With increasing frequency, my office continues to encounter cases in which a security clearance has been denied or revoked due to delinquent student loan debt. The cases are unfortunate because the student loan crisis is a well-documented phenomenon arguably aided and abetted by the government’s easy money policies. The more money the feds throw at students, the faster tuition rises.
But I digress.
The reality that smacks many of our clients in the face is that delinquent student loan debt raises the same security concerns as a delinquent Rolls Royce auto loan (if those even exist) – namely, that the clearance holder is living beyond their means and thereby has an increased propensity to succumb to the financial temptations of espionage. Objectively, a dollar of debt is a dollar of debt. A pure application of this rule is sometimes harsh, although a strong philosophical argument can be made that the type of debt does matter.
So what is a starving (former) student to do? Well, to start, you should understand that the amount of your student loan debt really isn’t the issue. The amount that is – or has been at any point – delinquent is all that matters. Similarly, personnel security officials could care less about your credit score, much to the chagrin of some applicants. You may have a stellar history of debt repayment, but a huge delinquency now renders that history largely irrelevant until the debt is resolved. National security concerns are sometimes counter-intuitive, even for attorneys who practice in other areas of the law. I often field phone calls from bankruptcy or consumer debt attorneys incredulous that their client has been denied a clearance for following their advice on matters like a “strategic default” or other leveraged negotiations with creditors. “He has a great credit score!” is the frequent comment.
Advice for Applicants with Student Loan Debt
My advice to applicants with this issue is essentially the same as it is for cases of consumer debt in general: be proactive in bringing your finances under control. Showing that you are serious about bringing a delinquent debt current means that you will be expected to invest your time in the process. Prepare a budget, get some financial counseling, and talk to your lender(s) about refinancing for a better interest rate or placing your loans temporarily into forbearance until you can get back on your feet financially. Even after you bring a delinquent debt current, most agencies will still want to see a re-established track record of compliance with your financial obligations. It may take some time to establish such a record; I generally advise applicants that a six month history of timely compliance with repayment obligations is a good start.
Whatever you do, don’t wait until after your clearance has already been denied to first get serious about delinquent student loans. Far too many applicants bury their head in the sand until their debts snowball out of control. By that time, what were previously manageable problems have now become a financial nightmare.
This article is intended as general information only and should not be construed as legal advice. Consult an attorney regarding your specific situation.
