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Evaluation White Paper

Military Personnel

Members of the U.S. military have unique financial circumstances. They can be deployed for years while accumulating a monthly paycheck, often spending little of that income during deployment. Upon returning to the United States they get a lump sum payment that may encourage overconsumption and accumulation of unsustainable debt, which can lead to financial hardship (Elbogen, 2015). Military families at home also must deal with an active duty member being removed from day-to-day financial decisions for an extended period of time, which can create financial problems during their absence and upon their return.

In addition, the transition to civilian life can be financially challenging for members of the U.S. military. One major decision for many service members is whether to attend additional years of schooling. Although the U.S. government provides assistance to military members through the GI Bill, there are requirements that must be met for members to receive the benefits (VA, 2016a). Ensuring that service members are fully aware of all requirements allows them to take full advantage of these benefits. The support also extends to mortgages as the Department of Veterans Affairs guarantees home loans to military members. Many members, past and present, are not fully aware of these benefits and how to use them to their fullest potential (Elbogen, 2015). Providing financial education to this group on topics that are specific to their special circumstance can help reduce the financial burden placed on these households.

Service members are often found to have low levels of financial literacy (FINRA, 2013a), which can have consequences for financial decision-making. Military members are more likely than adult civilians to engage in higher cost alternative financial services, including non-bank check cashing and payday loans (Carrell & Zinman, 2014) and are more likely to report their home is “underwater” (FINRA, 2013b). Due to the unique situation members of the military experience, the National Defense Authorization Act for Fiscal Year 2016 included a financial literacy mandate issued to the U.S. Department of Defense. The mandate requires that financial literacy training be provided to members of the uniformed services. The training is to focus on various career and life milestones that may require financial education. The provision also requires the Department of Defense to include a “financial literacy and preparedness survey in the status of the forces survey” (National Defense Authorization Act for 2016, 2015).

5A. Key Programs and Resources

The two main sources for financial education programs for active duty and retired military members are from the U.S. government and non-profit organizations. The Department of Defense, along with all branches of the military, provided financial education programs or financial assistance prior to the National Defense Authorization Act of 2016. The Department of Defense provides financial education and assistance through Military OneSource (Military OneSource, 2016). Military OneSource is a web-based resource for military members covering everyday issues, military benefits, relocation information, and personal finances. The program is open to all members of the military, including spouses and children, immediately after joining. Financial topics include: budgeting basics, home and family finances, savings tools, financial planning for deployment, general financial planning, financing college, protecting financial health, financial fraud and identity theft, taxes, and compensation and survivor benefits. Not only can members receive education directly from the website, they can also obtain additional information upon request or can speak with someone to receive immediate assistance (Military OneSource, 2016).

Individual branches of the military also provide personal financial assistance through their educational resource programs. Some education is offered in person during training sessions or based on the specific needs of the member. Education is also provided online in order for service members to access the material any time (Vitt et al., 2005). The Army provides financial education and assistance through an online service, Army OneSource. This service includes information on a wide variety of basic financial tools and every day decision-making assistance. The website also provides service members with a financial literacy game “Army Gold: Financial Game.” The game includes a virtual world where participants make financial decisions, including those specific to military members (Army OneSource, 2016).

The Navy delivers similar services through their Fleet and Family Support Programs (FFSP) which is provided both online and in person with a Command Financial Specialist (CFS). These specialists provide financial training, counseling and information based on the sailors’ needs. Financial topics include identity theft, predatory lending, creating a spending plan, saving and investing, consumer awareness, and financial resources (U. S. Navy Fleet and Family Support Programs, 2016).

The level of financial education offered by other branches of the military is less clear. The Marine Corps provides information on similar topics to both the Army and Navy, however, information is distributed through in-person workshops and seminars (U. S. Marine Corps, 2016). The Air Force also provides financial information to their members, though it appears they encourage their members to seek out education from non-profits (Air Force Personnel Center, 2016).

In addition to the financial literacy offered through the Department of Defense and branches of the military, the Consumer Financial Protection Bureau (CFPB) provides financial education and support along with advocating for stronger laws concerning the financial treatment of service members and veterans. The information provided through the CFPB website is specific to the financial situation of military members: education and student loan options, mortgages, debt collection and military benefits, and fraud protection. Support is also offered through financial coaching and a complaint system where service members can submit a complaint against a financial company and the CFPB will investigate the issue (CFPB, 2016).

Various non-profits are also providing financial education specific to the needs of military members. The Financial Industry Regulatory Authority (FINRA) provides resources for financial educators, specifically those targeting military members. The materials provided include general and specific financial education. Some specific financial education training includes transitioning to civilian life and GI Bill benefits related to paying for college. Another non-profit organization, InCharge Debt Solutions, provides service members with financial education programs, specifically assistance with their debt management (InCharge, 2016). There are many other non-profit organizations that provide financial education and support specifically to military members. These include, but are not limited to, National Financial Educators Council (NFEC, 2016), American Institute for CPAs (CPA, 2016), and the Better Business Bureau (BBB 2016). The Military Families Learning Network (MFLN) provides professional development training via webinars, blogs, and social media for professionals who serve military families. The MFLN has archived over sixty 90-minute personal finance webinars that are available for both professionals and military families. For more information, see http://articles.extension.org/militaryfamilies.

