In a fabulous turn of events, the Army's relief society, Army Emergency Relief (AER), has decided to change the requirement that lower-ranking soldiers have supervisor approval for loans. This change is specifically designed to encourage cash-strapped soldiers to use an AER loan instead of going to a payday lender.
Effective 9 September 2015, any enlisted soldier who has served for more than one year and completed both basic training and advanced individual training (AIT) will be eligible to apply for a loan without the signature of their commander or first sergeant. AER officials will still have the option of requiring command notification and approval for situations where it sees potential risk.
This rule has long been a pet peeve of mine, and I could not be more happy about the change. While obviously there are no statistics available, anecdotal evidence suggests that many younger troops avoid using the services of AER due to the command approval requirement. It can be intimidating for soldiers to admit that they are having financial difficulties, and there is the perception that admitting financial stress will negatively impact careers.
The next stop for most of these soldiers is a payday lender. Despite laws designed to prevent excessive interest and fees on payday loans, creative lenders have figured out way to charge total costs reaching 300%. These outrageous costs increase the likelihood that a single loan can turn into a debt-spiral that lasts for months or even years.
In contrast, AER offers interest-free loans that are easily repaid through allotment. Repayment is crafted with affordability in mind, and problems with repayment won't set off a cycle of fees and charges that rapidly expand the amount of the debt.
Army Emergency Relief is a private, non-profit organization dedicated to "Helping The Army Take Care Of It's Own." In 2014, AER distributed over $57 million in loans and nearly $16 million in grants and scholarships. AER is funded through donations from a wide variety of sources, particularly paycheck donations from individual service members and donations from private organizations and for-profit companies. AER is rated 3 out of 4 stars by the charity watchdog group Charity Navigator.