Two Questions involving SLRP and the Career Starter Loan

Discussion in 'ROTC' started by Full Metal Bulldog, Feb 21, 2015.

  1. Full Metal Bulldog

    Full Metal Bulldog Citadel Class of 2016

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    Is the AROTC Student Loan Repayment Plan (SLRP) still a thing? If no one knows, who would be the go-to person to ask?

    And.....
    Can ROTC cadets still apply for the USAA (or maybe it was Navy Federal....forgot which offered the service to ROTC commissionees) career starter loan beginning their Junior year? Figured at some point I'm gonna need a car and something for a rental deposit (I'm really trying to live off post as a 2LT).

    Thanks guys.
     
  2. kinnem

    kinnem Moderator

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    According to USAA's website you can take out a career start loan up to a year prior to graduation and commissioning... or up to a year after as well. So, you might be able to get the starter loan towards the end of your Junior year in college.
     
  3. Jcleppe

    Jcleppe Member

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    If you take the USAA loan prior to graduation, I can't remember exactly how much before, you can opt to have the payments start 6 months after you sign the loan. Remember the standard payment schedule for the loan is 5 years, you will be required to have a bank account with USAA and the payments are required to be direct payments from your account. If your service obligation is only 4 years it's a good idea to make extra principle payments so the loan is paid off before you leave the Military.
     
  4. Jcc123

    Jcc123 Member

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    As for the other half of your question, to my knowledge SLRP is no longer a thing.
     
  5. k2rider

    k2rider Member

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    My daughter received the "LT's loan" from USAA this past Summer. They approved her for up to $25000. I'm surprised that you can get it up to a year ahead of time because she had to FAX them her orders to prove that she was going on ACTIVE duty before they transferred the $$ into her USAA account.
     
  6. kinnem

    kinnem Moderator

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    So I assume she didn't actually receive the money until she had orders in hand? Seems like that might make it tough for a new Marine LT to use the loan to buy their dress blues for commissioning, unless the actual orders come through soon enough.
     
  7. k2rider

    k2rider Member

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    Well, that was my thinking when I saw the post about being able to receive it a year in advance. That being said, I think the Marine option cadets are all guaranteed Active Duty...right? If that's the case, the issue might not apply.
     
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  8. -Bull-

    -Bull- Member

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    I got the career starter loan prior to commissioning, no orders needed. I didn't even have to be AD to get it and I had classmates that are now Guard that took the loan, though that could be a burden for some that do not go AD.

    Bulldog, if you've got questions about it you can PM me. Don't worry about living on post as a 2LT, good chance that you won't even have the option depending on the post. I had no choice but to go off post.
     
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  9. USMCGrunt

    USMCGrunt Member

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    When I checked on the loan recently, I was told you need sign off from your NROTC commanding officer if pre-commissioning and copy of commission or orders if post commissioning. You can apply one year prior or one year post commissioning. Believe they told me that you have to set up for automatic withdraws from pay - which could be a problem if you don't go active right away. (Need clarity on this)

    DS is already a member of USAA (my original membership qualified him and he has financial account) and he told us that the unit CO said no need for his signature if student is already a member. So suffice it to say the details are a little murky.
     
  10. Pima

    Pima Parent

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    At our DSs commissioning as soon as the ceremony was over it was comical because every new LT was in line having the CoC sign off on their commissioning paperwork for the loan.
    ~ DS did not have orders at that time, so I think this is a gray area.

    I am not sure if they require a bank account with them, for some reason what sticks in my mind is that if you don't than they will charge a higher interest rate. I maybe confusing that with their car loans.

    I would really investigate all of this thoroughly.
    1. Why are you taking the entire 25k?
    ~ New car?
    ~~ You can get 0% on a new car. Not fiscally sound to use that loan if you can get a 0%.
    ~ Credit card debt?
    ~~ Make sure you don't get back in that hole again. Cut up the cards, use your bank debit and get an AMEX so it doesn't happen again. You can get an AMEX free via USAA. Or if you contact AMEX they will reimburse the fee.
    2. What are you going to do when you show up at your 1st base and need to furnish it, pay deposits for rent and utilities if you don't invest some of that money now?
    3. If you take it too early, you will have to start repaying before you get your first AD paycheck.
    ~ If you have student loans too than both may be starting while you are waiting.
    ~~ It is more common with AFROTC to wait 6-9 months before reporting than other branches.
    4. Somebody already mentioned about if you do the 4 and door have it paid off before separating. I can't recall, but I think it is a 5 year loan.
    ~ There is fine print in that loan paperwork. The interest rate jumps ten fold if you separate before that loan is paid off.

