The Urban Institute recently posted its study on the effects of the Military Lending Act (MLA) on the financial health of active servicemembers, and while not surprising to AFSA members, who have long warned about the effects of the MLA on access to credit, the study’s conclusions should raise eyebrows on Capitol Hill and among policymakers in the states.
The Urban Institute study used credit bureau data from 2013 to 2021 to see whether the 2015 expansion of the MLA improved credit and debt outcomes for military service members, particularly those with subprime credit scores. The results?
- The MLA had little to no effect “on the credit health of most service members and their families.”
- There is no evidence that the policy “decreased delinquency and collections rates among borrowers with subprime credit scores, nor did the policy have an impact on these consumers’ credit scores.”
- There is “suggestive evidence that consumers with deep subprime credit scores had less access to credit after the MLA was extended in 2015.”
The authors of the study conclude that efforts to impose MLA provisions on the broader public, as means of improving their financial well-being may also be misguided:
“[E]xtending some of the provisions of the Military Lending Act, particularly the 36 percent APR cap on revolving credit products, would be unlikely to improve credit and debt outcomes for the majority of borrowers. In fact, a nationwide extension of this policy might have detrimental effects on the most vulnerable consumers by limiting their access to credit in times of need.” [Emphasis added]
As AFSA has noted in the past, over the past seven years surveys by military support organizations of servicemembers and their families have shown that the MLA has not addressed the stated goal of the 36% rate cap: protecting and improving financial well-being. In many cases it has created greater financial strain by limiting access to credit. The Urban Institute study is the latest – and perhaps most compelling – data to confirm that fact.
MLA Hinders Credit Access
Feb 16, 2023
The Urban Institute recently posted its study on the effects of the Military Lending Act (MLA) on the financial health of active servicemembers, and while not surprising to AFSA members, who have long warned about the effects of the MLA on access… Read the rest
AFSA Files Amicus in FCRA 11th Circuit Case
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AFSA joined several other trades in an amicus brief in a Fair Credit Reporting Act (FCRA) case in front of the 11th Circuit. The case, Holden v. Holiday Inn Club Vacations, is over whether a furnisher has to investigate not only the factual accuracy… Read the rest
Keynote Jake Harriman
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AFSA is pleased to announce that Jake Harriman, retired U.S. Navy Force Recon Commander and founder of a global poverty eradication nonprofit, will serve as the 2023 Independents Conference and Expo Featured Speaker.
Born in rural West Virginia,… Read the rest
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AFSA Celebrates Black History Month | Marc Womack
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For Black History Month, AFSA seeks to celebrate the efforts and accomplishments of AFSA member company colleagues working in the consumer credit and financial services industries.
Marc Womack
Executive Vice President, Head of … Read the rest
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2023 Independents Conference & Expo Keynote Announcement
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AFSA is pleased to announce change-agent CEO, author, and one of America’s most popular corporate speakers, Amanda Gore, as an Independents Conference & Expo Keynote Speaker.
For more than 25 years Amanda has used her expertise in emotional… Read the rest
AFSAEF EDGE & Leadership Development Program Registration Open
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Registration for the 2023 AFSA Education Foundation leadership programs are now available.
The 2023 edition of THE EDGE (Education, Development, Growth & Enrichment) program will be held June 11-16 at Mercer University in Atlanta,… Read the rest