport with research suggesting lower financial literacy levels among non-college -educated educated
young adults than among other adults.21 There are also documented incidences of predatory young adults than among other adults.21 There are also documented incidences of predatory
commercial activity targeting servicemembers with high-cost, or high-interest rate plans that commercial activity targeting servicemembers with high-cost, or high-interest rate plans that
contribute to military family indebtedness (see discussion in contribute to military family indebtedness (see discussion in “Servicemember-specific Consumer
Protections”).22 .22
Assessing Servicemember Financial Readiness
Since 2015, DOD has had a statutory obligation to conduct an annual survey of servicemembers Since 2015, DOD has had a statutory obligation to conduct an annual survey of servicemembers
to assess the “status of the financial literacy and preparedness of members of the armed forces” to assess the “status of the financial literacy and preparedness of members of the armed forces”
and to report to the House and Senate Armed Services Committees.23 This is the main instrument and to report to the House and Senate Armed Services Committees.23 This is the main instrument
for assessing financial readiness across the force. DOD collects the data from a representative for assessing financial readiness across the force. DOD collects the data from a representative
cross-section of the active and reserve components (AC and RC) using the Status of Forces cross-section of the active and reserve components (AC and RC) using the Status of Forces
Survey (SOFS).24 The surveys include knowledge-based questions to assess servicemembers’ Survey (SOFS).24 The surveys include knowledge-based questions to assess servicemembers’
general financial literacy and understanding of military-specific benefits. These questions mirror general financial literacy and understanding of military-specific benefits. These questions mirror
questions that are included in other federal civilian surveys for ease of comparison between questions that are included in other federal civilian surveys for ease of comparison between
military and civilian populations.25 The SOFS also includes the Consumer Financial Protection military and civilian populations.25 The SOFS also includes the Consumer Financial Protection
Bureau’s (CFPB’s) financial well-being scale. Bureau’s (CFPB’s) financial well-being scale.
In terms of the overall financial condition of military forces, survey data from 2019 indicate that In terms of the overall financial condition of military forces, survey data from 2019 indicate that
72% of AC and 69% of RC personnel were “very comfortable and secure” or “able to make ends 72% of AC and 69% of RC personnel were “very comfortable and secure” or “able to make ends
meet without much difficulty.”26 This reflects improved conditions over prior-year survey results; meet without much difficulty.”26 This reflects improved conditions over prior-year survey results;

18 Department of Defense, 18 Department of Defense, 2020 Demographics; Profile of the Military Community, Table 1.09, 2020, p. 8. , Table 1.09, 2020, p. 8.
19 Financial literacy describes the "skills, knowledge, and tools that equip people to make individual financial decisions 19 Financial literacy describes the "skills, knowledge, and tools that equip people to make individual financial decisions
and actions to attain their goals." See U.S. Financial Literacy and Education Commission (FLEC), and actions to attain their goals." See U.S. Financial Literacy and Education Commission (FLEC), U.S. National
Strategy for Financial Literacy, 2020, p. 2, at https://home.treasury.gov/system/files/136/US-National-Strategy-, 2020, p. 2, at https://home.treasury.gov/system/files/136/US-National-Strategy-
Financial-Literacy-2020.pdf. Financial-Literacy-2020.pdf.
20 DOD, 20 DOD, Department of Defense Annual Report on the Financial Literacy and Preparedness of Members of the Armed
Forces, December 2020. , December 2020.
21 Annamaria Lusardi, et al., “Financial Literacy among the Young: Evidence and Implications for Consumer Policy,” 21 Annamaria Lusardi, et al., “Financial Literacy among the Young: Evidence and Implications for Consumer Policy,”
National Bureau of Economic Research, September 2009. , September 2009.
22 Department of Defense, 22 Department of Defense, Insurance Solicitation Practices on Department of Defense Installations, Final Report, May , Final Report, May
15, 2000. 15, 2000.
23 P.L. 114-92 §661, 10 U.S.C. §992. 23 P.L. 114-92 §661, 10 U.S.C. §992.
24 The SOFS is administered by DOD’s Office of People Analytics (OPA). Separate surveys are administered to the 24 The SOFS is administered by DOD’s Office of People Analytics (OPA). Separate surveys are administered to the
Active and Reserve components. Active and Reserve components.
25 DOD, 25 DOD, Annual Report on the Financial Literacy and Preparedness of Members of the Armed Forces, Results from the , Results from the
2019 Status of Forces Survey, December 2020. Other surveys that include these questions include Federal Reserve 2019 Status of Forces Survey, December 2020. Other surveys that include these questions include Federal Reserve
Board of Governors’ Survey of Household Economics and Decisionmaking (SHED), and the FINRA Investor Board of Governors’ Survey of Household Economics and Decisionmaking (SHED), and the FINRA Investor
Education Foundation’s National Financial Capability Study (NFCS). Education Foundation’s National Financial Capability Study (NFCS).
26 DOD, 26 DOD, Department of Defense Annual Report on the Financial Literacy and Preparedness of Members of the Armed
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however, these data do not capture the potential impacts from the Coronavirus Disease 2019 however, these data do not capture the potential impacts from the Coronavirus Disease 2019
(COVID-19) pandemic, which began in 2020. One area of potential concern includes saving and (COVID-19) pandemic, which began in 2020. One area of potential concern includes saving and
spending habits. A little over one-third of servicemembers report having zero or less than one spending habits. A little over one-third of servicemembers report having zero or less than one
month of emergency savings and nearly one-fifth of members spend all or more of their income month of emergency savings and nearly one-fifth of members spend all or more of their income
on a monthly basis.27 on a monthly basis.27
Officers are More Financially Stable
The 2019 SOFS data indicate that officers, who generally have higher pay than enlisted The 2019 SOFS data indicate that officers, who generally have higher pay than enlisted
personnel, report higher levels of financial security.28 In 2019, more than 80% of officers across personnel, report higher levels of financial security.28 In 2019, more than 80% of officers across
both components indicated that they were comfortable in their financial position. In comparison, both components indicated that they were comfortable in their financial position. In comparison,
among junior enlisted personnel (grades E-1 to E-4), 65% of AC and 60% of RC personnel among junior enlisted personnel (grades E-1 to E-4), 65% of AC and 60% of RC personnel
indicated that they were financially comfortable.29 Junior enlisted were more likely than officers indicated that they were financially comfortable.29 Junior enlisted were more likely than officers
to report low or zero emergency savings, and missed credit card payments and/or bank overdraft to report low or zero emergency savings, and missed credit card payments and/or bank overdraft
fees in the past twelve months.30 fees in the past twelve months.30
Financial Security is Higher among Active Component Servicemembers than
Reserve Component
Overall financial security was also higher for the AC relative to the RC across most measures. In Overall financial security was also higher for the AC relative to the RC across most measures. In
addition to performing more poorly on spending and savings measures, RC members were more addition to performing more poorly on spending and savings measures, RC members were more
likely to have debts referred to collection, have utilities shut off, or to have two or more likely to have debts referred to collection, have utilities shut off, or to have two or more
overdrawn checks per year. Members of the RC, who typically perform military duty part-time overdrawn checks per year. Members of the RC, who typically perform military duty part-time
and therefore receive only part-time military pay and fewer benefits, may be more vulnerable to and therefore receive only part-time military pay and fewer benefits, may be more vulnerable to
downturns in the civilian economy. RC members were also less likely to access DOD financial downturns in the civilian economy. RC members were also less likely to access DOD financial
education and other resources, likely due to both the part-time nature of their military education and other resources, likely due to both the part-time nature of their military
employment and the broader geographical distribution of reserve units, which may limit access to employment and the broader geographical distribution of reserve units, which may limit access to
military-installation based services.31 military-installation based services.31
Congressional Action to Support Military Financial
Readiness
Congress has pursued legislation to address two aspects of military financial readiness: (1) Congress has pursued legislation to address two aspects of military financial readiness: (1)
servicemember-specific consumer protections and (2) financial literacy and education programs. servicemember-specific consumer protections and (2) financial literacy and education programs.
Over the past few decades, Congress has enacted financial market regulations to protect Over the past few decades, Congress has enacted financial market regulations to protect
servicemembers from certain marketing practices on military installations, to restrict sales of servicemembers from certain marketing practices on military installations, to restrict sales of
high-interest credit/loan products to servicemembers, and to limit debt liability for members high-interest credit/loan products to servicemembers, and to limit debt liability for members
during periods of active duty. Financial literacy and education initiatives for servicemembers and during periods of active duty. Financial literacy and education initiatives for servicemembers and
their family members seek to improve decision-making about various consumer financial their family members seek to improve decision-making about various consumer financial

Forces, December 2020, p. 3. , December 2020, p. 3.
27 Ibid., p. 9. 27 Ibid., p. 9.
28 Ibid p. 4. The Defense Finance and Accounting Service (DFAS) published military pay tables at 28 Ibid p. 4. The Defense Finance and Accounting Service (DFAS) published military pay tables at
https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables/. https://www.dfas.mil/militarymembers/payentitlements/Pay-Tables/.
29 DOD, 29 DOD, Department of Defense Annual Report on the Financial Literacy and Preparedness of Members of the Armed
Forces, December 2020. , December 2020.
30 Ibid., pp. 9-11. 30 Ibid., pp. 9-11.
31 Ibid., p. 7. 31 Ibid., p. 7.
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products and to facilitate healthy financial habits among military households. A list of selected products and to facilitate healthy financial habits among military households. A list of selected
legislation can be found inlegislation can be found in Table A-1.
Servicemember-specific Consumer Protections
DOD has had policies in place to protect servicemembers from “deceptive or coercive” sales DOD has had policies in place to protect servicemembers from “deceptive or coercive” sales
tactics of financial products since former Defense Secretary Melvin Laird recognized the issue in tactics of financial products since former Defense Secretary Melvin Laird recognized the issue in
1971.32 Laird sought to protect servicemembers from these tactics by directing the first policies 1971.32 Laird sought to protect servicemembers from these tactics by directing the first policies
prohibiting certain solicitation activities on military installations.33 While the military had long prohibiting certain solicitation activities on military installations.33 While the military had long
been aware of this issue, enhanced public scrutiny in the past few decades has led to several been aware of this issue, enhanced public scrutiny in the past few decades has led to several
statutory and policy changes to enhance consumer protections for servicemembers and their statutory and policy changes to enhance consumer protections for servicemembers and their
families. families.
In 2000, DOD released a study on financial services solicitation on military bases that found In 2000, DOD released a study on financial services solicitation on military bases that found
frequent violations of policies, inadequate processes for reporting, investigating, and addressing frequent violations of policies, inadequate processes for reporting, investigating, and addressing
violations, and a lack of expertise and resources among those in the military services to regulate violations, and a lack of expertise and resources among those in the military services to regulate
the conduct of solicitors.34 The report also highlighted some of the unique characteristics of the conduct of solicitors.34 The report also highlighted some of the unique characteristics of
military service that can lead servicemembers to be more susceptible to certain marketing military service that can lead servicemembers to be more susceptible to certain marketing
practicespractices,:
Within the military community, military authority affects the private commercial behavior Within the military community, military authority affects the private commercial behavior
of military personnel as well as their public behavior. Subordinates heed their superiors in of military personnel as well as their public behavior. Subordinates heed their superiors in
theirtheir ~~private financial dealings in ways that are not common to the~~ private financial dealings in ways that are not common to the civilian community. civilian community.
Historically, military superiors have played a quasi-parental role in regard to personal Historically, military superiors have played a quasi-parental role in regard to personal
financial affairs. Even today, mentors play a real role in these activities. In almost all cases financial affairs. Even today, mentors play a real role in these activities. In almost all cases
of on base insurance sales, the agent has a letter signed by a senior military official that of on base insurance sales, the agent has a letter signed by a senior military official that
authorizes the sales activity. In addition, the consumer's guard is down when the sale occurs authorizes the sales activity. In addition, the consumer's guard is down when the sale occurs
on the installation because mere presence on a military installation connotes approval by on the installation because mere presence on a military installation connotes approval by
official authority.35 official authority.35
In the early 2000s, while contingency operations in Afghanistan and Iraq were escalating, DOD In the early 2000s, while contingency operations in Afghanistan and Iraq were escalating, DOD
and Congress raised concerns about the financial well-being of servicemembers and their and Congress raised concerns about the financial well-being of servicemembers and their
families, including those being called up from the reserve component.36 During this time, media families, including those being called up from the reserve component.36 During this time, media
reports also highlighted ethically questionable sales tactics by certain insurance agents to military reports also highlighted ethically questionable sales tactics by certain insurance agents to military
personnel, and criticized Congress and the Pentagon for lax oversight of the issue.37 personnel, and criticized Congress and the Pentagon for lax oversight of the issue.37

