As they miss paychecks, furloughed federal workers are taking out bank loans to help pay the bills

Some federal workers going unpaid during the U.S. government shutdown are resorting to taking out bank loans to tide them over financially.

A San Antonio, Texas, woman whose husband works for the Department of Defense, told CBS News her family is relying on a no-interest loan from the United Services Automobile Association (USAA) to pay the bills while he is furloughed.

The woman, who did not want to be named because of concerns about sharing private financial matters, told CBS News the family took out a $3,200 loan from USAA earlier this month, saying that “we would have been in trouble” without the money. 

Her predicament highlights the financial challenges many government workers are facing as the stalemate in Congress, now on Day 30, continues. She said that one of her five children, who has special needs, underwent spinal fusion surgery earlier this year. Their health plan covered most, but not all, of the procedure’s costs, saddling them with medical bills that are now coming due. 

“Insurance took some time to process it all, and things are starting to come in at a really bad time,” she told CBS News. 

Since the shutdown began on October 1, USAA has issued more than $365 million in special loans to over 119,000 federal employees affected by the government shutdown.

“These are unique, zero-interest, zero-fee loans built specifically to help people meet their essentials during this crisis,” USAA certified financial planner JJ Montanaro told CBS News. 

USAA members can apply for a no-interest loan equal to one net paycheck, for up to $6,000, and have 90 days to repay the loan from its date of issuance, according to the San Antonio-based lender. USAA provides banking services to 14 million members of the military, veterans and their families, and has offices in eight cities. 

Paycheck replacement

Roughly 1.4 million federal workers missed their first full paychecks on Oct. 24, and last received partial paychecks on Oct. 10. Furloughed workers, as well as essential government employees required to work without pay during the shutdown, are entitled to back pay once agencies reopen. It remains unclear when their next payday will come.

Other lenders are also stepping in to help federal workers bridge the financial gap during the impasse in Congress. 

Navy Federal Credit Union, which serves military servicepeople, veterans and their families, offers a “Paycheck Assistance Program” for members who are going without pay during the shutdown. 

The credit union’s no-interest loans are issued in the amount of members’ regular deposits, also up to $6,000. Once workers receive their paychecks again, the amount of the loan will be deducted as repayment. 

During a 2018-2019 government shutdown that lasted a record 35 days, Navy Federal issued a total of $53 million in loans to 32,000 recipients. Anne Repczynski, an assistant vice president at the lender, said member enrollment in the financial assistance program has been “significantly higher” during the latest shutdown. 

Naomi Pyle, a San Diego resident whose husband is in the Navy, said she applied for a Navy Federal loan to help her family cover bills, including therapy sessions for their son, who has autism, and for the couple’s daughter’s braces. She is delaying some dental work she requires until the shutdown ends, Pyle added.

Redwood Credit Union, a California-based community lender, said it has issued roughly $160,000 in zero-interest loans to 60 recipients. The bank says it serves about 3,200 federal workers who are eligible for the loans, which they have 60 days to repay.