AROTC Scholarship Process

Hello all,

MY DD was awarded a 4 year scholarship at the university level which she has accepted. She completed her physical and eye exam last week. My concern is a financial one, I assume those exams take a while to work their way back through the system. I was already prepared to take care of her initial fees, books and uniforms in the fall ($2500). She will receive HOPE scholarship funds which will cover most of her tuition, I'll fill in the gap her as well ($300-$500). The ROTC scholarship will be used to cover room and board but not sure when her PFT will be scheduled and what that means in terms of when she will be contracted. The scholarship offer letter specifically states she has to contract before receiving any benefits from the scholarship. She was awarded some financial aid which includes a student loan (ugghhh.....). I am looking for opinions from folks experienced with the process, should she accept the financial aid (and the loan) until the scholarship kicks in? I would love for her to avoid college loan debt.

I can not bear 100% of the gap due to family issues - her younger sister will be a hs senior in the fall and I care for my elderly mother. In addition to student loans of my own that I am still paying back.
 

AROTC-dad

Moderator
5-Year Member
As a financial planner, (CFP), I totally understand not wanting to accept the loans. But you have a chicken or the egg situation: you gotta get in the door to contract, and you must be contracted to get the scholarship funds! The loans may be a necessary evil to get into the dance.

So long as your DD is certain that she wants to go to this college, I would accept the Financial Aid package (warts and all), so she can get in the door and registered. Then she needs to pass DoDMERB and the APFT (not PFT...the PFT is only for high school candidates, once in college the APFT is required to contract).

Remember, once she is contracted, so long as she keeps grades and requirements in place, she will not have to worry about more student loans. So your freshman loan will be a small price to pay for a four year ticket to ride!

Once she gets contracted, the college will receive the funds. Make sure that your college FA office knows about the AROTC scholarship. Also keep in mind that by using the Army scholarship for R & B, you will be TAXED on the scholarship as income. If used for tution, and fees, you will NOT be taxed. Also make sure that once the scholarship kicks in, any excess funds can be repaid to the student loan immediately.

Have your DD get in touch with the ROO for the college and communicate how important it is that you expedite the DoDMERB and APFT process. She should start practicing the APFT right away and be ready to pass on the first try.

DoDMERB will take any where from four weeks to a few months depending on how complicated the medical history is. Hopefully, your DD had applied to a SA before and has passed DoDMERB already as that was the case for my DS.
 
Last edited:

Dckc88

Member
Hello all,

MY DD was awarded a 4 year scholarship at the university level which she has accepted. She completed her physical and eye exam last week. My concern is a financial one, I assume those exams take a while to work their way back through the system. I was already prepared to take care of her initial fees, books and uniforms in the fall ($2500). She will receive HOPE scholarship funds which will cover most of her tuition, I'll fill in the gap her as well ($300-$500). The ROTC scholarship will be used to cover room and board but not sure when her PFT will be scheduled and what that means in terms of when she will be contracted. The scholarship offer letter specifically states she has to contract before receiving any benefits from the scholarship. She was awarded some financial aid which includes a student loan (ugghhh.....). I am looking for opinions from folks experienced with the process, should she accept the financial aid (and the loan) until the scholarship kicks in? I would love for her to avoid college loan debt.

I can not bear 100% of the gap due to family issues - her younger sister will be a hs senior in the fall and I care for my elderly mother. In addition to student loans of my own that I am still paying back.
Have you talked to a financial aid counselor at the school? Have your daughter (assuming she is 18) permission, this is usually done online. Call the financial aid office and ask if their is a person who handles all of the ROTC kids. Then go over the scenario with the school. They may have some remedies and suggestions.i know for my DD's school as soon as she passed the PFT she notified the office and they returned the loans. That was for tuition not sure if it is different with room and board. But definitely call them if you have not.
 
Have you talked to a financial aid counselor at the school? Have your daughter (assuming she is 18) permission, this is usually done online. Call the financial aid office and ask if their is a person who handles all of the ROTC kids. Then go over the scenario with the school. They may have some remedies and suggestions.i know for my DD's school as soon as she passed the PFT she notified the office and they returned the loans. That was for tuition not sure if it is different with room and board. But definitely call them if you have not.
I'm afraid her financial aid counselor may think I am stalking him since I have asked so many questions. Throwing HOPE into the mix means we have to deal with financial aid, GA and Army to coordinate everything. I was planning on sending an email today to her financial aid counselor to update him on the situation and we will be on campus for orientation Thursday and Friday of this week. My DD starts school on June 19 in the Summer Language Institute @ UNG. Luckily she won a full scholarship for that.
 
