Marine recruits will now have more authority over their personal finances when heading to bootcamp in San Diego.
A KPBS investigation last year revealed the Marine Corps has had an exclusive arrangement with Oceanside-based Frontwave Credit Union going back decades. The agreement funneled thousands of Marine recruits into the credit union every year in order to process their direct deposits during boot camp.
Marines and former Frontwave employees told KPBS that recruits were instructed to sign up for the accounts, which boosted the credit union’s membership numbers over time. KPBS’ investigation also revealed the credit union has relied on overdraft fees from Marines, their families and other customers as a key source of revenue.
The latest contract between the Marine Corps and Frontwave keeps the credit union as the on-base financial institution for the Marine Corps Recruit Depot near downtown San Diego. But the contract now explicitly states recruits can use the bank or credit union of their choice to receive their paychecks. The agreement also expands Frontwave’s obligations to provide financial education to Marines.
“I think there's no doubt that choice is valuable and people should be able to select the financial institution that they want to work with,” said Bill Skimmyhorn, an associate professor of finance and economics at William and Mary who has studied financial readiness among military servicemembers.
Frontwave declined to comment. The Marine Corps did not respond to a request for comment.
The change comes after a bipartisan group of U.S. Congress members, led by Sen. Elizabeth Warren (D-MA), launched an investigation last year into Frontwave’s treatment of service members, as a result of KPBS’ reporting.
“We were concerned that young Marine recruits are just plain being cheated by this credit union,” said Warren in an interview with KPBS last year.
Frontwave, a nonprofit, collected $8.1 million in overdraft fees in 2024, which represented nearly 9% of its overall income, according to data collected by the state. Without the income from overdraft fees, Frontwave could have ended the year with a deficit, the data show.
In recent months, Warren called on the Marine Corps to hold off on renewing its contract with Frontwave.
The contract renewal went through. But the new agreement includes language making it clear that recruits can use any bank or credit union they want for their direct deposits.
It also instructs Frontwave to provide financial counseling on how to start a savings account and the risks of excessive debt. Frontwave is supposed to give special attention to junior enlisted, civilian grade and newly married personnel.
Skimmyhorn said the changes are a step in the right direction, though he believes the financial counseling should be mandatory — not optional — for recruits. He added that the changes will only make an impact if the Marine Corps holds Frontwave accountable to the agreement terms.
“You'll kind of now have to wait and see — does this seem to make a difference?” he said.