    Our DS only took 10k. One reason was reason number 4, because he was going pilot and knew that if he washed out the AF had the right to release him.

    He purchased a car using 0% and the discounts they give for new grads and military members. The 10 he took was split into 5k to max out his IRA and 5k to set up his first home at his first base, just in case if he didn't get a job during the wait to report. Spent the summer working and made enough money to pay 5k off on the first payment that came due in Nov.

    His experience was unique because he knew he was going to propose within a year and that when he completed pilot training and being married he would want to buy a home, so he needed/wanted to have as little debt as possible. That is something to think about when you take the entire loan, because although they can use the VA for a mtg. they will still need to meet the debt ratio. 25k even with that low rate, the min. payments plus any other debt like car/college loans or more credit debt can hurt you in the long run.
     
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  11. Pima

    Pima Parent

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    OBTW, jmpo and a long time USAA member (26 years). USAA is a good company, but still shop around for things. Sometimes their car insurance rates are better, sometimes they aren't. Same with renters/homeowners insurance.


    Also if you have a military ID many companies, like AMEX will give perks for military members. Lowes/Home depot give 10% everyday of the week. Aeropostale does too, a long with DSW. Always ask when purchasing if they give a military discount.

    Food for thought when you start trying to stretch every penny.
     
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  12. -Bull-

    -Bull- Member

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    Yes, for AROTC the PMS (CO for NROTC) needs to sign the form certifying that you are in a commissioning program. I don't think the CO is correct, the signature isn't to join USAA (I was a member prior to joining ROTC too) it's to certify that said cadet is in ROTC and will commission on X date, signed by the commander. You can call USAA and speak to a rep and they will handle everything with the loan. I'm sure you know just how helpful the folks are. I called and the rep I talked to explained everything, answered all my questions and cleared up the details, and I was able to do the application over the phone. All I had to do was print out 2 documents (1 being the CO signature form), fill them out, and then fax them in. (*Your, in this case, not specifically directing that info to you Grunt, but everyone that reads this)

    The payments should start 6 months after you commission, not after you take the loan. So if you take it 1 year prior to commissioning your 1st payment isn't due for 1.5 years, but the loan is still growing interest. If I remember everything correctly, and though I took the loan, it's been a short minute since I've looked at the details.

    I second PIMA as well, I love USAA and their people are extremely nice and helpful, but sometimes other companies have better rates or options.
     
    Last edited: Feb 22, 2015
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  13. USMCGrunt

    USMCGrunt Member

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    Thanks for the clarity Bull.

    I forgot to mention the payment schedule and interest - I was told exactly what you noted.

    I agree 100% with the comments on USAA and ease of doing business with them. My membership goes back 34 years and long before the use of personal computers. They have always been very customer focused and everything was easily handled with a phone call no matter where in the world I happened to be stationed.
     
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  14. Full Metal Bulldog

    Full Metal Bulldog Citadel Class of 2016

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    Thanks for all the replies, really appreciate the advice. Here's just some blanket info I don't mind giving for the sake of ya'll helping me out, always good to have some opinions from the more seasoned folks since my parents don't have any experience with helping someone start a military career, and their advice from starting a career after college is over 30 years old:

    -I will have about $30k in student loans when I graduate, all from federal loans used to pay for room and board.
    -I have never owned/had a car; it simply wasn't feasible or 100% necessary for me to have one up to this point, but I understand I will need one once I commission
    -I don't have any credit card debt, or a credit card for that matter. My stipend gives me more than enough for what I need.
    -My family has banked with PNC for the past year, before we had had Wells Fargo and, for a variety of reasons, decided to take our business elsewhere after a couple last straws. I highly recommend PNC for their professionalism and obvious care for their customers. Unfortunately they are relatively rare outside the of the eastern US so that may require a change in banks depending on their over-the-phone and online service. I was always hesitant to start banking with USAA due to the lack of branches/PNC has given me an excellent experience so far.
    -My dad has had Geico since he was 17 and neither him nor my mom have ever been in a car accident. Long story short, we don't pay squat for car insurance. May change if I purchase my own vehicle and decide to do my own plan, but I'd like to just try Geico at first.

