For-profit colleges target military personnel and market high-interest private loans


Image Credit: ABC

ABC News’ Amy Bingham and Tom Shine report:

American students are in debt, $ 1 trillion indebted In reality. But while most university graduates struggle to repay loans with less than 10% interest, some soldiers are drowning in much more expensive loans.

Holly Petraeus, wife of CIA Director David Petraeus and advocate for military families, told a Senate panel today that for-profit colleges are actively targeting military personnel and their families, marketing loans with an interest rate of up to 584 percent APR.

“There are real concerns, there is real aggressive marketing going on right now for the military and not just for the military, but also for their spouses and children,” said Petraeus.

To pay for expensive private schools, these colleges often market “expensive private student loans” to service members who, as a group, already tend to have more debt than the average American, said Petraeus, who works with the new Consumer Bureau of Financial Protection to protect military families from such predatory loans.

Petreaus said she spoke with an army bride at Fort. Campbell in Kentucky who had enrolled in an online course at a college she believed to be officially associated with the military. She said officials from the school, which actually had no military affiliation, called her a dozen times a day until she agreed to enroll.

But help was nowhere to be found once the school received payment for its tuition fees. The woman ended up failing her class because she was having trouble connecting, Petraeus said.

“I have a real interest in people being able to make more informed decisions than, ‘Well they looked friendly to the military and they called me 10 to 15 times a day,’ he said. -she declared to the Senate committee. “There are serious questions as to whether the education you get in many of these institutions justifies the high cost. “

When meeting with military personnel across the country, Petraeus said she had also heard horror stories of loan companies charging crippling interest rates. An internet lender, she said, told military personnel who visit their site: “We believe that your membership in the armed forces entitles you to special treatment. We speak your language ! This language includes an interest rate on their loans of almost 600 percent APR.

And when vets fall behind in their payments, harassing debt collectors take over.

“They can call a serviceman’s home and unit 20 or 30 times a day, threaten him with the uniform code of military justice and tell him that he is going to have him fired or have his security clearance revoked if he is. does not pay. up, ”said Petreaus. “We even heard of a debt collector harassing the surviving wife of a soldier killed in action, insisting that she should use the money from her death gratuity to pay off a debt immediately.”

College fees aside, many servicemen are in debt even before enlisting. Petreaus said that on a recent trip to Texas, “We were told that the average Air Force recruit arrives at Lackland Air Force Base for basic training with over $ 10,000 in debt.”

“A persistent problem for the military is the general problem of debt,” said Petraeus. “Sadly, there are still too many young soldiers who are learning to spend wisely through difficult experience and years of paying off expensive debts. “


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