Are Army ROTC Cadets in the Army?

[Aglahad]

Contracted Army ROTC cadets sign an enlistment contract and take an oath of enlistment just like everybody else that has enlisted in the military. They are "enlisted" in the USAR specifically under cadet commands ROTC Control Group. Hence why we carry reserve component Mil ID's. Just like above, we are not subject to UCMJ action.

Basically, yes, technically, however most cadets don't go running around saying this.

Another little nifty fact, cadets pay grades on their ID's is listed at E-6. Doesn't mean any of us are SSG's, but our stipend is about the same as an E-6's drill pay.

*All of this is on the contract you may sign

Just a small correction, drill pay is actually E-5 but I have seen all sorts of random pay grades on ROTC IDs. However, E-5 is what you will be paid in SMP.

Stipends range from 300-500 a month. The average LT makes 375 in the reserves/NG

 

[Aglahad]

Dang Stealth, DS went with the lower tier because according to coverage Laughlin didn't have 4G. Oh well, by the time he gets there he can upgrade it.

Becareful of the starter loans. Yes, it is a great deal, but they forget that if they are ROTC with student loans, and a car payment taking the full amount can hurt.

DS took 10K. 5 K went straight to IRA to max. 5 K to furnish and move. He purchased a new car (Toyota Corrolla) through the dealer. He got a 0.9% interest, plus a new grad discount and military discount. If he incorporated the car loan it would have been at a higher interest rate...@ 2.9%

Devil is in the details.

The USAA loan isn't bad if you have a plan and are responsible i.e. Dont go buy a brand new Charger or F-150 SD. New cars depreciate extremely fast. I took out a partial amount of the 25k to fix my car and re consolidate student loan debt.

Don't put it into a Roth IRA account at this point in time (my commanders, parents and my own advice). If you feel tempted to spend it put it into a CD.

Just my 2 cents of course others may do it differently. Not a knock on your DS or anything.

 

[Pima]

I disagree regarding the IRA, IRA's are better because you can get a tax deduction, whereas a CD would mean you pay for any interest accrued. Plus, CD returns in the long run are a much lower yield than the stock market. Traditionally stock market ROI is @12.5% over 20 yrs, CD ROI's are single digits.

Check out this link
https://www.google.com/advisor/uscd...m_term=cd rates&group=GenericRadio&q=cd+rates

Taking the USAA loan at 2.9%, means even if you invested in a CD for 5 yrs, your APY was 1.9%. Losing money, again you will also get hit with gains, IRA's some of it is capital gains, some of it is dividends.

This is also why DS did not use USAA to purchase his new car. He did not go over the 25K, including the 10K he invested. He just has 10K at 2.9 (invested), and 15K at 0.9% from Toyota. 15K at 0.9 over 3 yrs is less interest than 2.9 USAA for 3 yrs. As a military member, regardless of rank, you never make enough money to hand it over to the banks.

I would definitely agree paying off student loans is smarter because on a good day you might be at 3.5%, which means using the loan you have more money in your pocket since their rate is so low.

OBTW read the fine print on that USAA loan. If you leave the military before a certain time, they have the right to jack it up to APR + 9%. In other words it could easily go into double digits.

When you go AD you also have the opportunity to take a 0% int loan for 12 months up to your monthly base pay. People get in debt this way because they use it to buy 60 inch tvs, and not to pay down car loans or student debt.

 

[Aglahad]

I disagree regarding the IRA, IRA's are better because you can get a tax deduction, whereas a CD would mean you pay for any interest accrued. Plus, CD returns in the long run are a much lower yield than the stock market.

CDs are a last resort if you end up taking too much money out. IRAs at this point in time are not looking too good and the penalties for moving money around and getting double taxed doesn't seem worth it. If a cadet is going active they will have more then enough time to build up a 401k and Roth account before retirement. Using borrowed money to fund a retirement account that fluctuates just doesn't make sense to me during a recession like this.

Just my opinion.