32 Department of Defense, 32 Department of Defense, Insurance Solicitation Practices on Department of Defense Installations, Final Report, May , Final Report, May
15, 2000, p. iv. 15, 2000, p. iv.
33 Ibid. 33 Ibid.
34 Ibid. 34 Ibid.
35 Ibid., p. 2. 35 Ibid., p. 2.
36 See for example, U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, 36 See for example, U.S. Congress, Senate Committee on Banking, Housing, and Urban Affairs, A Review of the
Department of Defense’s Report on Predatory Lending Practices Directed at Members of the Armed Forces and Their
Dependents, Hearing on Unfair or Abusive Loans, Credit Sales Transactions, and Collections Practices that are , Hearing on Unfair or Abusive Loans, Credit Sales Transactions, and Collections Practices that are
Particularly Harmful to Service Members As it Undermines Military Readiness and Harms Troop Morale, 109th Cong., Particularly Harmful to Service Members As it Undermines Military Readiness and Harms Troop Morale, 109th Cong.,
2nd sess., September 14, 2006, 109-1081 (Washington: GPO, 2009). 2nd sess., September 14, 2006, 109-1081 (Washington: GPO, 2009).
37 Diana B. Henriques, "Basic Training Doesn't Guard Against Insurance Pitch to G.I.'s," 37 Diana B. Henriques, "Basic Training Doesn't Guard Against Insurance Pitch to G.I.'s," New York Times, July 20, , July 20,
2004. 2004.
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Regulating Commercial Solicitations on Military Installations; the Military
Personnel Financial Services Protection Act
In 2005, a congressionally requested study by the Government Accountability Office (GAO), In 2005, a congressionally requested study by the Government Accountability Office (GAO),
documented evidence of improper or misleading sales practices by insurance companies on and documented evidence of improper or misleading sales practices by insurance companies on and
around military installations.38 In particular, it found that some companies and agents were around military installations.38 In particular, it found that some companies and agents were
targeting junior servicemembers for high-cost life insurance and other financial products.39 targeting junior servicemembers for high-cost life insurance and other financial products.39
Sometimes these activities violated DOD solicitation policies or were offered under the guise of Sometimes these activities violated DOD solicitation policies or were offered under the guise of
independent “benefits counseling” from military fraternal organizations that were receiving independent “benefits counseling” from military fraternal organizations that were receiving
incentive payments for sales.40 Finally, GAO noted a lack of data-sharing between DOD and incentive payments for sales.40 Finally, GAO noted a lack of data-sharing between DOD and
financial regulators that handicapped their regulatory oversight and enforcement. financial regulators that handicapped their regulatory oversight and enforcement.
Shortly after GAO published its report, Congress passed the FY2006 National Defense Shortly after GAO published its report, Congress passed the FY2006 National Defense
Authorization Act (NDAA), which included a section on “Consumer Protection Matters” for Authorization Act (NDAA), which included a section on “Consumer Protection Matters” for
military servicemembers.41 This was followed in September 2006 by the Military Personnel military servicemembers.41 This was followed in September 2006 by the Military Personnel
Financial Services Protection Act (MPFSPA, P.L. 109-290) “to protect members of the U.S. Financial Services Protection Act (MPFSPA, P.L. 109-290) “to protect members of the U.S.
Armed Forces from unscrupulous practices regarding sales of insurance, financial, and Armed Forces from unscrupulous practices regarding sales of insurance, financial, and
investment products.”investment products.” 42 Both these laws sought to increase regulation of the sale of life insurance 42 Both these laws sought to increase regulation of the sale of life insurance
and other securities on military installations. and other securities on military installations.
The MPFSPA mandated certain disclosures with the sale of these products, including that “the The MPFSPA mandated certain disclosures with the sale of these products, including that “the
securities offered are not being offered or provided by the broker or dealer on behalf of the securities offered are not being offered or provided by the broker or dealer on behalf of the
Federal Government, and that its offer is not sanctioned, recommended, or encouraged by the Federal Government, and that its offer is not sanctioned, recommended, or encouraged by the
Federal Government.”43 It also prohibited individuals who were not associated with a registered Federal Government.”43 It also prohibited individuals who were not associated with a registered
broker or dealer from receiving incentive payments for referrals and required the Secretary of broker or dealer from receiving incentive payments for referrals and required the Secretary of
Defense to “maintain a list of the name, address, and other appropriate information relating to Defense to “maintain a list of the name, address, and other appropriate information relating to
persons engaged in the business of securities or insurance that have been barred or otherwise persons engaged in the business of securities or insurance that have been barred or otherwise
limited in any manner that is not generally applicable to all such type of persons, from any or all limited in any manner that is not generally applicable to all such type of persons, from any or all
military installations of the United States, or that have engaged in any transaction that is military installations of the United States, or that have engaged in any transaction that is
prohibited by this Act.”44 prohibited by this Act.”44
The FY2006 NDAA provisions required DOD to create or modify policies for personal The FY2006 NDAA provisions required DOD to create or modify policies for personal
commercial solicitations on military installations and to improve financial literacy for commercial solicitations on military installations and to improve financial literacy for
servicemembers and their families (see servicemembers and their families (see “Financial Literacy and Counseling”)45 Section 579 of the )45 Section 579 of the

38 U.S. Government Accountability Office, 38 U.S. Government Accountability Office, Financial Product Sales, GAO-06-23, November 2005. , GAO-06-23, November 2005.
39 As part of military servicemembers’ benefits package, each member is eligible for inexpensive life insurance 39 As part of military servicemembers’ benefits package, each member is eligible for inexpensive life insurance
coverage under Servicemembers’ Group Life Insurance (SGLI). See CRS Report R41435, coverage under Servicemembers’ Group Life Insurance (SGLI). See CRS Report R41435, Veterans’ Benefits: Current
Life Insurance Programs, by Heather M. Salazar. , by Heather M. Salazar.
40 Ibid. In December 2002, DOJ announced a settlement against an insurance company that targeted military members 40 Ibid. In December 2002, DOJ announced a settlement against an insurance company that targeted military members
whose agents had misrepresented themselves solely as employees of a benefits association. This company had allegedly whose agents had misrepresented themselves solely as employees of a benefits association. This company had allegedly
defrauded military defrauded military ~~service members~~servicemembers who purchased life insurance policies from the company by having its agents pose who purchased life insurance policies from the company by having its agents pose
as independent and objective counselors representing a nonprofit fraternal organization. However, the company’s agents as independent and objective counselors representing a nonprofit fraternal organization. However, the company’s agents
allegedly failed to disclose to the allegedly failed to disclose to the ~~service members~~servicemembers that they were compensated through commissions from the insurance that they were compensated through commissions from the insurance
company, and that the company was making undisclosed payments to the benefits association for every policy sold. company, and that the company was making undisclosed payments to the benefits association for every policy sold.
Settlement Agreement, Settlement Agreement, United States, v. Academy Life Insurance Co., U.S. Dist. Ct., E.D. Pa., Civil Action No. 02-9215 U.S. Dist. Ct., E.D. Pa., Civil Action No. 02-9215
(Dec. 10, 2002). (Dec. 10, 2002).
41 P.L. 109-163, Title V, Subtitle I. 41 P.L. 109-163, Title V, Subtitle I.
42 This 42 This ~~Act~~act also amended the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940. also amended the Securities Exchange Act of 1934 and the Investment Advisers Act of 1940.
43 P.L. 109-290 §5. 43 P.L. 109-290 §5.
44 Ibid44 Ibid., §13. §13.
45 DOD, 45 DOD, Report on Predatory Lending Practices Directed at Members of the Armed Services and Their Dependents, ,
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~~Act~~act also required DOD to prepare a report for Congress on “predatory lending practices directed also required DOD to prepare a report for Congress on “predatory lending practices directed
at members of the Armed Forces and their families.”46 Congress, in this law, described a at members of the Armed Forces and their families.”46 Congress, in this law, described a
predatory lending practice as an unfair or abusive loan or credit sale transaction or collection as an unfair or abusive loan or credit sale transaction or collection
practice. practice.
Regulating Consumer Credit for Servicemembers; the Military Lending Act
In August 2006, DOD released its congressionally mandated In August 2006, DOD released its congressionally mandated Report on Predatory Lending
Practices Directed at Members of the Armed Forces and Their Dependents.47 In this report, DOD .47 In this report, DOD
described described predatory practices as the use of affinity or deceptive marketing techniques to target practices as the use of affinity or deceptive marketing techniques to target
primarily young and inexperienced military for the sale of high-fee/interest rate, short-term, or primarily young and inexperienced military for the sale of high-fee/interest rate, short-term, or
installment loans.48 Examples referenced included payday, auto-title, and tax refund anticipation installment loans.48 Examples referenced included payday, auto-title, and tax refund anticipation
loansloans – —some with a combination of interest rates and fees in excess of a 100% annual percentage some with a combination of interest rates and fees in excess of a 100% annual percentage
rate (APR).49 DOD case studies found that members who took out these types of loans struggled rate (APR).49 DOD case studies found that members who took out these types of loans struggled
with cycles of “debt, family problems, difficulty maintaining personal readiness and a tarnished with cycles of “debt, family problems, difficulty maintaining personal readiness and a tarnished
career.”50 Given the findings in this report, DOD called for congressional action to regulate the career.”50 Given the findings in this report, DOD called for congressional action to regulate the
conditions for sale of certain consumer credit products to military servicemembers, including conditions for sale of certain consumer credit products to military servicemembers, including
capping the loan APRs at a 36% maximum, requiring transparent disclosures of loan rates, and capping the loan APRs at a 36% maximum, requiring transparent disclosures of loan rates, and
prohibiting loan provisions that require members and their dependents to waive legal rights as a prohibiting loan provisions that require members and their dependents to waive legal rights as a
condition of the loan.51condition of the loan.51
At the time of DOD’s report publication, several related proposals had already been introduced in At the time of DOD’s report publication, several related proposals had already been introduced in
the 109th Congress and were being considered as part of the NDAA process.52 In October 2006, the 109th Congress and were being considered as part of the NDAA process.52 In October 2006,
Congress enacted the Military Lending Act (MLA, 10 U.S.C. §987) under Title VI, Subtitle F of Congress enacted the Military Lending Act (MLA, 10 U.S.C. §987) under Title VI, Subtitle F of
the John Warner National Defense Authorization Act for Fiscal Year 2007 (FY2007 NDAA).53 the John Warner National Defense Authorization Act for Fiscal Year 2007 (FY2007 NDAA).53
The MLA regulates lending practices and products offered to military servicemembers and their The MLA regulates lending practices and products offered to military servicemembers and their
dependents. It prescribes limitations on terms for consumer credit extended to covered dependents. It prescribes limitations on terms for consumer credit extended to covered
servicemembers and dependents and bans certain lending practices. Under this law, creditors may servicemembers and dependents and bans certain lending practices. Under this law, creditors may
not exceed an annual percentage rate of 36% interest on consumer credit, and must provide not exceed an annual percentage rate of 36% interest on consumer credit, and must provide
specific disclosures about loan rates (e.g., statement of the APR and clear description of payment specific disclosures about loan rates (e.g., statement of the APR and clear description of payment
obligations). DOD implements the provisions of this act and the Consumer Financial Protection obligations). DOD implements the provisions of this act and the Consumer Financial Protection
Bureau and other bank regulators enforce the MLA, as well as other consumer protection laws Bureau and other bank regulators enforce the MLA, as well as other consumer protection laws
and regulations.54 and regulations.54

