What We All Can Learn from the Military's Payday Loan Problem

Getty Images As a 19-year-old, Robert Knoll made a mistake that many young people do -- he got into debt. Knoll did it by living beyond his meager salary as a U.S. Marine, and using small payday loans to help him get by between paychecks. "The problem, though, is it puts you behind the next payday," Knoll says. Those $80 to $200 payday loans added up, along with the $50 in interest he'd pay to borrow $200 for five days. With an annual percentage rate on the loan of more than 200 percent, Knoll would post-date a check for $250 for a $200 loan that would be paid off five days later when his paycheck was deposited into his checking account. "You can spend your entire paycheck before you get it," says Knoll, now an account executive at DRIVEN Public Relations in Temecula, California. He retired as a Marine master sergeant in 2013. Help From the ARK Unlike servicemembers today, Knoll didn't have help from the military on payday loans back then. One program that officials are trying to remind military members and their families about is the Asset Recovery Kit. For a $5 fee, members of 17 credit unions supported by the Pentagon Federal Credit Union Foundation can borrow up to $500 interest-free for 30 days. The program has loaned more than $3.8 million in 8,724 loans since it started in 2004, says Jane Whitfield, president and CEO of the PenFed Foundation. "We want to help in preventing short-term emergencies becoming long-term problems," she says.