 

[Pima]

I understand your opinion, and I respect it. We just have to agree to disagree. Remember investing is decades, stock market is down today, but in 20 yrs from now it will be up. DJIA closed at 2600 Jan 1991. 20 yrs later Dec. 2011 it was 5 times the price. Do a CD with 3% interest rate over 20 yrs., the ROI is no where near the DJIA. If you invest in a 401K it is not for 12 months, it is for yrs and yrs. just like an IRA. Additionally the military doesn't have a great 401K plan currently!

OBTW, if you take too much money out, use the money to repay it back earlier. Investing in a CD with a APY of 1.9% while paying 2.9% on the loan is not financially smart.

 

[-Bull-]

I know SMP drill pay is E-5, I'm stating a cadets monthly stipend is roughly the same as an E-6, hence why I believe the ID lists it as E-6. I should've clarified too, I've seen a range of pay grades on ID's, but around here we've all been getting E-6, not that it matters.

Also, cadet command doesn't have their own reserve. It's the same reserve component, cadets are just tracked in the USAR Control Group (ROTC). Our "drill" is the training we do.

Cadets can get insurance while in ROTC. I've got life insurance if something were to happen if I was training. I believe all the HR techs discuss this when dealing with contract paperwork. All it took from me to opt in was a yes answer and signature. It's a $400,000 policy if you're curious (the one I opted for).

FWIW, cadets have AKO access as well.

 

[goaliedad]

I disagree regarding the IRA, IRA's are better because you can get a tax deduction, whereas a CD would mean you pay for any interest accrued. Plus, CD returns in the long run are a much lower yield than the stock market. Traditionally stock market ROI is @12.5% over 20 yrs, CD ROI's are single digits.

Check out this link
https://www.google.com/advisor/uscd...m_term=cd rates&group=GenericRadio&q=cd+rates

Taking the USAA loan at 2.9%, means even if you invested in a CD for 5 yrs, your APY was 1.9%. Losing money, again you will also get hit with gains, IRA's some of it is capital gains, some of it is dividends.

This is also why DS did not use USAA to purchase his new car. He did not go over the 25K, including the 10K he invested. He just has 10K at 2.9 (invested), and 15K at 0.9% from Toyota. 15K at 0.9 over 3 yrs is less interest than 2.9 USAA for 3 yrs. As a military member, regardless of rank, you never make enough money to hand it over to the banks.

I would definitely agree paying off student loans is smarter because on a good day you might be at 3.5%, which means using the loan you have more money in your pocket since their rate is so low.

OBTW read the fine print on that USAA loan. If you leave the military before a certain time, they have the right to jack it up to APR + 9%. In other words it could easily go into double digits.

When you go AD you also have the opportunity to take a 0% int loan for 12 months up to your monthly base pay. People get in debt this way because they use it to buy 60 inch tvs, and not to pay down car loans or student debt.

Not sure if I agree with ALL of your financial advice (I will add the disclaimer that I am not a licensed financial adviser, so my free advice is worth every penny you pay for it).

As to borrowing to fund a traditional IRA/401k - that is particularly poor advice. With all IRA/401k accounts you pay income tax on all earnings at one time or another (Roth up front - traditional at withdrawal). You are making a bet with discounted money, no doubt, but the average 12.5% return (even if true) does not take into account the huge variation in investment returns from year to year. For example, if you were to put that money into stocks in 2007, you would still be behind the 8-ball just in the initial investment today in most funds even with all dividends reinvested.

Yeah, eventually you will come out ahead, but meanwhile you've committed a significant stream of income to paying back the loan during a period of life where having uncommitted cash flow is critical (forming a family typically happens in this period and that often results in a 10-20 year scaling back in retirement savings to fund those other expenses.

Now if someone has student debt at a higher rate, and a similar repayment term, given that most young folks don't have the deductions to itemize, using the discounted loan to pay off the student makes a lot of sense (if one is not using additional service to pay it off which is better IMHO). Plus, it gets those student loans out of the category of hanging over your head forever to dischargable in bankruptcy court. It wouldn't happen while in the military, but if you are injured to the extent that you cannot continue in the military, but not enough to qualify for discharge of student debt through total disability, you could be in a position (especially if you are looking for a job in today's market) where bankruptcy may be an option. Having converted that debt away from student loans, they become part of the bankruptcy proceeding.