August 9, 2006. August 9, 2006.
46 P.L. 109-163. 46 P.L. 109-163.
47 DOD, 47 DOD, Report on Predatory Lending Practices Directed at Members of the Armed Services and Their Dependents, ,
August 9, 2006. August 9, 2006.
48 For more background on short-term, small-dollar lending markets, see CRS Report R44868, 48 For more background on short-term, small-dollar lending markets, see CRS Report R44868, Short-Term, Small-
Dollar Lending: Policy Issues and Implications, by Darryl E. Getter. , by Darryl E. Getter.
49 DOD, 49 DOD, Report on Predatory Lending Practices Directed at Members of the Armed Services and Their Dependents, ,
August 9, 2006, p. 20. An annual Percentage Rate (APR) is a measure of the total cost of credit, that generally includes August 9, 2006, p. 20. An annual Percentage Rate (APR) is a measure of the total cost of credit, that generally includes
both the interest rate and fees associated with a loan. both the interest rate and fees associated with a loan.
50 Ibid. p. 39. 50 Ibid. p. 39.
51 Ibid. pp. 50-51. 51 Ibid. pp. 50-51.
52 CRS In Focus IF10515, 52 CRS In Focus IF10515, Defense Primer: The NDAA Process, by Valerie Heitshusen and Brendan W. McGarry. , by Valerie Heitshusen and Brendan W. McGarry.
53 P.L. 109-364. 53 P.L. 109-364.
54 For more on the CFPB, see CRS In Focus IF10031, 54 For more on the CFPB, see CRS In Focus IF10031, Introduction to Financial Services: The Consumer Financial
Protection Bureau (CFPB), by Cheryl R. Cooper and David H. Carpenter. , by Cheryl R. Cooper and David H. Carpenter.
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The MLA gave DOD rulemaking authority to determine the scope of the law as it applied to The MLA gave DOD rulemaking authority to determine the scope of the law as it applied to
various credit products. The MLA regulations went into effect on October 17, 2007, and covered various credit products. The MLA regulations went into effect on October 17, 2007, and covered
a limited range of closed-end credit products (e.g., payday, auto-title, and tax refund anticipation a limited range of closed-end credit products (e.g., payday, auto-title, and tax refund anticipation
loans). As these regulations were implemented, consumer advocacy groups argued that the loans). As these regulations were implemented, consumer advocacy groups argued that the
narrow definition of consumer credit products did not provide adequate protections for military narrow definition of consumer credit products did not provide adequate protections for military
servicemembers. During Senate hearings in 2013, witnesses stated that better MLA rules and servicemembers. During Senate hearings in 2013, witnesses stated that better MLA rules and
enforcement were needed because lenders were finding ways to structure loans to circumvent enforcement were needed because lenders were finding ways to structure loans to circumvent
consumer protections.55 consumer protections.55
Congress subsequently amended the MLA in sections 661-663 of the FY2013 NDAA.56 Among Congress subsequently amended the MLA in sections 661-663 of the FY2013 NDAA.56 Among
other things, this legislation required DOD to conduct regular reviews of the regulations. The other things, this legislation required DOD to conduct regular reviews of the regulations. The
conference report accompanying the bill directed DOD to conduct a study to determine if changes conference report accompanying the bill directed DOD to conduct a study to determine if changes
to the 2007 rules were necessary.57 The resulting DOD study in 2014 found that the limited to the 2007 rules were necessary.57 The resulting DOD study in 2014 found that the limited
definition of consumer credit in the 2007 rules allowed for marketplace adaptations that definition of consumer credit in the 2007 rules allowed for marketplace adaptations that
weakened the intended protections for servicemembers and their families. In September 2014, weakened the intended protections for servicemembers and their families. In September 2014,
DOD published a proposal to amend its MLA regulation, and on July 22, 2015, published its final DOD published a proposal to amend its MLA regulation, and on July 22, 2015, published its final
rules implementing the MLA.58 rules implementing the MLA.58
Whereas the rules previously defined a narrow set of products, the new rules applied to a broader Whereas the rules previously defined a narrow set of products, the new rules applied to a broader
range of closed-end credit products (e.g., fixed term loans) and also extended regulations to open-range of closed-end credit products (e.g., fixed term loans) and also extended regulations to open-
end products (e.g., credit cards), thereby affecting a larger number of businesses offering these end products (e.g., credit cards), thereby affecting a larger number of businesses offering these
products. The new rules also included a safe-harbor provision for creditors to verify that an products. The new rules also included a safe-harbor provision for creditors to verify that an
individual is a covered borrower through one or both of the following mechanisms (1) individual is a covered borrower through one or both of the following mechanisms (1)
electronically through the Defense Manpower Data Center (DMDC) MLA database, and/or (2) a electronically through the Defense Manpower Data Center (DMDC) MLA database, and/or (2) a
report from a nationwide consumer reporting agency. The rules required lender compliance for report from a nationwide consumer reporting agency. The rules required lender compliance for
consumer credit established on or after October 3, 2016, and for credit card accounts under an consumer credit established on or after October 3, 2016, and for credit card accounts under an
open-ended consumer credit plan on or after October 3, 2017. open-ended consumer credit plan on or after October 3, 2017.
Covered individuals under the MLA include Covered individuals under the MLA include
 Servicemembers on active duty,  Servicemembers on active duty,
 Reserve Component members serving on active duty under a call or order that  Reserve Component members serving on active duty under a call or order that
does not specify a period of 30 days or less, or such a member serving on Active does not specify a period of 30 days or less, or such a member serving on Active
Guard and Reserve duty as that term is defined in 10 U.S.C. §101(d)(6), Guard and Reserve duty as that term is defined in 10 U.S.C. §101(d)(6),
 The spouse of a covered member,  The spouse of a covered member,
 The child of a covered member, as child is defined in 38 USC §101(4), and  The child of a covered member, as child is defined in 38 USC §101(4), and
 An individual for whom the member provided more than one-half of the  An individual for whom the member provided more than one-half of the
individual's support for 180 days immediately preceding an extension of individual's support for 180 days immediately preceding an extension of
consumer credit covered by 32 C.F.R. Part 232.consumer credit covered by 32 C.F.R. Part 232.
~~DMDC portal for MLA Verification of Covered Members~~

55 Consumer Financial Protection Bureau, Office of Servicemember Affairs, 55 Consumer Financial Protection Bureau, Office of Servicemember Affairs, Testimony of Hollister K. Petraeus before
the U.S. Senate Committee on Commerce, Science & Transportation, November 20, 2013. , November 20, 2013.
56 P.L. 112-239 56 P.L. 112-239
57 This amendment also included a civil liability provision that would permit a covered borrower to recover damages 57 This amendment also included a civil liability provision that would permit a covered borrower to recover damages
from any creditor violating a requirement of the MLA and authorized the agencies specified in the Truth in Lending from any creditor violating a requirement of the MLA and authorized the agencies specified in the Truth in Lending
Act (TILA), as amended, to enforce those requirements. Act (TILA), as amended, to enforce those requirements.
58 Department of Defense, "Limitations on Terms of Consumer Credit Extended to Service Members and Dependents," 58 Department of Defense, "Limitations on Terms of Consumer Credit Extended to Service Members and Dependents,"
8080 Federal Register 43560-43612, July 22, 2015. 43560-43612, July 22, 2015.
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DMDC portal for MLA Verification of Covered Members
The Defense Manpower Data Center (DMDC) provides a data portal for creditors to verify applicant eligibility The Defense Manpower Data Center (DMDC) provides a data portal for creditors to verify applicant eligibility
under Military Lending Act provisions (https://mla.dmdc.osd.mil/mla/#/home). Creditors may submit a single under Military Lending Act provisions (https://mla.dmdc.osd.mil/mla/#/home). Creditors may submit a single
record request or batch record request to DMDC and if verified record request or batch record request to DMDC and if verified ~~will~~ wil receive a certificate as evidence of an receive a certificate as evidence of an
individual's active duty status in the U.S. Military, Reserve, or Guard. This certificate is also called the individual's active duty status in the U.S. Military, Reserve, or Guard. This certificate is also called the "“Status Status
Report Pursuant to Military Lending Act.” Report Pursuant to Military Lending Act.”
Information that must be submitted to verify an applicant’s eligibility includes the individual’s Social Security Information that must be submitted to verify an applicant’s eligibility includes the individual’s Social Security
Number (SSN) or Individual Taxpayer Identification Number (ITIN), birth date, and last name. Number (SSN) or Individual Taxpayer Identification Number (ITIN), birth date, and last name.
Limitations on Debt Liability: the Servicemembers Civil Relief Act
Congress has taken action to limit or suspend creditors’ legal liability under certain conditions, Congress has taken action to limit or suspend creditors’ legal liability under certain conditions,
due to the unique nature of military service. One such effort is the Servicemembers Civil Relief due to the unique nature of military service. One such effort is the Servicemembers Civil Relief
Act (SCRA) of 2003, as amended.59 The purpose of this Act (SCRA) of 2003, as amended.59 The purpose of this ~~Act is,~~act is
(1) to provide for, strengthen, and expedite the national defense through protection (1) to provide for, strengthen, and expedite the national defense through protection
extended by this chapter to servicemembers of the United States to enable such persons to extended by this chapter to servicemembers of the United States to enable such persons to
devote their entire energy to the defense needs of the Nation; and devote their entire energy to the defense needs of the Nation; and
(2) to provide for the temporary suspension of judicial and administrative proceedings and (2) to provide for the temporary suspension of judicial and administrative proceedings and
transactions that may adversely affect the civil rights of servicemembers during their transactions that may adversely affect the civil rights of servicemembers during their
military service.60 military service.60
Among other things, the SCRA provides servicemember protections against rental property Among other things, the SCRA provides servicemember protections against rental property
evictions, mortgage foreclosures, insurance cancellations, and government property seizures to evictions, mortgage foreclosures, insurance cancellations, and government property seizures to
pay property tax assessments.61 The SCRA applies to pay property tax assessments.61 The SCRA applies to
 Active duty members of the Army, Navy, Marine Corps, Air Force, Space Force,  Active duty members of the Army, Navy, Marine Corps, Air Force, Space Force,
and Coast Guard, and Coast Guard,
 Active duty commissioned officers of the Public Health Service or the National  Active duty commissioned officers of the Public Health Service or the National
Oceanic and Atmospheric Administration, Oceanic and Atmospheric Administration,
 Members of the Reserve Component on active duty, and  Members of the Reserve Component on active duty, and
 Members of the National Guard when mobilized for more than 30 consecutive  Members of the National Guard when mobilized for more than 30 consecutive
days under section 502(f) of title 32 for purposes of responding to a national days under section 502(f) of title 32 for purposes of responding to a national
emergency declared by the President and supported by Federal funds.62 emergency declared by the President and supported by Federal funds.62
With respect to indebtedness, the SCRA caps the maximum interest on With respect to indebtedness, the SCRA caps the maximum interest on prior debt incurred by the debt incurred by the
servicemember or jointly with the member’s spouse at 6% a year. It does not apply to loans that servicemember or jointly with the member’s spouse at 6% a year. It does not apply to loans that
are assumed while on active duty. This reduced rate applies to credit card debts, car loans, are assumed while on active duty. This reduced rate applies to credit card debts, car loans,
business obligations, student loans, and some other debts, fees, and service charges. The 6% cap business obligations, student loans, and some other debts, fees, and service charges. The 6% cap
applies during the period of active service. In the case of mortgages, the cap applies for the applies during the period of active service. In the case of mortgages, the cap applies for the
duration of active duty and for one year following discharge or deactivation. duration of active duty and for one year following discharge or deactivation.

59 50 U.S.C. §3901 et. seq. The SCRA amended and renamed the Soldiers’ and Sailors’ Civil Relief Act (SSCRA) of 59 50 U.S.C. §3901 et. seq. The SCRA amended and renamed the Soldiers’ and Sailors’ Civil Relief Act (SSCRA) of
1940. 1940.
60 50 U.S.C. §3902. 60 50 U.S.C. §3902.
61 For the full scope of protections, see CRS Report R45283, 61 For the full scope of protections, see CRS Report R45283, The Servicemembers Civil Relief Act (SCRA): Section-by-
Section Summary, by Jennifer K. Elsea. , by Jennifer K. Elsea.
62 For more on mobilization authorities, see CRS Report RL30802, 62 For more on mobilization authorities, see CRS Report RL30802, Reserve Component Personnel Issues: Questions
and Answers, by Lawrence Kapp and Barbara Salazar Torreon. , by Lawrence Kapp and Barbara Salazar Torreon.
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Servicemember Redress for SCRA Violations
If a servicemember believes that his or her SCRA rights have been violated, there are several options to seek If a servicemember believes that his or her SCRA rights have been violated, there are several options to seek
redress: redress:
 
Seek advice from a local military legal assistance office,63 Seek advice from a local military legal assistance office,63
 
Contact state attorney general,64 Contact state attorney general,64
 
File a complaint with the Department of Justice’s Office of Civil Rights,65 and/or File a complaint with the Department of Justice’s Office of Civil Rights,65 and/or
 
