US Default Could Stop Military Paychecks, But Navy Federal Has a Fix

The Navy Federal Credit Union mascot takes a photo with runners.
The Navy Federal Credit Union mascot takes a photo with runners during the Marine Corps Marathon Kids Run at Long Bridge Park in Arlington, Virginia, Oct. 29, 2022. (U.S. Marine Corps photo by Lance Cpl. Christopher D. Zincke)

Active-duty troops, reservists, civilian employees and contractors of the Defense Department may not have to go without pay if an ongoing political fight in Washington, D.C., leads to a default on U.S. debt -- if they’re signed up to have their pay directly deposited into Navy Federal Credit Union, that is.

President Biden and House Republicans are wrangling over a deal to raise the government’s debt ceiling and head off a potential June 1 default, which could disrupt the issuance of military paychecks. If they can’t reach an agreement, Navy Federal will offer its members interest-free loans to help bridge the gap, the credit union announced Friday.

The debt ceiling or debt limit refers to how much money the federal government may borrow to pay its bills.

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Navy Federal has provided interest-free loans during government shutdowns in 2011, 2013 and 2018-2019, according to its news release announcing the paycheck assistance program.

Here’s how it works:

  • To qualify, a Navy Federal member’s paycheck must come directly from the federal government via direct deposit, and it must be affected by the debt default.
  • Preferably no later than the day before the member’s scheduled pay date, but up to three days after, the member must register to receive a loan in advance of the pay owed.
  • Loan amounts are determined in $500 increments. If the member’s last paycheck amounted to $1,001-$1,500, for example, the member will receive a loan of $1,000. If the last check was for $2,501-$3,000, the loan will be for $2,500.
  • Once direct deposits resume, Navy Federal will automatically deduct the loan amount so that it’s repaid.

For customers who don’t meet the eligibility requirements, other help may be possible by consulting a member services representative, according to the announcement.

Meanwhile, USAA -- a chief competitor to Navy Federal -- is “hopeful lawmakers can reach an agreement” but is “monitoring this issue and … ready to assist our members in the event of default,” the bank said in a statement emailed to

The president and Republicans reportedly hoped to reach a deal this weekend that would raise the debt limit as well as “curb federal spending,” according to the Associated Press.

In a letter to members of Congress sent Monday, Treasury Secretary Janet Yellen estimated that without a deal to raise or suspend the U.S. debt limit, the federal government might no longer be able to pay all of its bills as soon as June 1.

Yellen cited past debt limit impasses, saying they hurt business and consumer confidence, borrowing costs for taxpayers and the credit rating of the country.

“If Congress fails to increase the debt limit, it would cause severe hardship to American families, harm our global leadership position, and raise questions about our ability to defend our national security interests,” Yellen said in the letter.

Amanda Miller can be reached at

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