    Again, thanks for ya'll's help, I'm just trying to make some smart decisions to go ahead and get my life started on the right foot. And about Pima's (who I respect greatly and take heed to all the random tidbits of advice she gives on this forum) comment regarding about having to furnish an apartment or other unexpected big costs, I can deal with nothing but a blow-up matress in a living room and having to buy my clothes at Walmart. It don't take much to make me happy and the latter thing I've really always done. Yeah, my girlfriend hates that I have the same Trans Am and Mustang t-shirts that I just alternate between when we go out :biggrin:
     
  15. -Bull-

    -Bull- Member

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    It looks like it really comes down to what you want to spend it on, and weighing options between companies.

    Do you have your branch yet? Most BOLC's it will be extremely useful to have your POV with you, especially when most single LT's are living off post, and general getting around. Doesn't have to be a rockstar car, but something that gets you around. Nobody's hosting POV car shows on the weekends.

    Other things to consider are length of time between commissioning/graduating and going to BOLC. You might need some cash to sustain you before you go AD, but you might not have enough time to really get a job. Also, once you get to BOLC, it takes some time to get in the system and start actually getting paid, a good number of people it takes even a month. For me, I took the opportunity to get a credit card for this and to start building more credit. And if your BOLC is a PCS (and even if it's not, but you still take a bunch of stuff) you have to think about the costs associated with the move. When you PCS you should get 10 days of "house hunting" where you might stay in a hotel. The Army will reimburse you, but you'll have to foot the bill upfront.

    Furnishing an apartment could be an issue, but there is a growing number of complexes outside of posts that offer all inclusive rent including some or all utilities and come fully furnished. Of course you could also furnish as you go and just start with the basic essentials.

    I don't know anything about PNC, but with the loan you'll have to join USAA anyways so it might be an opportunity to try them out. USAA doesn't have physical locations, but they refund ATM fees and make it real easy to deposit checks and what not.

    For insurance, just as others said, USAA might not always be the best deal, so if Geico works for you, go with it. Just take your time and compare your options.

    And you don't have to take the full amount, just whatever you need. I know people who have taken the loan for every reason under the sun, just find what needs you have. And don't blow it all on booze and fast food.
     
  16. Pima

    Pima Parent

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    My DS lucked out and lived in the Qs on base at UPT. It was a furnished one bedroom apartment, but what it doesn't come with, and what you are forgetting is the following.
    ~ Sheets, towels, pillows, pots, pans plates, etc. Nor a TV or alarm clock! Believe it or not even the cheap stuff from Walmart is going to set you back several hundred unless of course you intend to raid the folks house before you leave. Linens are more expensive than any college kid realizes.
    ~~ Do you realize how expensiveit is to even do the bare mins, such as, aluminum foil, milk, salt, pepper, toilet paper is? That 1st shop even for a single person is going to be more than you think because you need the staples, plus, little splurges like...I don't know meat, toothpaste, bread, coffee, etc. DS flipped out because even though he lived off campus, he never realized how much my bags I sent back with him when he came home actually cost until he had to buy zip lock baggies and Tupperware!

    Next, setting up is not just setting up the house. If you live off base/post you will place down a deposit, typically at least first and last months rent.
    ~ Let's just say 1000 in total.

    So right now just for sheets, towels, cable, and the deposits, you are probably at no less than $1500. No new TV and sound bar included in these move in costs. Just bare min....blow up mattress living.