Submit a complaint about a financial product or service with the Consumer Finance Protection Bureau (see Submit a complaint about a financial product or service with the Consumer Finance Protection Bureau (see
“The Role of the Consumer Financial Protection Bureau (CFPB)”).66 .66
Financial Literacy and Counseling
Military servicemembers may make a number of significant decisions about their finances and Military servicemembers may make a number of significant decisions about their finances and
military benefits throughout their career that can affect their household financial well-being. military benefits throughout their career that can affect their household financial well-being.
Some of these decisions may include how much to contribute to military retirement savings, or Some of these decisions may include how much to contribute to military retirement savings, or
whether to use veteran benefits to secure a mortgage or invest in education.67 In addition, whether to use veteran benefits to secure a mortgage or invest in education.67 In addition,
servicemembers navigate the market for credit, loans, and other financial products just as civilian servicemembers navigate the market for credit, loans, and other financial products just as civilian
consumers do.68 Over the past few decades, technological changes and other market innovations consumers do.68 Over the past few decades, technological changes and other market innovations
have led to a more complex range of financial products on offer to consumers.69 This has, in turn, have led to a more complex range of financial products on offer to consumers.69 This has, in turn,
created a need for better created a need for better financial literacy, often defined as “skills, knowledge, and tools that , often defined as “skills, knowledge, and tools that
equip people to make individual financial decisions and actions to attain their goals.”70 DOD equip people to make individual financial decisions and actions to attain their goals.”70 DOD
provides financial education programs and counseling to assist servicemembers in making provides financial education programs and counseling to assist servicemembers in making
informed decisions about pay and benefits, improving their financial management skills, and informed decisions about pay and benefits, improving their financial management skills, and
enhancing their financial well-being. enhancing their financial well-being.
Financial Literacy Training
Financial literacy training requirements, as originally enacted by the FY2006 NDAA, are outlined Financial literacy training requirements, as originally enacted by the FY2006 NDAA, are outlined
in Section 992 of Title 10, United States Code. Mandatory training topics include common private in Section 992 of Title 10, United States Code. Mandatory training topics include common private
sector financial services71 and marketing practices, and practices that are “particularly prevalent at sector financial services71 and marketing practices, and practices that are “particularly prevalent at

63 Under 10 U.S.C. §1044, military servicemembers are eligible for legal counsel from military lawyers for personal 63 Under 10 U.S.C. §1044, military servicemembers are eligible for legal counsel from military lawyers for personal
civil legal affairs. For locations and contact information, see for example https://legalassistance.law.af.mil/. civil legal affairs. For locations and contact information, see for example https://legalassistance.law.af.mil/.
64 See, https://www.naag.org/find-my-ag/. 64 See, https://www.naag.org/find-my-ag/.
65 See, https://civilrights.justice.gov/report/. 65 See, https://civilrights.justice.gov/report/.
66 See, https://www.consumerfinance.gov/complaint/. 66 See, https://www.consumerfinance.gov/complaint/.
67 For more information on veteran housing and education benefits, see CRS Report R42504, 67 For more information on veteran housing and education benefits, see CRS Report R42504, VA Housing: Guaranteed
Loans, Direct Loans, and Specially Adapted Housing Grants, by Libby Perl, and CRS Report R42785, , by Libby Perl, and CRS Report R42785, Veterans’
Educational Assistance Programs and Benefits: A Primer, by Cassandria Dortch. , by Cassandria Dortch.
68 For background on financial literacy and financial education for all consumers, see CRS Report R46941, 68 For background on financial literacy and financial education for all consumers, see CRS Report R46941, Financial
Literacy and Financial Education Policy Issues, by Cheryl R. Cooper. , by Cheryl R. Cooper.
69 Annamaria Lusardi, “Financial literacy and the need for financial education: evidence and implications,” 69 Annamaria Lusardi, “Financial literacy and the need for financial education: evidence and implications,” Swiss
Journal of Economics and Statistics, January 24, 2019. , January 24, 2019.
70 U.S. Financial Literacy and Education Commission, 70 U.S. Financial Literacy and Education Commission, U.S. National Strategy for Financial Literacy 2020, 2020, , 2020,
https://home.treasury.gov/system/files/136/US-National-Strategy-Financial-Literacy-2020.pdf. https://home.treasury.gov/system/files/136/US-National-Strategy-Financial-Literacy-2020.pdf.
71 The law defines 71 The law defines financial services as, “(1) Life insurance, casualty insurance, and other insurance, (2) Investments in as, “(1) Life insurance, casualty insurance, and other insurance, (2) Investments in
securities or financial instruments, (3) Banking, credit, loans, deferred payment plans, and mortgages, and (4) Health securities or financial instruments, (3) Banking, credit, loans, deferred payment plans, and mortgages, and (4) Health
insurance, budget management, Thrift Savings Plan (TSP), retirement lump sum payments (including rollover options insurance, budget management, Thrift Savings Plan (TSP), retirement lump sum payments (including rollover options
and tax consequences), and Survivor Benefit Plan (SBP). Congressional Research Service Congressional Research Service
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Military Families and Financial Readiness

that military installation and in the vicinity.”72 Training on financial services and consumer that military installation and in the vicinity.”72 Training on financial services and consumer
protections available to servicemembers under other sections of law is also required. protections available to servicemembers under other sections of law is also required.
Between 2013 and 2015, military financial literacy requirements and implementation were Between 2013 and 2015, military financial literacy requirements and implementation were
revisited in studies conducted by the Military Compensation and Retirement Modernization revisited in studies conducted by the Military Compensation and Retirement Modernization
Commission (MCRMC).73 The MCRMC found that “existing financial literacy programs do not Commission (MCRMC).73 The MCRMC found that “existing financial literacy programs do not
adequately educate servicemembers and their families on financial matters.”74 It recommended adequately educate servicemembers and their families on financial matters.”74 It recommended
amendments to 10 U.S.C. §992 to increase frequency and enhance content of financial literacy amendments to 10 U.S.C. §992 to increase frequency and enhance content of financial literacy
training. Congress enacted these recommended changes in the FY2016 NDAA (P.L. 114-92 §661) training. Congress enacted these recommended changes in the FY2016 NDAA (P.L. 114-92 §661)
alongside significant changes to the military retirement system.75 These amendments required alongside significant changes to the military retirement system.75 These amendments required
financial literacy training at several points during a servicemember’s career (see shaded text box financial literacy training at several points during a servicemember’s career (see shaded text box
below). below).
DOD policy identifies certain learning objectives and the points in a member’s career at which DOD policy identifies certain learning objectives and the points in a member’s career at which
each objective should be met. For example, an initial entry learning objective is to “analyze the each objective should be met. For example, an initial entry learning objective is to “analyze the
implications and identify strategies for financing a major purchase” and a pre-deployment implications and identify strategies for financing a major purchase” and a pre-deployment
learning objective is to “examine the impact of special pay and entitlements”.76 learning objective is to “examine the impact of special pay and entitlements”.76
When Financial Literacy Training is Required under 10 U.S.C. §992
DOD is required to provide financial literacy training during “periodically recurring required training” and at DOD is required to provide financial literacy training during “periodically recurring required training” and at
various touchpoints/significant life events in a servicemember’s career. These events includevarious touchpoints/significant life events in a servicemember’s career. These events include,
 
During initial entry training, During initial entry training,
 
Upon arrival at first duty station and every subsequent duty station (for members in enlisted pay grades of E- Upon arrival at first duty station and every subsequent duty station (for members in enlisted pay grades of E-
4 or below and officers in the pay grade of O-3 or below), 4 or below and officers in the pay grade of O-3 or below),
 
On the date of promotion of the member (for members in enlisted pay grades of E-5 or below and officers in On the date of promotion of the member (for members in enlisted pay grades of E-5 or below and officers in
the pay grade of O-4 or below), the pay grade of O-4 or below),
 
At each major life event during the member’s service, such as marriage, divorce, birth of a first child, or At each major life event during the member’s service, such as marriage, divorce, birth of a first child, or
disabling sickness or condition, disabling sickness or condition,
 
During leadership training, and During leadership training, and
 
At transition points from a regular component to a reserve component and when separating or retiring from At transition points from a regular component to a reserve component and when separating or retiring from
service. service.
~~In addition, those servicemembers who are subject to the Blended Retirement System77 have required financial~~
~~training~~

~~and tax consequences), and Survivor Benefit Plan (SBP).~~
72 10 U.S.C. §992. 72 10 U.S.C. §992.
73 The FY2013 NDAA (P.L. 112-239) established the Military Compensation and Retirement Modernization 73 The FY2013 NDAA (P.L. 112-239) established the Military Compensation and Retirement Modernization
Commission with a mandate to review the military compensation and retirement systems and make recommendations Commission with a mandate to review the military compensation and retirement systems and make recommendations
to modernize these systems. Section 1008(b) of Title 37 United States Code, requires the President to conduct a review to modernize these systems. Section 1008(b) of Title 37 United States Code, requires the President to conduct a review
of military compensation every four years. Per a January 9, 2015 White House memorandum the MCRMC study of military compensation every four years. Per a January 9, 2015 White House memorandum the MCRMC study
fulfills the requirement for the 12th Quadrennial Review of Military Compensation (QRMC). President Barack Obama, fulfills the requirement for the 12th Quadrennial Review of Military Compensation (QRMC). President Barack Obama,
Memorandum for the Secretary of Defense on the Twelfth Quadrennial Review of Military Compensation, January 9, , January 9,
2015. 2015.
74 United States. 74 United States. Military Compensation and Retirement Modernization Commission MCRMC. United States, 2015. . United States, 2015.
Web Archive. Retrieved from the Library of Congress, p. 47. Web Archive. Retrieved from the Library of Congress, p. 47.
75 The FY2016 NDAA (P.L. 114-92 §661) retitled this 10 U.S.C. §992 “Financial literacy training: financial services” 75 The FY2016 NDAA (P.L. 114-92 §661) retitled this 10 U.S.C. §992 “Financial literacy training: financial services”
from the prior title “Consumer education: financial services”. For more background on the military retirement system, from the prior title “Consumer education: financial services”. For more background on the military retirement system,
see CRS Report RL34751, see CRS Report RL34751, Military Retirement: Background and Recent Developments, by Kristy N. Kamarck. , by Kristy N. Kamarck.
76 Office of the Under Secretary of Defense for Personnel and Readiness, 76 Office of the Under Secretary of Defense for Personnel and Readiness, Directive-type Memorandum (DTM) 19-~~009 –~~
009—Financial Readiness Common Military Training Requirements, August 13, 2019, Table 1, pp. 11-12. , August 13, 2019, Table 1, pp. 11-12.
~~77 This includes all servicemembers who entered service on or after January 1, 2018, and certain eligible members who~~
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Congressional Research Service 12 Military Families and Financial Readiness In addition, those servicemembers who are subject to the Blended Retirement System77 have required financial training  
When the member vests in the Thrift Savings Plan (TSP)78, and When the member vests in the Thrift Savings Plan (TSP)78, and
 
When the member becomes entitled to receive continuation pay.79 When the member becomes entitled to receive continuation pay.79
The frequency of qualifying events (e.g., change of station, promotion) provides some assurance The frequency of qualifying events (e.g., change of station, promotion) provides some assurance
that servicemembers will be exposed to financial literacy training several times in their first that servicemembers will be exposed to financial literacy training several times in their first
decade of service. Nevertheless, the effectiveness of training can depend on its implementation, decade of service. Nevertheless, the effectiveness of training can depend on its implementation,
which is the responsibility of the Secretaries of the military departments as part of military family which is the responsibility of the Secretaries of the military departments as part of military family
readiness programs.80 DOD policy gives the Secretaries discretion on the method of delivery used readiness programs.80 DOD policy gives the Secretaries discretion on the method of delivery used
for these trainings, and allows flexibility to include web- or computer-based training, instructor-for these trainings, and allows flexibility to include web- or computer-based training, instructor-
led training, or structured self-development.81 Curricula may also be tailored by service; however, led training, or structured self-development.81 Curricula may also be tailored by service; however,
DOD specifies that some courses must follow a standard curriculum. These include courses DOD specifies that some courses must follow a standard curriculum. These include courses
related to benefit elections under Blended Retirement System, and a course called “Financial related to benefit elections under Blended Retirement System, and a course called “Financial
Planning for Transition” as part of the Transition Assistance Program (TAP).82 Planning for Transition” as part of the Transition Assistance Program (TAP).82
Section 594 of the FY2020 NDAA included a provision that required the Secretary of Defense Section 594 of the FY2020 NDAA included a provision that required the Secretary of Defense
and the Secretary of Homeland Security (for matters related to Coast Guard personnel) to conduct and the Secretary of Homeland Security (for matters related to Coast Guard personnel) to conduct
a study on the best practices to provide financial literacy education for separating members of the a study on the best practices to provide financial literacy education for separating members of the
Armed Forces. The provision requires the Secretaries concerned to consult with the Financial Armed Forces. The provision requires the Secretaries concerned to consult with the Financial
Literacy and Education Commission of the Department of the Treasury and to submit a report to Literacy and Education Commission of the Department of the Treasury and to submit a report to
Congress within 120 days of enactment of the law. Congress within 120 days of enactment of the law.
Financial Counseling Services
Section 992 of Title 10 U.S. Code requires DOD to provide certain financial counseling services Section 992 of Title 10 U.S. Code requires DOD to provide certain financial counseling services
to servicemembers and their spouses. The law requires installations with 2,000 or more to servicemembers and their spouses. The law requires installations with 2,000 or more
servicemembers assigned to provide a full-time financial services counselor. Those employed as servicemembers assigned to provide a full-time financial services counselor. Those employed as
counselors may be uniformed military, federal government civilians, contracted personnel, or counselors may be uniformed military, federal government civilians, contracted personnel, or
qualified representatives of nonprofit organizations through agreements with DOD. Military qualified representatives of nonprofit organizations through agreements with DOD. Military
counselors are required to be in the rank of E-7 or above. In all cases, counselors are required to counselors are required to be in the rank of E-7 or above. In all cases, counselors are required to
be “free from conflicts of interest” in the provision of financial services counseling. This be “free from conflicts of interest” in the provision of financial services counseling. This
~~requirement is largely in response to past instances of “counselors” serving a dual-hatted role as~~
~~agents or employees of financial services companies.83~~