 

[bruno]

Interesting -Bull-, goes to show again how different branches operate.

An AFROTC scholarship cadet is not a military member until they are a POC. Their first 2 yrs they can walk away with no obligation.

PIMA - that is not correct- all of the ROTC 4 year scholarships are the same: you incur your obligation immediately beginning the start of your 2d year - you get one free year to decide and then you sign a contract which incurs a payback or service obligation. What you described is the point at which a non- scholarship cadet incurs a payback obligation. Per the AF ROTC Web site:

http://afrotc.com/help-center/faqs/#q_6

If I join Air Force ROTC, does that mean I am joining the military?
No. If you got a four-year scholarship from high school, then the first year of college is paid for, and you can quit at the end of your freshman year with no obligation. If you got a three-year scholarship from high school or college then you are not committed to the Air Force until you accept your scholarship (usually in the fall of your sophomore year). If you did not get any scholarship, then you are not committed to joining the Air Force until you start your junior year of college.

 

[dunninla]

^ Is it possible that the ROTC programs changed from 2 year trial to 1 year trial within the past few years? Certainly Navy ROTC changed from 4 year ADSO to 5 year ADSO two years ago, so change is always occurring.

 

[Jcleppe]

^ Is it possible that the ROTC programs changed from 2 year trial to 1 year trial within the past few years? Certainly Navy ROTC changed from 4 year ADSO to 5 year ADSO two years ago, so change is always occurring.

The one year trial with no obligation has been around for years for scholarship cadets.

 

[Packer]

The one year trial was for AFROTC and AROTC scholarship offers my son received this year.

 

[dunninla]

I checked back on this very website to posts from 2006 and 2007, and it looks like the 1 year trial was in effect then.

I guess then that PIMA simply got the Academies' policy and ROTC policy mixed up.

 

[Jcleppe]

I checked back on this very website to posts from 2006 and 2007, and it looks like the 1 year trial was in effect then.

I guess then that PIMA simply got the Academies' policy and ROTC policy mixed up.

Pima was correct in regard to non scholarship cadets, the first two years have no obligation, the same as AROTC.

It has always struck me as odd the Scholarship cadets in ROTC get only one year without an obligation when the Academy cadets get 2 years. Tha Academies throw out tuition values up to $400K for 4 years, civilian colleges are no where near those costs yet they can walk fron the Academy after 2 years while ROTC cadets with less money spent are obligated after one year.

The only thing I can think of is that the Army wants to prevent kids from taking a scholarship, attending 2 years paid and then drop the program before things get busy and have the benefit of 2 years of paid tuition. I guess applicants think harder about the program knowing they are going to be comitted after just one year.

I hate it when I answer my own question.

 

[dunninla]

^ or, or perhaps Also, the Academies have figured out that a cadet at the end of Plebe year, by most account by far the toughest year, is more prone to making a rash and ill-advised decision to not return for sophomore year, if they know that returning removes the option to withdraw without obligation. Having the 2nd year to sort things out in his/her mind keeps attrition lower than it would otherwise be.

 

[Jcleppe]

^ or, or perhaps Also, the Academies have figured out that a cadet at the end of Plebe year, by most account by far the toughest year, is more prone to making a rash and ill-advised decision to not return for sophomore year, if they know that returning removes the option to withdraw without obligation. Having the 2nd year to sort things out in his/her mind keeps attrition lower than it would otherwise be.

Well, that's sporting of them.

I must admit, I have talked with a couple WP cadets who's first instinct was to jump ship after the first year but were willing to give it a try for the second year. You could have something there. The first year of ROTC does not usually have kids running home with their tail between their legs so to speak.

 

[Pima]

Okay, my mind did a brain lapse. DS had to sign again as a POC, even though he was a scholarship recipient as a GMC. This occurred the beginning of his jr. yr. Same type of paperwork, basically boiler plate, leave now and you owe us, thus, I was thinking of his last signing. I remember it because my GF's DS was at USNA at the same time, same yr group and we both remarked how our boys just made the "I'm all in" decision, but different time commitments owed. He had 7 yrs left, and DS owed 6. (2 in school, 4 for ROTC), we joked because he was AFROTC it really was 7 too. That is the little devil in the details. It is not 4 from commissioning it is 4 from the 1st day of ADAF. Rated cadets can wait up to a yr before going AD, thus the clock for 2012 grads, may not start until 2013.