    The military will state how many days it should take you to travel. This is out of your own pocket at first. DS had 3 days. Between the hotels Days Inn, nothing amazing, gas and eating at McDs 3 times a day he was out @450 more.
    ~ AF considers a travel day @ 500 miles... Gas at even 2.15, with 35 mpg, will be @30 a day...MCDs (20...5 for breakfast, 5 for lunch, 5 for dinner, 5 for snacks at the fill up), 75 -80 for a hotel (taxes included). When DS PCsd gas was $3+ a gallon.

    Total tally is now at 2000. He than had to stay about 5 days in the Temp. Lodging (base hotel) before moving into his apartment. No cooking facilities in the room. Ate out 3 times a day. Again about 500 more dollars.

    You are at 2500 on the low side.

    Now here is the crux of the matter. DS showed up Sept. 30th. Too late for being paid on the 1st. Got paid on the 15th, but not reimbursed at that time for the lay out to move from VA to TX or the time in the Qs.
    Nor was it in his 11/1 paycheck. Meanwhile Xmas was getting close and he needed to buy tickets home. And his first USAA repayment was due. On a LTs salary that basically will chew up a huge chunk of your pay. The PCS and TLA pay showed up 11/7.
    ~ If you do not have money squirreled away like our DS how would you survive that 1st month.
    ~ How will you go out and hang with the buds that first month if you don't have that safety net?
    ~ Brown bagging lunch...increase that first commissary bill.

    Just saying living on 550 bucks a month (stipend) is one thing, but what if they delayed just one month?

    You can live frugally, and my DS is one of those people, but he also believes in a rainy day. He commissioned 2012. Last week he became the proud owner of his first home. (AF pilot training is 2 years long)
    ~ Trust me he thought about taking the entire 25k, but after we sat him down and did a true budget with him, he realized it was better off to take a multi-direction path.
    ~~ The car he bought was a brand new Toyota Corolla for @15k, 0%. So in total he did take 25k.

    He has $7500 in student loans. (AFROTC scholarship type 2 works differently than any other branch or any other type of AFROTC scholarship) Again, because he knew his intention was to buy a home as soon as he got to his first operational base he did not pay it off for tax purposes. The difference in the interest was 1%, which is nothing if you are doing the 1040 A with deductions. That interest paid can be deductible, but it is not for the starter loan.

    Finally, you talked about GEICO. GEICO is a version of USAA. (Government Employees Insurance CO). They are a great company, but when setting up policies, you are on their policy. You have stated you have no car, and that means you are considered a part time driver. If you live more than a certain distance(I believe USAA says 51 miles) at college you are considered not only a part time driver, but a part time part time drive. Part time because you have 2 cars and 3 drivers. Part time part time because you are not living close enough to home to drive the car part time, except for school breaks.

    When you get insurance it is going to be based on you, not the folks, and the type of car you purchased. GEICO may still be better, but realize you are walking in with a misconception. It is not how long they have been a customer...it is pure stats on how often you do I've their car, how much it will cost to replace and your age.

    I always support USAA for car and most of the times renter/homeowners because the longer you are a member the happier you are come mid Dec. USAA sends what is easiest to describe as a rebate in Dec. , but it takes a couple of years before you get any check. USMC probably had a much nicer check than me this year, but I won't complain at the several hundred we got.
    ~ In all of the years we have received checks, only one year we didn't get it. It was a year that the stock market was flat, while at the same time FL, SC, NC, and VA were battered with hurricanes...guess where many military members and retirees live?
     
    Last edited: Feb 22, 2015
  17. goaliedad

    goaliedad Parent

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    As much as previous advice says you can buy a new car with 0% financing and that you are a man of simple needs, I recommend that you get the loan approved but not disbursed until you are ready to purchase a solid reliable USED vehicle. You won't find lower rates on used vehicles than the USAA starter loan and it takes one of the dealers' profit centers away from them (many will give you a great price on the car but make it up in the financing). If you are one who doesn't turn his own wrenches or likes to find a mechanic in a new city, I suggest finding a manufacturers' certified pre-owned (usually 2-3 years old with an extended warranty up to 6 years all handled by any X-brand dealer nationwide). Just make sure it can fit all the stuff you will raid from your parent's house or at least tow a trailer with the stuff.
     