5B. Major Topics and Literature Review

Military members face the same financial issues any household experiences, however there are additional challenges. During deployment one member of the household may be responsible for all financial decisions. For single individuals, those financial decisions may be put on hold until returning from deployment or someone may be given power of attorney and required to make any financial decisions for the deployed member. The financial decisions made at this time may place strains on the relationship should any mismanagement of funds or disagreements occur. Many organizations providing financial education focus their programs on basic financial skills such as budgeting and debt management.

Military members also face financial challenges that are specific to their situation. The GI Bill, in reference to education and student loans, is an area often covered when providing financial education to service members. The details and requirements of the program can be difficult to understand, making it challenging for members to receive full benefits. In addition to support for educational advancement, service members and veterans are eligible for assistance with home loans. The Department for Veteran Affairs (VA) guarantees a portion of the home loan in order for the lender, private banks and mortgage companies, to provide more favorable terms to the service member (VA, 2016b). These loans also have specific requirements that the borrower and lender must be made aware of in order to secure the benefit.

The final area of education typically provided to military members is assistance with alternative financial services. Many service members utilize the services of nontraditional loans such as payday loans (Carrell & Zinman, 2014). These services are typically more costly than the loans provided by traditional banking institutions. The CFPB works to ensure military members limit the high APR often associated with these loans and any illegal debt collecting methods. The CFPB, along with other organizations, also provides education to members to ensure they fully understand the cost of these services and the longevity of the loans (CFPB, 2016).

Limited research has been done on the effectiveness of any financial education opportunities listed above or other programs specific to the military. Plantier and Durband (2007) investigated the use of financial resources provided to military members and their families. They found it difficult to recruit participants, and were only able to acquire data for 201 service members from over one million active duty personnel. One significant finding is that many spouses were not fully aware of the financial support and services offered by the military and often looked to non-military resources as an alternative.

Brand et al., (2011) examined the effectiveness of a two-day personal finance course completed by new enrollees into the Army. The authors found that the course did increase the number of service members signing up for retirement savings plans, but did not have a significant impact on establishing emergency funds. Bell et al., (2009) surveyed soldiers to determine their subjective well-being. The measure included indicators for how often they worry about their financial situation, along with their level of anxiety, difficulty sleeping, and ability to concentrate. On average, soldiers reported a relatively high level of subjective well-being, 16 points out of 20. While the authors did not have access to the service members’ actual level of financial knowledge, they did conclude a higher level of perceived financial knowledge increased the soldiers’ subjective well-being. Previous literature has found that perceived financial knowledge can be just as valuable as actual financial knowledge when examining financial behaviors and practices (Allgood & Walstad, 2016).

Skimmyhorn (2016) examined the effects of an eight-hour personal financial management course on a variety of financial behaviors. The course was a mandatory portion of the Advanced Individual Training (AIT) program for new enlistees to the U.S. Army. The course included “education, assistance in signing up for savings plans, and advice provided by the instructors during breaks or in response to specific questions.” After the first year, those participating in the course reduced their credit account balances, delinquencies, and saw a reduced number of adverse legal actions. These positive financial results, however, were not evident in the second year. What was consistent both years was an increase in savings rates.

5C. Evaluation Practices, Strengths and Limitations

Due to the limited research on the usage and effectiveness of the financial education programs provided by the military, there is little to report in terms of evaluation practices. Formal financial education evaluation that has been completed has focused on relatively short programs, spanning two days of basic training and totaling eight hours (Brand et al., 2011; Skimmyhorn, 2016). More research examining the effectiveness of Military OneSource and other branch-specific programs would provide further insight into the effectiveness of the military’s financial education programs.

The measures of success are also somewhat limited within existing literature. Evaluation of the financial education programs has been measured in terms of the number of soldiers signing up for retirement savings plans and reporting emergency funds (Brand et al., 2011; Skimmyhorn, 2016). Missing from the existing literature is evidence these programs improve financial literacy and have any effect on recurring financial behaviors. More research is specifically needed in investigating the effect of financial education programs on practices service members commonly engage in such as payday loans and maintaining credit card balances.

5D. Public Communication

After returning from deployment, many service members struggle to adapt to civilian life, not only with regard to making financial decisions but in other aspects of daily living. This results in high rates of homelessness and suicide among military members and veterans. Providing financial education and support may help alleviate some of the stresses that are put on members as they return to society. The government and non-profit organizations provide financial education and support to military members and veterans. Little is known, however, about whether the members are aware of the services, how frequently they are utilized, and their effectiveness. More research is needed to determine whether these resources are effective and what can be done to improve the financial literacy and well-being of current and past military members.