As a financial planner, (CFP), I totally understand not wanting to accept the loans. But you have a chicken or the egg situation: you gotta get in the door to contract, and you can get contracted to get the scholarship funds! The loans may be a necessary evil to get into the dance.

So long as your DD is certain that she wants to go to this college, I would accept the Financial Aid package (warts and all), so she can get in the door and registered. Then she needs to pass DoDMERB and the APFT (not PFT...the PFT is only for high school candidates, once in college the APFT is required to contract).

Remember, once she is contracted, so long as she keeps grades and requirements in place, she will not have to worry about more student loans. So your freshman loan will be a small price to pay for a four year ticket to ride!

Once she gets contracted, the college will receive the funds. Make sure that your college FA office knows about the AROTC scholarship. Also keep in mind that by using the Army scholarship for R & B, you will be TAXED on the scholarship as income. If used for tution, and fees, you will NOT be taxed. Also make sure that once the scholarship kicks in, any excess funds can be repaid to the student loan immediately.

Have your DD get in touch with the ROO for the college and communicate how important it is that you expedite the DoDMERB and APFT process. She should start practicing the APFT right away and be ready to pass on the first try.

DoDMERB will take any where from four weeks to a few months depending on how complicated the medical history is. Hopefully, your DD had applied to a SA before and has passed DoDMERB already as that was the case for my DS.

Quick follow-up question on the taxation issue. I was doing a little reading elsewhere so a little confused. At UNG staying on campus is a required part of the program for the cadets in ROTC and the university in general since she is under 21 (https://ung.edu/undergraduate-admissions/ung-residence-policy.php). If it is required by the school then why is it not considered a required expense like any of the other fees?
 

AROTC-dad

Moderator
5-Year Member
Quick follow-up question on the taxation issue. I was doing a little reading elsewhere so a little confused. At UNG staying on campus is a required part of the program for the cadets in ROTC and the university in general since she is under 21 (https://ung.edu/undergraduate-admissions/ung-residence-policy.php). If it is required by the school then why is it not considered a required expense like any of the other fees?
The rules on IRS topic 421 are pretty explicit. Room and Board is listed as an incidental expense and not eligible for tax free treatment of a scholarship (see below).

However, I would consult with your tax advisor (CPA or EA) to confirm your situation. You can also speak with the Financial Aid folks at UNG to see if they can cite any IRS case exceptions based on UNG's requirement. Perhaps you can make the argument that the R & B requirement at UNG makes room and board a NON-INCIDENTAL required expense. .

Here is the text from the IRS website.

Topic 421 - Scholarships, Fellowship Grants, and Other Grants


A scholarship is generally an amount paid or allowed to a student at an educational institution for the purpose of study. A fellowship grant is generally an amount paid or allowed to an individual for the purpose of study or research. Other types of grants include need-based grants (such as Pell Grants) and Fulbright grants.

Tax-Free
If you receive a scholarship, a fellowship grant, or other grant, all or part of the amounts you receive may be tax-free. Scholarships, fellowship grants, and other grants are tax-free if you meet the following conditions:
  • You're a candidate for a degree at an educational institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities; and
  • The amounts you receive are used to pay for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment required for courses at the educational institution.
Taxable
You must include in gross income:
  • Amounts used for incidental expenses, such as room and board, travel, and optional equipment.
  • Amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant. However, you don't need to include in gross income any amounts you receive for services that are required by the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program.
Source:
https://www.irs.gov/taxtopics/tc421.html
 
Last edited:

cb7893

5-Year Member
The ROTC scholarship will be used to cover room and board but not sure when her PFT will be scheduled and what that means in terms of when she will be contracted.
Tell DD to make absolutely sure she can pass PFT, which means not only hitting the numbers but using "proper form". The test my DS took during the application process was formality. The test he took when he showed up freshman year was a whole other matter.

He failed his first PFT on account of having "bad form" on several of his push-ups which did not count in his total. The test was administered by an MS-III and an MS-IV. It delayed his contracting date for two months.