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  18. Pima

    Pima Parent

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    I agree, used cars are a great option via the USAA starter loan.
    ~ We are not people that buy new cars every 3-4 years. Bullet drove our Honda Accord for 11 years. I drove the new car.

    I think it is a great option if you want to buy a used Vette, or an F350 King Ranch, but if you are going to buy a Toyota Rav4 or a Ford F150 maybe it would be better to buy the new car with 0% than the starter loan.

    Again every year this topic becomes a firestorm.

    I respect everyone's opinion, and hope that it is reciprocated. Cadets need to investigate, and impo, that starts with reviewing DFAS for pay and housing. Minus 25% for taxes,FICA, insurance,etc. Than look at what you will have left to live with when it comes to how to utilize the loan
    ~ DS lived on base at UPT his BAH was what he was allotted. Lived off base when he got married and pocketed money. He took that money and doubled down on his car loan.

    Just saying...sit down with the folks and make a budget for 12-18 months out... Assume 30k student loans will be 300 a month, USAA starter loan (15k for a car and 10k investing/rainy day) is another 450 a month. That is 750 before you pay for cable, food and cell phone.
    ~ Spitballing numbers here...no flaming
    ~ I know Sprint, Verizon and Cricket advertise how inexpensive they are, but again, like car insurance, I doubt you have placed that into your monthly budget. I am not trying to be mean, rude, antagnostic or condescending. I am trying to say that these little items that the folks paid for are going to end up costing more than you have thought about.
    ~ 50 for cell, 100 for cable, 50 for car insurance, 25 for renters insurance equates to 225. Add in the 25% tax/FICA/insurance and 750 for student loan debt/USAA and again thousands are out the door before you buy a TV/computer or pots and pans or kinvest so you can live for 6 months if you do four and the door
    ~~ pm LITS about how as a USCGA grad how it went for him when he dived at five.

    I am being Janie raincloud, but I married Bullet when he was an O1. I recall those days.
     
  19. Jcleppe

    Jcleppe Member

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    This is a budget we worked up the other day with my son, thought I would throw it out their as an example.

    2934.00 Base Pay

    Deductions
    220.93 FICA/Med Care
    440.01 Federal Witholding at 15%
    450.00 Starter loan payment based on 25,000 loan
    120.00 Cable/internet +-
    55.00 Cell phone
    75.00 Auto insurance +-
    20.00 Insurance
    Total Hard Cost Deductions $1380.94

    2934.00 Base Pay
    (1380.94) Hard deductions
    1553.06 Balance

    1553.06 Balance
    253.00 BAS Non taxable
    1806.08 New Balance

    Out of this $1806.o8 you would need to budget for:
    Food
    Gas
    Incidentals (Soap, laundry, toiletries, Car maintenance, ect.)
    Entertainment

    You will need to budget along the way for household items, remember, you don't need to buy them all at once, and like Goliedad said, raid your parents house and hit the Goodwills. There will also be a network at your new post you can use to try and purchase items from those that are leaving.

    In the OP's case he will have the added bill every month for his student loan. Even with this payment if you budget well and don't buy everything at once there is no reason you can't save money each month.

    The above was based on living on base where they take your entire BAH, if you can get lucky and get a roommate at your new post you can pocket some of your BAH which can be substantial depending on where you live.

    Also remember that at your 2 year mark you will get a bump in pay of $915.00 per month, if you have learned to live within your means and still save money your first two years, you will be able to increase what you pay on your loans and still put more in savings and toward retirement.

    Even with your loans and payments, if you live smart you can do well and save money as you go. Take advantage of the TSP and try and max your ROTH every year if you can, the ROTH should be your first priority above the TSP if you can only afford one.
     
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  20. Jcc123

    Jcc123 Member

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    DS was tempted, but opted not to take the loan at all. He had no desire to start his career in debt. He drives a 2000 Jeep Wrangler with umpteen thousand miles on it that should run for umpteen more, hopefully, and has managed to save several thousand during school from his tuition refunds (scholarships equal more than total cost of attendance at his school). Hopefully he's got enough saved to get the first apartment, etc., squared away.
     

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