My son, a sophomore, is in the middle of this process right now. As far as we understand it, if he does not get a scholarship or advanced standing by the end of his sophomore year, he is dropped from the program. He is NROTC-MO. there is a student who participates in some of the activities who is in the PLC program. My DS just finished the work for his scholarship application. One other freshmen is also doing his application for the "sideload" scholarship. I would think that a freshman who does not get a scholarship this year could try again his sophomore year. If my son does not get one, there is the chance he could be picked up for "advanced standing". He would be in the NROTC but without scholarship funds. This captain told him there are only 30 sideload scholarship slots available and 15 for advanced standing. So, if neither of those come through for him, his option would be to move on into the PLC program. And, as mentioned above, he would go into the PLC already knowing so much more than someone who never did ROTC. So staying with the ROTC would be very much in your favor.
I wish I knew when the board meets and when he might expect to hear back on the decisions. He will not ask anybody at the school though.