The South Korean government is taking action as cases of military personnel falling into debt through leveraged stock trading and online gambling have rapidly increased. Analysts say that while expanded smartphone use and rising military pay have improved investment accessibility, a lack of financial education has caused youth debt problems to surface first within the military.
Defense Ministry to Join Financial Education Council
According to the financial investment industry on January 16, the Financial Services Commission (FSC) plans to submit a revised enforcement decree of the Financial Consumer Protection Act to the Cabinet meeting on January 21, adding the Defense Minister to those who can nominate members of the Financial Education Council.
The Financial Education Council deliberates and decides on financial education policies. Previously, eight ministries including the FSC participated, but the Defense Ministry will now be included. The aim is to systematically operate financial education programs for military personnel.
The measure is seen as a response to the growing debt problems within the military caused by leveraged investing, cryptocurrency trading, and online gambling.
444 Billion Won in Leveraged Loans — Soldiers Turn to High-Interest Lenders
Behind this measure lies an already serious military debt problem. According to a Financial Supervisory Service (FSS) survey released on December 8, loan balances to military personnel from the top 30 lending companies totaled 44.4 billion won.
Active-duty soldiers accounted for the largest share at 24.2 billion won (54.5%), while career military personnel including officers and non-commissioned officers held 15.8 billion won (35.7%).
Military personnel were mainly drawn in through provocative advertisements targeting soldiers with slogans like "Loyalty Loan" and "Sergeant Loan." Loan limits ranged from 10 million to 15 million won, with interest rates of 17.9% to 20% annually — near the legal maximum.
These borrowed funds often went not only into stocks and cryptocurrency but also into online gambling. According to the Credit Recovery Committee, debt restructuring amounts for military personnel nearly doubled from 5.6 billion won in 2021 to 10.2 billion won in 2025.
"Military personnel have guaranteed monthly income but virtually no investment education," a financial authority official said. "This creates a structure where risky investments are repeated until they lead to debt."
FSS Urges Lenders to Refrain From Targeting Active-Duty Soldiers
As the situation has worsened, financial authorities have sent direct warnings to the lending industry. On December 15, the FSS held a briefing for 220 lending and debt collection industry practitioners, urging them to refrain from marketing to active-duty soldiers.
"Recently, cases have been increasing where military personnel take out loans for investment and gambling, then apply for debt restructuring," said Kim Hyung-won, FSS Assistant Governor. "Improving business practices is necessary to protect vulnerable groups."
The FSS also demanded improvements to existing problematic practices, including indiscriminate extension of statutes of limitations, excessive debt collection, and repeated sales of delinquent loans. The agency noted that the need to protect vulnerable borrowers has grown amid increased economic uncertainty from deteriorating Middle East conditions.
The FSS plans to work with the Defense Ministry to operate a "three-stage financial education" program spanning enlistment to discharge: high-risk investment prevention education (early enlistment), asset and debt management education (during service), and economic independence education (before discharge).
"If financial education for military personnel is systematically operated, it will help reduce reckless investment and debt problems," a financial authority official said.
The authorities also called for strengthened personal information protection following hacking incidents at some lending companies. "Inspect security systems including network separation, intrusion prevention, and data encryption," the authorities said. "We will impose strict sanctions for customer information leaks."