Congratulations and best of luck!
 
Tell DD to make absolutely sure she can pass PFT, which means not only hitting the numbers but using "proper form". The test my DS took during the application process was formality. The test he took when he showed up freshman year was a whole other matter.

He failed his first PFT on account of having "bad form" on several of his push-ups which did not count in his total. The test was administered by an MS-III and an MS-IV. It delayed his contracting date for two months.

Congratulations and best of luck!
Thanks for the advice, I shared the link for this conversation with her so she can view the responses first hand.
 
The rules on IRS topic 421 are pretty explicit. Room and Board is listed as an incidental expense and not eligible for tax free treatment of a scholarship (see below).

However, I would consult with your tax advisor (CPA or EA) to confirm your situation. You can also speak with the Financial Aid folks at UNG to see if they can cite any IRS case exceptions based on UNG's requirement. Perhaps you can make the argument that the R & B requirement at UNG makes room and board a NON-INCIDENTAL required expense. .

Here is the text from the IRS website.

Topic 421 - Scholarships, Fellowship Grants, and Other Grants


A scholarship is generally an amount paid or allowed to a student at an educational institution for the purpose of study. A fellowship grant is generally an amount paid or allowed to an individual for the purpose of study or research. Other types of grants include need-based grants (such as Pell Grants) and Fulbright grants.

Tax-Free
If you receive a scholarship, a fellowship grant, or other grant, all or part of the amounts you receive may be tax-free. Scholarships, fellowship grants, and other grants are tax-free if you meet the following conditions:
  • You're a candidate for a degree at an educational institution that maintains a regular faculty and curriculum and normally has a regularly enrolled body of students in attendance at the place where it carries on its educational activities; and
  • The amounts you receive are used to pay for tuition and fees required for enrollment or attendance at the educational institution, or for fees, books, supplies, and equipment required for courses at the educational institution.
Taxable
You must include in gross income:
  • Amounts used for incidental expenses, such as room and board, travel, and optional equipment.
  • Amounts received as payments for teaching, research, or other services required as a condition for receiving the scholarship or fellowship grant. However, you don't need to include in gross income any amounts you receive for services that are required by the National Health Service Corps Scholarship Program or the Armed Forces Health Professions Scholarship and Financial Assistance Program.
Source:
https://www.irs.gov/taxtopics/tc421.html
Thank you for the detailed response, it is super helpful.
 

Dckc88

Member
I'm afraid her financial aid counselor may think I am stalking him since I have asked so many questions. Throwing HOPE into the mix means we have to deal with financial aid, GA and Army to coordinate everything. I was planning on sending an email today to her financial aid counselor to update him on the situation and we will be on campus for orientation Thursday and Friday of this week. My DD starts school on June 19 in the Summer Language Institute @ UNG. Luckily she won a full scholarship for that.
If you have already talked to him, there might not be much information there. If you haven't asked about timing of parents, if they recommend you taking loans or not, etc., then I would ask.
 
If you have already talked to him, there might not be much information there. If you haven't asked about timing of parents, if they recommend you taking loans or not, etc., then I would ask.
Finished orientation and received a great bit of information from her recruiting officer on how the scholarships work and how parents typically used the loans followed by the scholarship disbursement.
 
I'm afraid her financial aid counselor may think I am stalking him since I have asked so many questions. Throwing HOPE into the mix means we have to deal with financial aid, GA and Army to coordinate everything. I was planning on sending an email today to her financial aid counselor to update him on the situation and we will be on campus for orientation Thursday and Friday of this week. My DD starts school on June 19 in the Summer Language Institute @ UNG. Luckily she won a full scholarship for that.
LOLOLOLOL you definitely wouldn't be the first....I've stalked multiple financial aid reps at my college even before ROTC started. I totally get your worries....I haven't even been medically cleared (supposed to hear something this week, praying that it's a "qualified" status), and I go off to CIET in July, so I would really like to get cleared and get that scholarship locked in, so you are not alone in your worries.

Like the others said, I'd go with the loans route. It may hurt and be a bit of a "risk"....but that's just how the system is nowadays
 

EDelahanty

5-Year Member
The (non-taxable) monthly stipend for contracted cadets will not begin until she has passed the APFT. Unlike tuition or R&B, it is not retroactive to the beginning of the semester.
 
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