Discussion in 'Air Force Academy - USAFA' started by Non, Mar 13, 2016.
Can a cadet be denied the career starter loan ?
Certainly. By the bank who issues the loan. The loan is not a right.
It's definitely possible but not common. Do you have a situation in mind which might hypothetically disqualify someone?
Having worked for USAA, and having been directly involved with this product, I am now able to discuss certain things. Here are a few points:
- For the ROTC CSL, PNS/PMS must assure in good standing. Basic credit check is done.
- For SA, a basic credit check is done. This is a no-collateral loan based on presumptive earnings at the 0-1 and 0-2 levels after graduation, for 5 years. Payments are deferred until after graduation.
- Many cadets and mids use the CSL to pay off consumer debt and school loans. USAA will work with mids and cadets in that situation, if they are overextended. Their main concern is their financial stability.
- There is no requirement to take the maximum loan amount; many take less. Or at all.
If you are concerned about your finances, go talk to the Cadet Financial Advisor - I am sure there is one by that title or similar.
There have been several cases of attempted fraud by separated mids and cadets who try to get the loan, but USAA is savvy when it comes to checking DOD status and suspicious statements.
Happy to help further if I can.
And remember, this IS a LOAN. A loan from USAA who is basing the low interest rate on the premise that you have a minimum commitment of 5 years, and the loan will be paid back in that period of time. If for some reason, you are separated from the air force in less than those 5 years, you can be feel confident that the loan rate will increase to a standard rate much higher. Make sure you read the terms of the loan.
Many consider it a "Career Starter Loan". And that is what it's marketed as. But each individual getting such a loan does so for many different reasons. Some don't even take the loan because they have no need for it. Believe it or not, even with the low paychecks at the academy, after 4 years, you can actually accrue quite a bit of savings. More than enough to so called "Get you started". Then again, there are those who spend every penny they have, and don't save anything. Some, take the loan money and use it to fund IRA's and other investments. Some others, in my opinion are foolish, and use the money to buy a $30,000+ car. (Not saying buying a good dependable car is foolish, but that doesn't mean you need a $30-$35,000 car).
The point is, is IS a LOAN that has to be paid back. Make sure you understand the conditions of the loan. Make sure that you set yourself up in case things don't go as planned, and you're able to continue paying off the loan. Just because an individual came out of high school with stellar grades, and was accepted to and graduated from one of the most elite universities in the country, DOESN'T MEAN that they are necessarily educated and mature with personal finances. I always tell young people to look at their parents. There's a really good chance that when they were 22 years old, they didn't have the money and possessions that you remember having when you graduated high school. There's no reason to think you're SUPPOSE to or feel ENTITLED to having all the things you took for granted when you lived at home. It took your parents years to work, save, and establish that standard of living. Don't try and jump back into that standard of living. If you do, you probably will have financial problems.
My son was surprised to be denied the career starter loan. He had absolutely zero credit - had never had a bill, loan, anything in his name. He was told that they would not approve the loan for anyone with zero credit history.
It actually ended up working out fine for him. He got started with no debt and now has a great credit score.
Both of mine took the loan and I believe have paid it back already
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