77 This includes all servicemembers who entered service on or after January 1, 2018, and certain eligible members who were already in service and opted into the Blended Retirement System. See CRS Report RL34751, were already in service and opted into the Blended Retirement System. See CRS Report RL34751, Military Retirement:
Background and Recent Developments, by Kristy N. Kamarck. , by Kristy N. Kamarck.
78 For more information on the TSP, see CRS Report RL30387, 78 For more information on the TSP, see CRS Report RL30387, Federal Employees’ Retirement System: The Role of
the Thrift Savings Plan, by Katelin P. Isaacs. , by Katelin P. Isaacs.
79 Continuation pay is a direct cash payment available to servicemembers covered under the Blended Retirement 79 Continuation pay is a direct cash payment available to servicemembers covered under the Blended Retirement
System, payable between completion of 8 and 12 years of service with a commitment of a minimum of 3 additional System, payable between completion of 8 and 12 years of service with a commitment of a minimum of 3 additional
years of service. years of service.
80 DOD, 80 DOD, Military Family Readiness, DoDI 1342.22, August 4, 2021, p. 16. Office of the Under Secretary of Defense , DoDI 1342.22, August 4, 2021, p. 16. Office of the Under Secretary of Defense
for Personnel and Readiness, for Personnel and Readiness, Directive-type Memorandum (DTM) 19-009 – —Financial Readiness Common Military
Training Requirements, August 13, 2019, p. 6. , August 13, 2019, p. 6.
81 Ibid., p. 9. 81 Ibid., p. 9.
82 TAP counseling requirements are specified in 10 U.S.C. §1142(b) and include “(9) Financial planning assistance, 82 TAP counseling requirements are specified in 10 U.S.C. §1142(b) and include “(9) Financial planning assistance,
including information on budgeting, saving, credit, loans, and taxes.” See also, DOD, Transition Assistance Program including information on budgeting, saving, credit, loans, and taxes.” See also, DOD, Transition Assistance Program
for Military Personnel, DODI 1332.35, September 26, 2019. for Military Personnel, DODI 1332.35, September 26, 2019.
~~83 See for example discussion in Department of Defense,~~ ~~Insurance Solicitation Practices on Department of Defense~~
~~Installations, Final Report, May 15, 2000, p. 3.~~
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Congressional Research Service 13 Military Families and Financial Readiness requirement is largely in response to past instances of “counselors” serving a dual-hatted role as agents or employees of financial services companies.83
DOD regulations require the military services to offer one-on-one personal financial management DOD regulations require the military services to offer one-on-one personal financial management
counseling services.84 These services are offered in-person at Military and Family Support counseling services.84 These services are offered in-person at Military and Family Support
Centers (MFSCs) located on the installations and, virtually, through the Military OneSource Centers (MFSCs) located on the installations and, virtually, through the Military OneSource
website.85 According to DOD policies the MFSCs are required to offerwebsite.85 According to DOD policies the MFSCs are required to offer,
proactive personal life cycle financial management services that provide servicemembers proactive personal life cycle financial management services that provide servicemembers
and their families with the tools and information they need to develop individual strategies and their families with the tools and information they need to develop individual strategies
to achieve financial goals and address financial challenges. Information shall address the to achieve financial goals and address financial challenges. Information shall address the
effects of financial decisions on personal and professional lives, resources needed to make effects of financial decisions on personal and professional lives, resources needed to make
prudent consumer decisions, and related services and support.86 prudent consumer decisions, and related services and support.86
Military OneSource is DOD’s one-stop web portal for information, resources, and counseling Military OneSource is DOD’s one-stop web portal for information, resources, and counseling
services related to military life. The website’s content is mostly available to the general public services related to military life. The website’s content is mostly available to the general public
while counseling services by phone, video, or text chat are available for military personnel, their while counseling services by phone, video, or text chat are available for military personnel, their
family members and veterans for up to one year post-service.87 Counseling services include family members and veterans for up to one year post-service.87 Counseling services include
income tax filing support, help accessing emergency financial assistance, and guidance for estate income tax filing support, help accessing emergency financial assistance, and guidance for estate
planning. planning.
The Role of the Consumer Financial Protection
Bureau (CFPB)
The Consumer Financial Protection Bureau plays a role in military financial literacy programs The Consumer Financial Protection Bureau plays a role in military financial literacy programs
and in oversight of servicemember consumer financial protections. Created in 2010, the Dodd-and in oversight of servicemember consumer financial protections. Created in 2010, the Dodd-
Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) created an Office of Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) created an Office of
Servicemember Affairs (OSA) within the CFPB with the statutory authority to Servicemember Affairs (OSA) within the CFPB with the statutory authority to
 educate and empower  educate and empower ~~service members~~servicemembers and their families to make better and their families to make better
informed informed decisions regarding consumer financial products and services, decisions regarding consumer financial products and services,
 monitor complaints by  monitor complaints by ~~service members~~servicemembers and their families and responses to those and their families and responses to those
complaints, and complaints, and
 coordinate efforts among Federal and State agencies, as appropriate, regarding  coordinate efforts among Federal and State agencies, as appropriate, regarding
consumer protection measures relating to consumer financial products and consumer protection measures relating to consumer financial products and
services offered to, or used by, servicemembers and their families.services offered to, or used by, servicemembers and their families. 88
~~OSA coordinates with DOD and other federal agencies, such as the Federal Trade Commission,~~
~~Federal Reserve Board, and Internal Revenue Service, on outreach and education programs for~~
~~military families.89~~

88 83 See for example discussion in Department of Defense, Insurance Solicitation Practices on Department of Defense Installations, Final Report, May 15, 2000, p. 3. 84 DOD, 84 DOD, Military Family Readiness, DODI 1342.22, April 11, 2017. , DODI 1342.22, April 11, 2017.
85 Military Onesource, at https://www.militaryonesource.mil/financial-legal/personal-finance/personal-finance-85 Military Onesource, at https://www.militaryonesource.mil/financial-legal/personal-finance/personal-finance-
resources. resources.
86 DOD, 86 DOD, Military Family Readiness, DODI 1342.22, April 11, 2017. , DODI 1342.22, April 11, 2017.
87 The FY2019 NDAA (P.L. 115-232) extended veteran eligibility for Military OneSource services from 180 to 365 87 The FY2019 NDAA (P.L. 115-232) extended veteran eligibility for Military OneSource services from 180 to 365
days. days.
88 P.L. 111-203 §1013(e), 12 U.S.C. §5493. For more on the CFPB, see https://www.consumerfinance.gov/consumer- 88 P.L. 111-203 §1013(e), 12 U.S.C. §5493. For more on the CFPB, see https://www.consumerfinance.gov/consumer-
tools/educator-tools/servicemembers/, and CRS In Focus IF10031, tools/educator-tools/servicemembers/, and CRS In Focus IF10031, Introduction to Financial Services: The Consumer
Financial Protection Bureau (CFPB), by Cheryl R. Cooper and David H. Carpenter. , by Cheryl R. Cooper and David H. Carpenter.
~~89 Consumer Financial Protection Bureau,~~ ~~Office of Servicemember Affairs Annual Report; January 1 - December 31~~
~~2020, May 2021, https://files.consumerfinance.gov/f/documents/cfpb_osa-annual-report-2020.pdf.~~
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Congressional Research Service 14 Military Families and Financial Readiness OSA coordinates with DOD and other federal agencies, such as the Federal Trade Commission, Federal Reserve Board, and Internal Revenue Service, on outreach and education programs for military families.89 OSA financial education programs seek to inform servicemembers and families about their legal OSA financial education programs seek to inform servicemembers and families about their legal
rights and avenues for redress under the SCRA, MLA, and other financial authorities. OSA has rights and avenues for redress under the SCRA, MLA, and other financial authorities. OSA has
developed an online interactive money management program available to servicemembers, their developed an online interactive money management program available to servicemembers, their
families and those in pre-enlistment and commissioning programs (e.g., Reserve Officer Training families and those in pre-enlistment and commissioning programs (e.g., Reserve Officer Training
Corps, and Delayed Entry Program). OSA also provides other education programs for Corps, and Delayed Entry Program). OSA also provides other education programs for
stakeholders such as military financial counselors, veteran service organizations, and state stakeholders such as military financial counselors, veteran service organizations, and state
agencies. agencies.
For 2020, the CFPB received over 40,800 complaints from servicemembers about consumer For 2020, the CFPB received over 40,800 complaints from servicemembers about consumer
financial products, an increase of 14% from the previous year.90 A majority of these complaints financial products, an increase of 14% from the previous year.90 A majority of these complaints
were related to credit or consumer reporting, debt collection, and mortgages. The CFPB has were related to credit or consumer reporting, debt collection, and mortgages. The CFPB has
reported that servicemembers submit complaints about debt collection practices at a higher rate reported that servicemembers submit complaints about debt collection practices at a higher rate
than non-servicemembers.91 Some of debt collection practices that members experience include, than non-servicemembers.91 Some of debt collection practices that members experience include,
contacting or threatening to contact the member’s commanding officer, attempts to collect debts contacting or threatening to contact the member’s commanding officer, attempts to collect debts
not owed, and threats of disciplinary action under the Uniform Code of Military Justice (UCMJ). not owed, and threats of disciplinary action under the Uniform Code of Military Justice (UCMJ).
Legislation in the 117th Congress, the Legislation in the 117th Congress, the Fair Debt Collection Practices for Servicemembers Act, ,
would seek to address some of these issues.92 would seek to address some of these issues.92
Other Financial Support for Military Families
In addition to the consumer protections discussed in this report, military servicemembers and In addition to the consumer protections discussed in this report, military servicemembers and
their families are also eligible for some need-based direct financial support from DOD and their families are also eligible for some need-based direct financial support from DOD and
military/veteran-serving nonprofit organization. military/veteran-serving nonprofit organization.
Family Subsistence Supplemental Allowance (FSSA)
In 2000, some Members expressed concerns about the number of military servicemembers In 2000, some Members expressed concerns about the number of military servicemembers
“believed to be relying on food stamps to meet the nutritional needs of family members.”93 In the “believed to be relying on food stamps to meet the nutritional needs of family members.”93 In the
National Defense Authorization Act for FY2001, Congress added a requirement for DOD to National Defense Authorization Act for FY2001, Congress added a requirement for DOD to
provide a supplemental subsistence allowance for low-income members.94 The FSSA was initially provide a supplemental subsistence allowance for low-income members.94 The FSSA was initially
established as a five-year program to provide a maximum of $500 monthly direct financial established as a five-year program to provide a maximum of $500 monthly direct financial
support to raise a family’s income above that which would make them eligible for food stamps support to raise a family’s income above that which would make them eligible for food stamps
(now known as the Supplemental Nutrition Assistance Program, or SNAP).95 Eligibility for the (now known as the Supplemental Nutrition Assistance Program, or SNAP).95 Eligibility for the
FSSA benefit depends on household income and household size. It requires servicemembers to FSSA benefit depends on household income and household size. It requires servicemembers to
~~apply for certification of eligibility and for recertification on an annual basis, or if a qualifying~~
~~event occurs (e.g., promotion, permanent change of station, increase in household income).96~~
~~The FSSA law was subsequently amended to make the authority permanent in 2006 (P.L. 109-~~
~~364) and to raise the maximum amount of assistance to $1,100 in 2009 (P.L. 111-84). In 2015, the~~

