Those who graduated in 2019 did so with an average of $29,900 in student loan debt, according to a recent survey. And it’s not just recent grads who are saddled with student loans. The same survey shows that 14% of parents took out an average of $37,200 to help out their kids. They join decades of previous graduating classes with debt that totals up to more than $1.6 trillion in U.S. student loans, with more than 44.7 million Americans carrying student loan debts.
Can Student Loan Debt Stand in the Way of Getting a Clearance?
The numbers are not intended to be scary. Instead, it’s simply to show that if you are applying for security clearance, chances are fair to good that you are carrying student loan debt. And you may be wondering: Will those five-digit (or more) debts stand in the way of getting a clearance?
All of our finances—including student loans—are subject to review during a security clearance investigation, warns Bradley P. Moss, a national security attorney. “Agencies need to have a complete understanding of a [potential] clearance holder’s financial situation to ensure those individuals are not at an unacceptable risk of exploitation by those who would want to gain any insight into U.S. government classified information,” Moss explains. But generally speaking, they’re not concerned that you have loans, whether student, mortgage, or consumer. They are looking to see that you have a history of paying your bills on time—and your debt-to-credit ratio is reasonable.
Some Debt Is Better than Others
“Significant student loan debts are not a barrier to getting a clearance,” Moss says, and R. Scott Oswald, managing principal of The Employment Law Group, P.C., agrees. In fact, Oswald says, “unlike other forms of debt—like consumer debt—student loan debt is an investment in one’s self. And part of the reason the applicant has been able to secure the job they’re now seeking—and the attendant salary—is because of the education for which they’ve paid [with loans].”
Oswald continues to say that, “my own experience has been that student loan debt itself is rarely an issue for security professionals as part of the security clearance application process.”
It’s Not Necessarily about the Total Debt Number
If you’re thinking, but I’ve got a lot of student loan debt—plus a mortgage and a car loan—you still may not need to worry. Oswald says that when investigators look into your debts, they’re not usually focusing on the number. Instead, he says, they want to see that your debt-to-credit ratio is low, your payment history is reliable, and your credit score is high. Your credit score is, of course, affected by your debt-credit ratio and your payment history, so Oswald advises his clients to pay down their debts on time and when bills are due. If you can’t, he says, you should contract your creditor to try to work out an arrangement with obligations you can meet. For example, many student loans can be refinanced. Other student loans offer deferment options for months or even years to give you time to save.
Check your Credit Score
You can—and should!—regularly check your credit score. Look for mistakes that have been made. Check to see that your payments on your student loans are accurately reflected by your reports. You are entitled to one free copy of your credit report each year from all of the three nationwide credit reporting companies: Experian, TransUnion, and Equifax. (You can get your reports here.) Credit checks also provide situational awareness about identity theft issues. Identity theft for the clearance holder has its own repercussions.
Pay Your Student Loans On Time
If you have a history of paying your debts late, however, your student loans could be cause for concern, says Moss. Or, if you’re “racking up student loans after student loans with no end in sight,” Moss adds, you may draw an investigator’s attention. But, Moss reiterates, “for most new applicants, however, even that should not be a barrier in its own right unless there are separate concerns about financial stability in the person’s background. The key is to ensure that you remain current on student loans and you are able to demonstrate that, in general, you live a financially responsible lifestyle. The agencies don’t expect you to be a flawless consumer or financial steward: they simply need to be assured that you aren’t being reckless or careless.”