FORT RUCKER, Ala. (June 20, 2013) -- Student loans can be a big help to those in need, but if not managed correctly might do more damage than good.

Mike Kozlowki, Army Community Service accredited financial counselor, said the most obvious danger with any loan, especially student loans, is allowing a loan to default by either neglect or ignorance.

"It's something you can't 'wish away' via Chapter 7 or 13 bankruptcy filing," he explained. "Student loans are among those debt obligations that are not exempt from any repayment, and defaulting on a loan will have negative impacts on your ability to get credit or favorable interest rates on large purchases such as homes and cars."

According to the Federal Reserve Bank of New York, nearly $1 trillion is currently owed on student loans and the average outstanding student loan balance per borrower is $24,803 with more than 15 million borrowers.

"If you take into consideration [the average student loan debt], then the obvious long- and short-term impact on an individual's personal finances is huge," said Kozlowski. "I have personally dealt with flight school students struggling to make payment on these debt loads."

This level of debt can cause difficulty for Families as well as Soldiers -- especially if a Family is already feeling the financial pressure of necessary living expenses, car payments or credit card debt, said Kozlowski.

"Most student loan finance companies have internal collecting departments that employ tactics that border on harassment, while others refer these collection accounts to outside firms," he said. "In both instances, these collection entities add interest charges and expenses to the original amounts owed, making repayment next to impossible given the terms.

"[Additionally] … debt has the potential to transform wedded bliss into marital nightmare," he said, adding that money management is traditionally one of the most difficult topics for married couples to discuss.

If a Soldier or Family is struggling to repay a student loan, a variety of assistance options are available to them, Kozlowski said. The first option to consider, a provision of the Service member's Civil Relief Act, can bring an interest rate down to a 6-percent floor.

The availability of other options depends on the type of loan -- whether it's a federal or private loan. For example, if a loan is eligible, the Army's Student Loan Repayment Program can contribute up to $65,000 toward the loan for enrolled active-duty Soldiers. Some funds are also available to the National Guard and Reserve through this program.

The William D. Fort Federal Direct Loan Program, also known as Direct Loans, is another program that "allows enrollees to consolidate their federal student loans and offers various payment plans which, in some cases, depending on the severity of economic hardship, are extremely affordable," Kozlowski said.

Information on both of these programs is available through the ACS Financial Readiness Program, he said.

Other Soldiers choose to have loans deferred under a military deferment option. This option usually gives the borrower a three-year break from making payments on federal loans, but regular payments will be due again at the end of the deferment period.

"My experience has shown that these arrangements are becoming increasingly more difficult to obtain from lenders," Kozlowski added.

One other option, called forbearance, is similar to deferment but Soldiers are encouraged to make monthly interest payments during the term of forbearance.

"Doing so will keep them from having missed interest payments from being 'capitalized' onto their new loan payments whenever they come due," he said.

Kozlowski advises Families and future students to do the research and consider all the options before applying for a student loan.

If a Soldier of Family is faced with the task of paying back a student loan, however, the best defense is to stay on top of the payments, said Kozlowski.

"Don't miss payment," he stressed. "I have discovered that this is the discipline that people fail to exercise with regard to their student loan debt service."

Other options for students include scholarships, grants and work-study program. Kozlowski recommends filling out the Free Application for Federal Student Aid. The website,, also offers detailed information about Stafford loans, Pell Grants and other forms of federal financial aid.

If a Soldier or Family member is concerned about student loans, Kozlowski recommends making an appointment with a financial readiness program representative to discuss the available options.

"We can work together to resolve the debt problem without interfering with the training schedule," Kozlowski said.

Page last updated Thu June 20th, 2013 at 16:22