89 Consumer Financial Protection Bureau, Office of Servicemember Affairs Annual Report; January 1-December 31 2020, May 2021, https://files.consumerfinance.gov/f/documents/cfpb_osa-annual-report-2020.pdf. 90 Ibid. p. 12. 90 Ibid. p. 12.
91 Ibid., p. 18. For more information on debt collection, see CRS Report R46477, 91 Ibid., p. 18. For more information on debt collection, see CRS Report R46477, The Debt Collection Market and
Selected Policy Issues, by Cheryl R. Cooper. , by Cheryl R. Cooper.
92 H.R. 1491. This legislation was passed in the House on April 20, 2021. 92 H.R. 1491. This legislation was passed in the House on April 20, 2021.
93 U.S. Congress, House Committee on Armed Services, 106th Cong., 2nd sess., H.Rept. 106-616, p. 376. The report 93 U.S. Congress, House Committee on Armed Services, 106th Cong., 2nd sess., H.Rept. 106-616, p. 376. The report
cited 6,300 as the number of servicemembers believed to be relying on food stamps. cited 6,300 as the number of servicemembers believed to be relying on food stamps.
94 P.L. 106-398 §604, codified under 37 U.S.C. 402a. 94 P.L. 106-398 §604, codified under 37 U.S.C. 402a.
95 For more information on SNAP eligibility, see CRS Report R42505, 95 For more information on SNAP eligibility, see CRS Report R42505, Supplemental Nutrition Assistance Program
(SNAP): A Primer on Eligibility and Benefits, by Randy Alison Aussenberg. , by Randy Alison Aussenberg.
~~96 DOD, Family Subsistence Supplemental Allowance (FSSA) Program, DODI 1341.11, March 4, 2008.~~
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Congressional Research Service 15 link to page 6 Military Families and Financial Readiness apply for certification of eligibility and for recertification on an annual basis, or if a qualifying event occurs (e.g., promotion, permanent change of station, increase in household income).96 The FSSA law was subsequently amended to make the authority permanent in 2006 (P.L. 109-364) and to raise the maximum amount of assistance to $1,100 in 2009 (P.L. 111-84). In 2015, the Military Compensation and Retirement Modernization Commission (MCRMC) examined Military Compensation and Retirement Modernization Commission (MCRMC) examined
servicemember eligibility for food and nutrition assistance programs and found that very few servicemember eligibility for food and nutrition assistance programs and found that very few
servicemembers were participating in the FSSA program (a total of 285 participants in servicemembers were participating in the FSSA program (a total of 285 participants in
FY2013).97 In addition, they deemed the FSSA “duplicative” and “less generous” in many cases FY2013).97 In addition, they deemed the FSSA “duplicative” and “less generous” in many cases
than SNAP benefits. The Commission also highlighted feedback from military families that there than SNAP benefits. The Commission also highlighted feedback from military families that there
was a stigma associated with requesting FSSA through military channels, whereas applying for was a stigma associated with requesting FSSA through military channels, whereas applying for
SNAP does not typically involve the chain of command. The Commission recommended SNAP does not typically involve the chain of command. The Commission recommended
restricting FSSA only to servicemembers in overseas locations where no SNAP assistance was restricting FSSA only to servicemembers in overseas locations where no SNAP assistance was
available.98 Congress enacted this restriction in the FY2016 NDAA.99 available.98 Congress enacted this restriction in the FY2016 NDAA.99
Basic Needs Allowance In the Fiscal Year 2022 NDAA, Congress authorized a new pay allowance called the “Basic Needs Allowance.”100 This payment is authorized for certain servicemember households with dependents (spouse and/or child(ren)) in which “the gross household income of the member during the most recent calendar year did not exceed an amount equal to 130 percent of the Federal poverty guidelines of the Department of Health and Human Services for the location of the member and the number of individuals in the household of the member for such year.”101 This law requires the Secretary of Defense to conduct a screening at initial entry for servicemembers and “regularly thereafter.” This authority goes into effect on December 27, 2022 and expires on December 31, 2027. Prior to the implementation of this allowance, the law requires DOD to conduct a study and brief the Armed Services Committees on issues related to servicemember food insecurity by April 1, 2022. Follow-on reports on the implementation of the law are required in 2025 and 2027. Those most likely to meet this income threshold are junior enlisted servicemembers with non-income earning spouses and dependent children (see Table 1 and earlier discussion of servicemember pay).102 DOD initial entry policy requires enlistment waivers for single parenthood or for married individuals with several children.103 The impact of this new allowance could be fewer waivers granted by the services for applicants with dependents. 96 DOD, Family Subsistence Supplemental Allowance (FSSA) Program, DODI 1341.11, March 4, 2008. 97 Report of the Military Compensation and Retirement Modernization Commission, Final Report, January 2015, p. 7. 98 Ibid. 99 P.L. 114-92 §602. 100 P.L. 117-81 §601. 101 “Gross household income” is defined as all household income, derived from any source; minus any portion of the basic allowance for housing under section 403 of title 37, U.S. Code that the relevant Secretary elects to exclude for members in high cost-of-living locations. For more information on federal poverty guidelines, see CRS Report R44780, An Introduction to Poverty Measurement, by Joseph Dalaker. 102 Cadets and midshipmen at the military service academies are ineligible for this allowance. 103 Law and policy establish certain entry standards for servicemembers based on, for example, medical conditions, past misconduct, and dependency status. According to 32 C.F.R. § 66.7(2). “A dependent waiver is required when an applicant is married with more than two dependents under the age of 18 or when an applicant is unmarried and has custody of any dependents under the age of 18.” Congressional Research Service 16 Military Families and Financial Readiness Financial Support during National Crises
At certain times of national crises or economic downturn, Congress has authorized financial At certain times of national crises or economic downturn, Congress has authorized financial
support to military servicemembers who are adversely affected. DOD has also used existing support to military servicemembers who are adversely affected. DOD has also used existing
flexibilities in military pay authorities to support servicemembers affected by these events. Two flexibilities in military pay authorities to support servicemembers affected by these events. Two
examples of are the expansion of the Homeowner’s Assistance Program during the 2008 financial examples of are the expansion of the Homeowner’s Assistance Program during the 2008 financial
crisis, and DOD’s response to the COVID-19 pandemic in 2020. crisis, and DOD’s response to the COVID-19 pandemic in 2020.
Expansion of Homeowner’s Assistance Program
This program, initially authorized in 1966 (P.L. 89-754), was expanded as part of the American This program, initially authorized in 1966 (P.L. 89-754), was expanded as part of the American
Recovery and Reinvestment Act of 2009 to respond to the nationwide mortgage foreclosure and Recovery and Reinvestment Act of 2009 to respond to the nationwide mortgage foreclosure and
credit crisis.credit crisis.~~100~~104 This This ~~Act~~act amended an existing statute associated with the loss of real estate amended an existing statute associated with the loss of real estate
property value due to base realignment and closure (BRAC) activity.property value due to base realignment and closure (BRAC) activity.~~101~~105 The 2009 law authorized The 2009 law authorized
DOD to “acquire title to, hold, manage, and dispose of, or, in lieu thereof, to reimburse for certain DOD to “acquire title to, hold, manage, and dispose of, or, in lieu thereof, to reimburse for certain
losses upon private sale of, or foreclosure against, any property improved with a one- or two-losses upon private sale of, or foreclosure against, any property improved with a one- or two-
family dwelling situated at or near a military base or installation” under the conditions that the family dwelling situated at or near a military base or installation” under the conditions that the
property was owned by and the private residence of a servicemember who was permanently property was owned by and the private residence of a servicemember who was permanently
reassigned and compelled to sell the home between July 1, 2006, and September 30, 2012. reassigned and compelled to sell the home between July 1, 2006, and September 30, 2012.
Another provision of this law authorized the same housing assistance for military servicemembers Another provision of this law authorized the same housing assistance for military servicemembers
who incurred a disability of 30% of or more from a deployment-related injury or illness, and were who incurred a disability of 30% of or more from a deployment-related injury or illness, and were
reassigned for “furtherance of medical treatment, rehabilitation, or due to medical retirement reassigned for “furtherance of medical treatment, rehabilitation, or due to medical retirement
resulting from the sustained disability.” resulting from the sustained disability.”
COVID-19 Pandemic
DOD also used existing flexibilities in statute to help military families facing financial hardships DOD also used existing flexibilities in statute to help military families facing financial hardships
during the COVID-19 pandemic. Starting in 2020, the Department authorized a series of special during the COVID-19 pandemic. Starting in 2020, the Department authorized a series of special
pays and allowances for servicemembers who were adversely impacted by quarantine pays and allowances for servicemembers who were adversely impacted by quarantine
requirements or travel restrictions. One of these was the extension of hardship duty pay under 37 requirements or travel restrictions. One of these was the extension of hardship duty pay under 37
U.S.C. §305. This statute provides discretionary authority to the Secretary of Defense to U.S.C. §305. This statute provides discretionary authority to the Secretary of Defense to
designate certain types of duty as “hardship duty” and allows the Secretary to pay an eligible designate certain types of duty as “hardship duty” and allows the Secretary to pay an eligible

~~97 Report of the Military Compensation and Retirement Modernization Commission, Final Report, January 2015, p. 7.~~
~~98 Ibid.~~
~~99 P.L. 114-92 §602.~~
~~100 P.L. 111-5, codified in 42 U.S.C. §3374.~~
~~101 CRS Report R45705, Base Closure and Realignment (BRAC): Background and Issues for Congress, by Christopher~~
~~T. Mann.~~
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~~Military Families and Financial Readiness~~

member up to $1,500 per month. Starting in March 2020, servicemembers who were ordered to member up to $1,500 per month. Starting in March 2020, servicemembers who were ordered to
self-monitor in isolation due to COVID-19 exposure or infection were eligible for self-monitor in isolation due to COVID-19 exposure or infection were eligible for hardship duty
pay-restriction of movement (HDP-ROM). (HDP-ROM).~~102~~106 Servicemembers were eligible for a taxable payment Servicemembers were eligible for a taxable payment
of $100 per day if they were ordered to isolate somewhere other than at their home or a of $100 per day if they were ordered to isolate somewhere other than at their home or a
government-funded lodging facility. government-funded lodging facility.
Nongovernmental Direct Financial Assistance
Servicemembers who face financial difficulties have some military-specific options available to Servicemembers who face financial difficulties have some military-specific options available to
them for direct relief. DOD reports that servicemembers generally have access to low-cost loans them for direct relief. DOD reports that servicemembers generally have access to low-cost loans
through banks and credit unions operating on military bases. Other military and veteran-serving through banks and credit unions operating on military bases. Other military and veteran-serving
nonprofit organizations also provide direct financial assistance to families facing emergency nonprofit organizations also provide direct financial assistance to families facing emergency
104 P.L. 111-5, codified in 42 U.S.C. §3374. 105 CRS Report R45705, Base Closure and Realignment (BRAC): Background and Issues for Congress, by Christopher T. Mann. 106 DOD, Fact Sheet: COVID-19 Military Personnel, Pay, and Benefits Policy, March 26, 2020. Congressional Research Service 17 Military Families and Financial Readiness expenses (e.g., foreclosure or eviction, utility shut-offs).expenses (e.g., foreclosure or eviction, utility shut-offs).~~103~~107 Each of the military departments and Each of the military departments and
the Coast Guard also have relief societies. The Armed Forces Relief Societies are nonprofit the Coast Guard also have relief societies. The Armed Forces Relief Societies are nonprofit
organizations that provide financial counseling, education, and emergency financial assistance organizations that provide financial counseling, education, and emergency financial assistance
through grants or interest-free loans to uniformed servicemembers, retirees, survivors and through grants or interest-free loans to uniformed servicemembers, retirees, survivors and
military dependents. They include military dependents. They include
 Army Emergency Relief (AER),  Army Emergency Relief (AER),~~104~~108
 Navy-Marine Corps Relief Society (NMCRS) Navy-Marine Corps Relief Society (NMCRS)~~105~~109, ,
 Air Force Aid Society, Air Force Aid Society,~~106~~110 and and
 Coast Guard Mutual Assistance. Coast Guard Mutual Assistance.~~107~~111
Interest-free loans issued by these societies are typically short-term (12 months) and range from Interest-free loans issued by these societies are typically short-term (12 months) and range from
about $500-$2,000. This type of financial assistance can help members to manage unexpected about $500-$2,000. This type of financial assistance can help members to manage unexpected
financial shocks, or to restructure debt. financial shocks, or to restructure debt.
Policy Issues for Congress
Congress and DOD have taken several actions through law and regulation to improve military Congress and DOD have taken several actions through law and regulation to improve military
readiness, including enhancing military consumer protections, actions toward increasing the readiness, including enhancing military consumer protections, actions toward increasing the
financial literacy of servicemembers and dependents, and direct financial support to the lower financial literacy of servicemembers and dependents, and direct financial support to the lower
income or otherwise vulnerable families during times of need or national emergency. Congress income or otherwise vulnerable families during times of need or national emergency. Congress
may consider the adequacy and equity of current programs and coverage, as well as the may consider the adequacy and equity of current programs and coverage, as well as the
appropriate consumer financial protections for servicemembers. appropriate consumer financial protections for servicemembers.