I know a few yrs ago DS's best friend (same yr group) was hit with a 40K tab, because after he completed SFT, he bolted, thus I am sure that is why it also went into my mind it was the SFT marker. The you must serve was not offered it was you must pay. They also don't give you tons of time to get that money in order. They have the right to decide if they will give you a payment plan or one big check. He was given the one big check option.

Needless to say his family life was strained to the say the least. Parents and their children need to sit down and discuss this before accepting the scholarship. His parents didn't get why he would throw this scholarship away, afterall, it was only 4 yrs of his life AD! They never addressed the reality that once in the world, the illusion would not meet the reality, and what they would do if it didn't meet. His folks believed/wanted him to suck it up, he believed/wanted to be happy and the price of 6 more yrs (ROTC + AD) was too high to suck it up.

As always, have Plan B in place. Plan B is how will you pay for that dream school if you lose the scholarship.

 

[Jcleppe]

His folks believed/wanted him to suck it up, he believed/wanted to be happy and the price of 6 more yrs (ROTC + AD) was too high to suck it up.

Just wondering, after a couple years, does he still think that was a good idea.

Looks to me that while he is not in the Air Force, the Air Force still owns him, to the tune of $40K, but with no AF paycheck to help pay it back.

 

[Pima]

Yes, he still does not regret it one iota. The AF does not own him at all since he, like Gojira's DS was told to pay the entire amount in one check. He paid the 40K back in Sept 2010, while he was a new jr. Had to take personal loans to do so, that accumulated interest for 2 yrs.

He attended a great college in their Scholars program for his major. That program required he intern for a yr prior to his jr. yr, from there they kept him on the rest of his academic career. Paying him 20 bucks an hr. Prior to graduation they offered him a job starting at $30/hr. He didn't take it because another company offered him close to 40/hr. + sweetened the deal that he only had to work PT until August., thus had his final fun summer before growing up and joining the real world. Both of the offers also agreed to pay 80% of his grad school as long as he pulls a 3.0.

It is even more ironic of why he is thankful. We had a blow out graduation party at our home. He was driving his motorcycle to our home for the party, got into an accident that broke his arm. The break was so bad he needed pins. Had he gone AFROTC and rated, he could have lost his slot, and maybe even his commissioning, which would equate into him being more upside down financially (no job).

Sometimes fate is funny. His parents were against him leaving the AF, but I do wonder if they would feel the same now knowing he landed up fiscally fine and he is 1000% comfortable with his decision.

I am not implying or inferring it is a wise decision for everyone. He was at a great school, with Merit on top of ROTC, that offered internships which turned into post graduation employment. He was not in a major that anyone would consider a dime a dozen, aka like our DS Govt and Politics (also in Scholars & internship program), love my DS, but let's face it as parents we may have said to him re-think this degree had it not been for his true desire was to serve the AF.

That is why everyone needs a Plan B for college admissions and scholarships, than a Plan B once in college. Finally a Plan B when you enter the real world be it military or corporate.

The old military joke of don't believe it until they say at In Processing "Welcome 2nd Lt. Smith" is true, and even after that, if you are in a school, such as rated, the Plan B needs to be in place, because unless something has changed they do not graduate 100% of UPT students, many will be shown the door. Some out of the military, some into desk jobs. Can we say PLAN B?

 

[Packer]

Yes, he still does not regret it one iota. The AF does not own him at all since he, like Gojira's DS was told to pay the entire amount in one check. He paid the 40K back in Sept 2010, while he was a new jr. Had to take personal loans to do so, that accumulated interest for 2 yrs.

Question on the one check deal. If the kid can not come up with 40K, 100K, 200k or whatever is owed what do they do? Not everyone can get a loan of that magnitude. They are a college kid without a significant job, no credit history to speak of, no assets so banks aren't exactly lining up for the chance to lend them money.

 

[Jcleppe]

^Good question.