Military Pay:

Hundreds of Battle-Injured GWOT Soldiers Have Struggled to Resolve Military Debts

GAO-06-494: Published: Apr 27, 2006. Publicly Released: Apr 27, 2006.

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As part of the Committee on Government Reform's continuing focus on pay and financial issues affecting Army soldiers deployed in the Global War on Terrorism (GWOT), the requesters were concerned that battle-injured soldiers were not only battling the broken military pay system, but faced blemishes on their credit reports and pursuit by collection agencies from referrals of their Army debts. GAO was asked to determine (1) the extent of debt of separated battle-injured soldiers and deceased Army soldiers who served in the GWOT, (2) the impact of DOD debt collection action on separated battle-injured and deceased soldiers and their families, and (3) ways that Congress could make the process for collecting these debts more soldier friendly.

Pay problems rooted in the complex, cumbersome processes used to pay Army soldiers from their initial mobilization through active duty deployment to demobilization have generated military debts. As of September 30, 2005, nearly 1,300 separated Army GWOT soldiers who were injured or killed during combat in Iraq and Afghanistan had incurred over $1.5 million in military debt, including almost 900 battle-injured soldiers with debts of $1.2 million and about 400 soldiers who died in combat with debts of $300,000. As a policy, DOD does not pursue collection of debts of soldiers who were killed in combat. However, hundreds of battle-injured soldiers experienced collection action on their debts. The extent of these debts may be greater due to incomplete reporting. GAO's case studies of 19 battle-injured soldiers showed that collection action on military debts resulted in significant hardships to these soldiers and their families. For example, 16 of the 19 soldiers were unable to pay their basic household expenses; 4 soldiers were unable to obtain loans to purchase a car or house or meet other needs; and 8 soldiers' debts were offset against their income tax refunds. In addition, 16 of the 19 case study soldiers had their debts reported to credit bureaus and 9 soldiers were contacted by private collection agencies. Due to concerns about soldier indebtedness resulting from pay-related problems during deployments, Congress recently gave the Service Secretaries authority to cancel some GWOT soldier debts. Because of restrictions in the law, debts of injured soldiers who separated at different times can be treated differently. For example, soldiers who separated more than 1 year ago are not eligible for debt relief and soldiers who paid their debts are not eligible for refunds. Further, because this authority expires in December 2007, injured soldiers and their families could face bad credit reports, visits from collection agents, and tax refund offsets in the future.

Status Legend:

More Info
  • Review Pending-GAO has not yet assessed implementation status.
  • Open-Actions to satisfy the intent of the recommendation have not been taken or are being planned, or actions that partially satisfy the intent of the recommendation have been taken.
  • Closed-implemented-Actions that satisfy the intent of the recommendation have been taken.
  • Closed-not implemented-While the intent of the recommendation has not been satisfied, time or circumstances have rendered the recommendation invalid.
    • Review Pending
    • Open
    • Closed - implemented
    • Closed - not implemented

    Matters for Congressional Consideration

    Matter: There are several matters that Congress may wish to consider if it wishes to strengthen the Secretary's authority to provide debt relief so that it can be applied uniformly for all GWOT-incurred debt. Second, Congress may wish to consider directing the Secretary of Defense, as appropriate, in concert with any changes to debt relief provisions in law, to take immediate action to make debt relief policy applicable to all GWOT soldiers who sustain battle injuries or are killed in combat-related actions.

    Status: Closed - Implemented

    Comments: On October 17, 2006, the Congress passed the National Defense Authorization Act for Fiscal Year 2007, which extended the termination date of the temporary expanded authority for the secretaries of the military departments to remit or cancel indebtedness of military members from three to five years.

    Matter: There are several matters that Congress may wish to consider if it wishes to strengthen the Secretary's authority to provide debt relief so that it can be applied uniformly for all GWOT-incurred debt. First, Congress could consider legislation to grant DOD the authority to ensure that the Secretary of Defense has authority to cancel GWOT-incurred debt throughout, and a reasonable period following, the deployment and thus, can exempt injured soldiers from debt collection action through credit bureau reporting and private collection agency and Treasury Offset Program action.

    Status: Closed - Implemented

    Comments: On October 17, 2006, the Congress passed the National Defense Authorization Act for Fiscal Year 2007, created an exemption from notice to consumer reporting agencies regarding debts or erroneous payments pending a decision to waive, remit, or cancel debts of battle-injured GWOT soldiers, unless the Secretary determines that debt disclosure is in the best interest of the United States.

    Matter: There are several matters that Congress may wish to consider if it wishes to strengthen the Secretary's authority to provide debt relief so that it can be applied uniformly for all GWOT-incurred debt. First, Congress could consider legislation to grant DOD the authority to give the Service Secretaries authority to provide refunds to soldiers who have paid debts incurred while in an active status.

    Status: Closed - Not Implemented

    Comments: DOD responded that the law does not prohibit granting these refunds and DOD therefore has authority to do so.

    Matter: There are several matters that Congress may wish to consider if it wishes to strengthen the Secretary's authority to provide debt relief so that it can be applied uniformly for all GWOT-incurred debt. First, Congress could consider legislation to grant DOD the authority to give the Service Secretaries authority to make debt relief available to all injured GWOT soldiers regardless of when they separate from active duty.

    Status: Closed - Implemented

    Comments: On October 17, 2006, the Congress passed the National Defense Authorization Act for fiscal Year 2007, increased the period of time following honorable discharge or separation during which the secretaries may exercise the expanded authority to remit and cancel indebtedness from one year to five years. The Act also extended the termination date of the temporary expanded authority for the secretaries of the military departments to remit or cancel indebtedness of military members from three to five years.

    Matter: There are several matters that Congress may wish to consider if it wishes to strengthen the Secretary's authority to provide debt relief so that it can be applied uniformly for all GWOT-incurred debt. Second, Congress may wish to consider directing the Secretary of Defense, as appropriate, in concert with any changes to debt relief provisions in law, to identify the military debts of battle-injured soldiers that were previously paid and were not subject to remission or waiver and issue refunds.

    Status: Closed - Not Implemented

    Comments: The FY 2007 National Defense Authorization Act required the Army to audit pay accounts of injured Army members evacuated from the theater of operations for inpatient medical cared from May 1, 2005, through April 30, 2006, and report, among other things, on the amount of debts debts collected or pending, the amount of any reimbursements or debt relief granted to the member, and any debts referred to collection agencies. The Army Finance Command Director provided documentation on audit results that were provided to Congress. However, the Director advised that detailed records are no longer available to support research to identify the amount of all debts paid by Army GWOT soldiers for processing refunds. As a result, it is not practically feasible for the Army to identify and take additional action provide refunds to soldiers who paid military debts that are canceled, waived, or forgiven under current law.

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