~~102 DOD, Fact Sheet: COVID-19 Military Personnel, Pay, and Benefits Policy, March 26, 2020.~~
~~103 See for example, American Legion temporary financial assistance grants, at~~
~~https://www.legion.org/financialassistance, and The Enlisted Association of the National Guard of the United States at~~
~~https://eangus-wcfa.org/covid-19-loan-information/.~~
~~104 https://www.armyemergencyrelief.org/.~~
~~105 https://www.nmcrs.org/pages/our-history.~~
~~106 https://afas.org/.~~
~~107 https://www.cgmahq.org/.~~
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Financial Literacy Training: Saliency and Effectiveness
Just as the range of financial product offerings has expanded, so have the financial literacy Just as the range of financial product offerings has expanded, so have the financial literacy
training offerings and the federal spending on such programs.training offerings and the federal spending on such programs.~~108~~112 In general, research suggests that In general, research suggests that
financial literacy training is correlated with positive credit behaviors (e.g., on-time bill payment), financial literacy training is correlated with positive credit behaviors (e.g., on-time bill payment),
better retirement planning and wealth accumulation, and overall financial well-being. Evidence is better retirement planning and wealth accumulation, and overall financial well-being. Evidence is
limited as to whether financial literacy training is effective in increasing knowledge and shifting limited as to whether financial literacy training is effective in increasing knowledge and shifting
behaviors for military servicemembers and households. In some cases, servicemember-specific behaviors for military servicemembers and households. In some cases, servicemember-specific
training has been associated with improvements in self-reported financial knowledge and training has been associated with improvements in self-reported financial knowledge and
behavior relative to a comparison group.behavior relative to a comparison group.~~109~~113 For example, a study of the U.S. Army's personal For example, a study of the U.S. Army's personal
financial management course for new enlistees found that it reduced credit delinquencies and debt financial management course for new enlistees found that it reduced credit delinquencies and debt
balances in the year following the course, and increased retirement savings rates for at least two balances in the year following the course, and increased retirement savings rates for at least two
107 See for example, American Legion temporary financial assistance grants, at https://www.legion.org/financialassistance, and The Enlisted Association of the National Guard of the United States at https://eangus-wcfa.org/covid-19-loan-information/. 108 https://www.armyemergencyrelief.org/. 109 https://www.nmcrs.org/pages/our-history. 110 https://afas.org/. 111 https://www.cgmahq.org/. 112 U.S. Government Accountability Office, Financial Literacy: Overlap of Programs Suggests There May Opportunities for Consolidation, GAO-12-588, July 2012, Table 1, p. 6. 113 Catherine Bell, Daniel Gorin, and Jeanne M. Hogarth, "Does Financial Education Affect Soldiers’ Financial Behavior?," Networks Financial Institute, Indiana State University, August 2009. Congressional Research Service 18 Military Families and Financial Readiness years afterwards.114~~years afterwards.110~~ In this study, the effect of the course on adverse credit events did not persist In this study, the effect of the course on adverse credit events did not persist
beyond the first year, suggesting that the current approach of requiring training at multiple career beyond the first year, suggesting that the current approach of requiring training at multiple career
milestones (as per 10 U.S.C. §992) may be effective for sustained impact. milestones (as per 10 U.S.C. §992) may be effective for sustained impact.
Civilian research indicates that outcomes associated with financial education are sensitive to the Civilian research indicates that outcomes associated with financial education are sensitive to the
timing, method of delivery, and content, among other factors.timing, method of delivery, and content, among other factors.~~111~~115 There also is some research to There also is some research to
suggest that there are racial and gender differences in baseline financial knowledge and post-suggest that there are racial and gender differences in baseline financial knowledge and post-
training outcomes.training outcomes.~~112~~116 These findings suggest that offering targeted or tailored training to various These findings suggest that offering targeted or tailored training to various
military sub-populations might increase its effectiveness.military sub-populations might increase its effectiveness.~~113~~117
Past government reports have also pointed to opportunities to consolidate federal efforts for Past government reports have also pointed to opportunities to consolidate federal efforts for
financial literacy training both across and within agencies to improve efficiency and oversight. financial literacy training both across and within agencies to improve efficiency and oversight.
For example, a 2019 report from the Treasury Department recommended that DOD take the lead For example, a 2019 report from the Treasury Department recommended that DOD take the lead
on financial education activities for servicemembers and their families, while considering, “how on financial education activities for servicemembers and their families, while considering, “how
to reduce, consolidate or eliminate seemingly duplicative financial education activities among the to reduce, consolidate or eliminate seemingly duplicative financial education activities among the
military services, including duplicative curricula.”military services, including duplicative curricula.” ~~114~~118 This recommendation was adopted by the This recommendation was adopted by the
Financial Literacy and Education Commission (FLEC) as part of UFinancial Literacy and Education Commission (FLEC) as part of U.S. National Strategy for
Financial Literacy 2020..~~115~~

~~108 U.S. Government Accountability Office,~~ ~~Financial Literacy: Overlap of Programs Suggests There May~~
~~Opportunities for Consolidation, GAO-12-588, July 2012, Table 1, p. 6.~~
~~109 Catherine Bell, Daniel Gorin, and Jeanne M. Hogarth, "Does Financial Education Affect Soldiers’ Financial~~
~~Behavior?," Networks Financial Institute, Indiana State University, August 2009.~~
~~110~~119 Some have argued that the government should focus its financial literacy education efforts before individuals enter the military, as part of K-12 education.120 There may other opportunities to prepare those with an affinity or propensity for military service, through courses in Junior Reserve Officer Training Corps (JROTC), Senior Reserve Officer Training Corps (SROTC), or other recruiter outreach and intake programs (e.g., Delayed Entry Program (DEP)).121 Variations in Consumer Protection Coverage by Duty Status and Dependency One consideration for Congress whether the eligible population under military consumer protection laws should be clarified or broadened. While active component (AC) members and 114 William Skimmyhorn, "Assessing Financial Education: Evidence from Boot Camp," William Skimmyhorn, "Assessing Financial Education: Evidence from Boot Camp," American Economic Journal:
Economic Policy, vol. 8, no. 2 (May 2016). , vol. 8, no. 2 (May 2016).
~~111~~115 Jamie Francis Wagner, “An analysis of the effects of financial education on financial literacy and financial Jamie Francis Wagner, “An analysis of the effects of financial education on financial literacy and financial
behaviors,” behaviors,” The University of Nebraska-Lincoln, 2015. Evan Davies and Perry Bolding, , 2015. Evan Davies and Perry Bolding, A Literature Review of the
Teaching Methods Used in Financial Literacy Education, Center for Faculty Excellence, United States Military , Center for Faculty Excellence, United States Military
Academy, 2016Academy, 2016. CRS Report R46941, CRS Report R46941, Financial Literacy and Financial Education Policy Issues, by Cheryl R. Cooper. , by Cheryl R. Cooper.
~~112~~116 Abdullah Al-Bahrani, Jamie Weathers, and Darshak Patel, “Racial Differences in the Returns to Financial Literacy Abdullah Al-Bahrani, Jamie Weathers, and Darshak Patel, “Racial Differences in the Returns to Financial Literacy
Education," Education," The Journal of Consumer Affairs, vol. 52, no. 2 (June 7, 2018), pp. 572-599. Roger B. Butters, Carlos J. , vol. 52, no. 2 (June 7, 2018), pp. 572-599. Roger B. Butters, Carlos J.
Asarta, and Shannon G. McCoy, “Financial Literacy and Gender in U.S. High Schools” Asarta, and Shannon G. McCoy, “Financial Literacy and Gender in U.S. High Schools” Journal of Economics and
Financial Education, vol. 11, no. 2 (Winter 2012), pp. 142-149. , vol. 11, no. 2 (Winter 2012), pp. 142-149.
~~113~~117 For more on financial education best practices, see CRS Report R46941, For more on financial education best practices, see CRS Report R46941, Financial Literacy and Financial
Education Policy Issues, by Cheryl R. Cooper. , by Cheryl R. Cooper.
~~114~~118 U.S. Department of the Treasury, U.S. Department of the Treasury, Federal Financial Literacy Reforms; Coordinating and Improving Financial
Literacy Efforts, July 2019, p. 9. U.S. Government Accountability Office, , July 2019, p. 9. U.S. Government Accountability Office, Financial Literacy: Overlap of Programs
Suggests There May Opportunities for Consolidation, GAO-12-588, July 2012. , GAO-12-588, July 2012.
~~115~~119 FLEC, FLEC, U.S. National Strategy for Financial Literacy 2020, 2020, p. 13. , 2020, p. 13.
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~~link to page 24~~ ~~Military Families and Financial Readiness~~

~~Some have argued that the government should focus its financial literacy education efforts before~~
~~individuals enter the military, as part of K-12 education.116 There may other opportunities to~~
~~prepare those with an affinity or propensity for military service, through courses in Junior~~
~~Reserve Officer~~120 Jamie Gayton, "Military financial literacy improving, but it needs to start sooner," Fox Business News, April 30, 2019. 121 JROTC is offered in 8th grade through 12th grade in some schools. See CRS In Focus IF11313, Defense Primer: Junior Reserve Officers’ Training Corps (JROTC) Training Corps (JROTC), by Kristy N. Kamarck, and CRS In Focus IF11235, Defense Primer: Senior Reserve Officer Training Corps, by Kristy N. Kamarck. Congressional Research Service 19 link to page 24 Military Families and Financial Readiness ~~, Senior Reserve Officer Training Corps (SROTC), or~~
~~other recruiter outreach and intake programs (e.g., Delayed Entry Program (DEP)).117~~
~~Variations in Consumer Protection Coverage by Duty Status and~~
~~Dependency~~
~~One consideration for Congress whether the eligible population under military consumer~~
~~protection laws should be clarified or broadened. While active component (AC) members and~~
their dependents are always covered by the SCRA and MLA, coverage for reserve component their dependents are always covered by the SCRA and MLA, coverage for reserve component
(RC) members is often contingent on their duty status ((RC) members is often contingent on their duty status (~~see~~see Table 2). For members of the RC, . For members of the RC,
MLA eligibility may be conditioned on the amount of time served on active duty. Dependent MLA eligibility may be conditioned on the amount of time served on active duty. Dependent
eligibility for certain protections is also variable, as these acts rely on dependency definitions eligibility for certain protections is also variable, as these acts rely on dependency definitions
from different sections of code. For example, the MLA has more expansive coverage for from different sections of code. For example, the MLA has more expansive coverage for
dependents, including un-remarried former spouses and widows/widowers as well as older dependents, including un-remarried former spouses and widows/widowers as well as older
dependent children. dependent children.
Variations in coverage and eligibility between the two laws can sometimes create a confusing Variations in coverage and eligibility between the two laws can sometimes create a confusing
landscape for military families, and for providers of consumer credit. These issues can be landscape for military families, and for providers of consumer credit. These issues can be
particularly challenging for RC members whose duty status changes more frequently and who particularly challenging for RC members whose duty status changes more frequently and who
may not have the same level of access to financial counseling, education, or other forms of may not have the same level of access to financial counseling, education, or other forms of
installation-based support as their AC counterparts. In addition, coverage may lapse for certain installation-based support as their AC counterparts. In addition, coverage may lapse for certain
military servicemembers and families during times when they are at the highest risk for financial military servicemembers and families during times when they are at the highest risk for financial
shocks, for example, following the death of a servicemember, when transitioning out of the shocks, for example, following the death of a servicemember, when transitioning out of the
military to veteran status, or when demobilizing from a reserve activation. From the financial firm military to veteran status, or when demobilizing from a reserve activation. From the financial firm
perspective, verifying eligibility by duty status can lead to additional administrative compliance perspective, verifying eligibility by duty status can lead to additional administrative compliance
costs and delays in issuing credit.costs and delays in issuing credit.~~118~~122 Congress may consider whether existing law covers the Congress may consider whether existing law covers the
intended population and if there are gaps in intended coverage based on duty status or intended population and if there are gaps in intended coverage based on duty status or
dependency. dependency.

~~116 Jamie Gayton, "Military financial literacy improving, but it needs to start sooner," Fox Business News, April 30,~~
~~2019.~~
~~117 JROTC is offered in 8th grade through 12th grade in some schools. See CRS In Focus IF11313,~~ ~~Defense Primer:~~
~~Junior Reserve Officers’ Training Corps (JROTC), by Kristy N. Kamarck, and CRS In Focus IF11235,~~ ~~Defense~~
~~Primer: Senior Reserve Officer Training Corps, by Kristy N. Kamarck.~~
~~118 Nick Rummell, “Pawnbrokers Say New Lending Law Is Ruinous,” Courthouse News Service, July 13, 2016.~~
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~~Military Families and Financial Readiness~~

~~Table 2. Variations in Benefit Coverage by Status~~
~~Law~~
~~Active~~
~~Reserve Component~~
~~Dependents~~
~~Component~~ Table 2. Variations in Benefit Coverage by Status Active Law Component Reserve Component Dependents
SCRA SCRA
All All
Reserves ordered to active duty Spouse Reserves ordered to active duty Spouse
as defined under 10 U.S.C. as defined under 10 U.S.C.
Dependent child(ren) as defined under 38 U.S.C. Dependent child(ren) as defined under 38 U.S.C.
101(d)(1). 101(d)(1).
§101(4), including §101(4), including:
National Guard when under a National Guard when under a
 
Child under the age of 18 (under age 23 for Child under the age of 18 (under age 23 for
call to active service authorized call to active service authorized
~~full~~ful -time student), -time student),
by the President or the by the President or the
Secretary of Defense for a Secretary of Defense for a
 
Incapacitated child if incapacitation is prior Incapacitated child if incapacitation is prior
period of more than 30 period of more than 30
to age 18. to age 18.
consecutive days under section consecutive days under section
 
An individual for whom the servicemember An individual for whom the servicemember
502(f) of title 32 for purposes of 502(f) of title 32 for purposes of
provided more than one-half of the provided more than one-half of the
responding to a national responding to a national
individual's support for 180 days immediately individual's support for 180 days immediately
emergency declared by the emergency declared by the
preceding an application for relief. preceding an application for relief.
President and supported by President and supported by
Federal funds Federal funds
MLA MLA
All All
Members on Active Guard and Members on Active Guard and
Dependents as defined under 10 U.S.C. 1072(2), Dependents as defined under 10 U.S.C. 1072(2),
Reserve duty or on active duty Reserve duty or on active duty
including including:
for 30 days or longer. for 30 days or longer.
 
Spouse Spouse
 
Un-remarried former spouse (if married for Un-remarried former spouse (if married for
20 years w/20 years of service), 20 years w/20 years of service),
 
Un-remarried widow/widower Un-remarried widow/widower
 
Children under age 21 (under age 23 if Children under age 21 (under age 23 if ~~full~~ful --
time student), time student),
 
Incapacitated child at any age, Incapacitated child at any age,
 
Dependent parent or parent-in-law Dependent parent or parent-in-law
122 Nick Rummell, “Pawnbrokers Say New Lending Law Is Ruinous,” Courthouse News Service, July 13, 2016. Congressional Research Service 20 link to page 6 Military Families and Financial Readiness Source: CRS analysis of statute. CRS analysis of statute.
Notes: Under SCRA, a servicemember’s child is as defined under 38 U.S.C. §101(4). Dependent eligibility is Under SCRA, a servicemember’s child is as defined under 38 U.S.C. §101(4). Dependent eligibility is
contingent on the duty status of the member. contingent on the duty status of the member.
Military-specific Consumer Financial Regulations
Over the past few decades, Congress has treated military servicemembers and their families as a Over the past few decades, Congress has treated military servicemembers and their families as a
special category for consumer protections. This is largely due to the unique nature of military special category for consumer protections. This is largely due to the unique nature of military
work and the need to maintain individual and family readiness. Some lenders and advocates for work and the need to maintain individual and family readiness. Some lenders and advocates for
the consumer credit industry argue that MLA and other military-specific rules impose undue the consumer credit industry argue that MLA and other military-specific rules impose undue
regulatory burdens and compliance costs on their businesses.regulatory burdens and compliance costs on their businesses.~~119~~123 In addition, they note that the In addition, they note that the
rules limit access to credit, including the potential range of consumer credit products available to rules limit access to credit, including the potential range of consumer credit products available to
servicemembers and family members, which could result in unmet needs and financial hardships servicemembers and family members, which could result in unmet needs and financial hardships
for those individuals.for those individuals.~~120~~124
On the other hand, consumer and military advocacy groups see military-connected consumers as On the other hand, consumer and military advocacy groups see military-connected consumers as
a particularly vulnerable group in need of stronger financial market regulations, oversight, and a particularly vulnerable group in need of stronger financial market regulations, oversight, and
enforcement. These groups argue that regulatory initiatives like transparency in lending rates and enforcement. These groups argue that regulatory initiatives like transparency in lending rates and
limits on interest rates can help servicemembers and their families make more informed and limits on interest rates can help servicemembers and their families make more informed and

~~119 Ibid.~~
~~120 See for example, Roxette Pietri-Freeman, "Law change creates GAP insurance confusion for military members,"~~
~~KTBS.com, October 27, 2019.~~
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better financial decisions. Some have also argued that these protections should not be limited to better financial decisions. Some have also argued that these protections should not be limited to
military servicemembers and should be expanded to other civilian consumers. military servicemembers and should be expanded to other civilian consumers.
One consideration might be whether certain protections should be expanded to veterans for a One consideration might be whether certain protections should be expanded to veterans for a
certain period of time post-service. certain period of time post-service. While post-service earnings vary based on military occupation and years of experience, data suggests that, on average, servicemembers have lower earnings after leaving the service compared with their final year of active duty.125 There is some evidence to indicate that recently separated There is some evidence to indicate that recently separated
enlisted servicemembers struggle with financial stability, including higher rates of debt enlisted servicemembers struggle with financial stability, including higher rates of debt
delinquency and derogatory marks on their credit scores.delinquency and derogatory marks on their credit scores.~~121~~126 This may be due to post-service dips This may be due to post-service dips
in income that make it more challenging for veterans to meet debt obligations they incurred while in income that make it more challenging for veterans to meet debt obligations they incurred while
in service. Compared to their civilian counterparts ages 18 to 24, young servicemembers are more in service. Compared to their civilian counterparts ages 18 to 24, young servicemembers are more
likely to have an auto loan or a credit card, and slightly more likely to have a mortgage.likely to have an auto loan or a credit card, and slightly more likely to have a mortgage.~~122~~127 As As
noted noted inin Table 1, thethe annual earnings (RMC) for a single enlisted Private First Class (E-3) with annual earnings (RMC) for a single enlisted Private First Class (E-3) with
less than two years of service is about $50,000, while the Census Bureau reports that average less than two years of service is about $50,000, while the Census Bureau reports that average
earnings for a veteran E-3 is $26,140 in the first year post-discharge.earnings for a veteran E-3 is $26,140 in the first year post-discharge.~~123~~128
Congress may consider these and other questions when developing military-specific policies and Congress may consider these and other questions when developing military-specific policies and
programs. programs.

~~121~~ 123 Ibid. 124 See for example, Roxette Pietri-Freeman, "Law change creates GAP insurance confusion for military members," KTBS.com, October 27, 2019. 125 Charles Goldman et al., Navigating a Big Transition: Military Service Members Earnings and Employment After Active Duty Service, RAND Corporation, Santa Monica, CA, 2021, at https://www.rand.org/pubs/research_reports/RRA361-1.html. 126 CFPB, CFPB, Debt and delinquency after military service: A study of the credit records of young veterans in the first year
after separation, Consumer education and empowerment, November 9, 2020. , Consumer education and empowerment, November 9, 2020.
~~122~~127 CFPB, CFPB, Financially Fit? Comparing the credit records of young servicemembers and civilians, Consumer education , Consumer education
and empowerment, July 14, 2020. This report notes that servicemembers are less likely than civilian counterparts to and empowerment, July 14, 2020. This report notes that servicemembers are less likely than civilian counterparts to
have student loans while in the service. have student loans while in the service.
~~123~~128 United States Census Bureau, United States Census Bureau, Veteran Employment Outcomes Explorer, Earnings for Employed Veterans by , Earnings for Employed Veterans by
Paygrade; 2014-2015 Exit Cohort, at https://lehd.ces.census.gov/applications/veo/service/paygrade/line. Paygrade; 2014-2015 Exit Cohort, at https://lehd.ces.census.gov/applications/veo/service/paygrade/line.
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Congressional Research Service 22 Military Families and Financial Readiness Appendix. Selected Legislation
Table A-1. Selected Legislation
2003-2021 2003-2021
Year
Citation
Legislation Title and Description
2003 2003
P.L. 108-136 P.L. 108-136 National Defense Authorization Act for Fiscal Year 2004
Required congressional notification of amendment or cancellation of DOD directive Required congressional notification of amendment or cancellation of DOD directive
relating to reasonable access to military installations for certain personal commercial relating to reasonable access to military installations for certain personal commercial
solicitation. (repealed in 2005) solicitation. (repealed in 2005)

P.L. 108-189 P.L. 108-189 Servicemembers Civil Relief Act (SCRA)
Amended the Soldiers' and Sailors' Civil Relief Act of 1940 (SSCRA) Amended the Soldiers' and Sailors' Civil Relief Act of 1940 (SSCRA)
2006 2006
P.L. 109-163 P.L. 109-163
National Defense Authorization Act for Fiscal Year 2006, Title V, Subtitle I,
Consumer Protection Matters
Required regulations on policies and procedures on personal commercial solicitations on Required regulations on policies and procedures on personal commercial solicitations on
DOD installations. DOD installations.
Required consumer education for members of the Armed Forces and their spouses on Required consumer education for members of the Armed Forces and their spouses on
insurance and other financial services. insurance and other financial services.
Required DOD report on predatory lending practices directed at members of the Required DOD report on predatory lending practices directed at members of the
Armed Forces and their dependents. Armed Forces and their dependents.

P.L. 109-290 P.L. 109-290
Military Personnel Financial Services Protection Act
Modified regulatory requirements with respect to sales of certain securities on military Modified regulatory requirements with respect to sales of certain securities on military
installations and to military servicemembers. installations and to military servicemembers.
Required certain disclosure on the sale of life insurance products to members of the Required certain disclosure on the sale of life insurance products to members of the
Armed Forces. Armed Forces.
Banned insurance agents and financial advisors who violate regulations from doing Banned insurance agents and financial advisors who violate regulations from doing
business on military installations and required enhanced monitoring by DOD. business on military installations and required enhanced monitoring by DOD.
2007 2007
P.L. 109-364 P.L. 109-364 John Warner National Defense Authorization Act for Fiscal Year 2007
Enacted the Military Lending Act (MLA) with a cap on the interest rate, and other Enacted the Military Lending Act (MLA) with a cap on the interest rate, and other
restrictions on certain credit products marketed to military servicemembers. restrictions on certain credit products marketed to military servicemembers.
2009 2009
P.L. 111-5 P.L. 111-5
American Recovery and Reinvestment Act of 2009
Expanded the Homeowners Assistance Program for certain military servicemembers. Expanded the Homeowners Assistance Program for certain military servicemembers.
2010 2010
P.L. 111-203 P.L. 111-203
Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-
§1029(e) §1029(e)
Frank)
Created CFBP OSA and mandated a role for the agency in military financial education Created CFBP OSA and mandated a role for the agency in military financial education
and oversight of military consumer protections. and oversight of military consumer protections.
2012 2012
P.L. 112-239 P.L. 112-239 National Defense Authorization Act for Fiscal Year 2013
Amended the MLA. Amended the MLA.
2015 2015
P.L. 114-92 P.L. 114-92
National Defense Authorization Act for Fiscal Year 2016
Amended 10 U.S.C. §992 to require DOD to conduct an annual survey of the “status of Amended 10 U.S.C. §992 to require DOD to conduct an annual survey of the “status of
the financial literacy and preparedness of members of the armed forces,” and report to the financial literacy and preparedness of members of the armed forces,” and report to
the Armed Services Committees.the Armed Services Committees. 2021 P.L. 117-81 National Defense Authorization Act for Fiscal Year 2022 Authorized a “Basic Needs Allowance” from the Department of Defense for certain servicemember households with dependents whose gross income is below 130% of the federal poverty line.
Source: CRS analysis of legislation CRS analysis of legislation
Congressional Research Service Congressional Research Service
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Military Families and Financial Readiness

Author Information

Kristy N. Kamarck Kristy N. Kamarck

Specialist in Military Manpower Specialist in Military Manpower

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