Cow Loan and "get rich quick"

MidCakePa said:
There’s no delicate way to say this, but my observation re school in the age of Covid: money talks!

While the public schools around us have been very slow to restore in-person classes — if at all — our kids’ private school declared from the outset that the 20-21 school year would happen in person unless something catastrophic occurred. And they’ve stuck to it! They’ve done a terrific job of limiting quarantines to a small set of students via contact tracing, and besides desks that are 6 feet apart, staggered lunch periods, canceled events such as homecoming, and the ubiquitous masks, things are close to normal.

Being a paying customer has its privileges. You can expect — and demand, if necessary — your money’s worth. Accountability matters much more in private enterprise than it does in the public sector (the military excluded). Private schools have a bottom line, and holding in-person classes not only retains their current student body (i.e. revenue stream), it attracts new students too.

Again, no delicate way to describe this, because it comes at the risk of appearing elitist and privileged. We’re fortunate and blessed to be able to afford it. And it breaks my heart that public schools don’t have the same incentive structure that forces them to step the heck up. Such is life.
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The irony is that the same people who want to keep the school closed, along with the teachers and teachers union who dont want to start work until they get vaccinated are the same people who then attack the private schools and or home school pods because they feel it creates an inequity between mostly minority children and those who can afford to pay for schools and are assumed to be white. Which of course is true that those who go to school will have a much better educaiton than those who do 2 hours of zoom every day. However, all i hear when they complain is that if my child or minority children has to be screwed over because of Covid (school closing) then everybody's kid has to be screwed over by Covid even if the parents can afford to fix the issue. The fix must be done by the government (school boards) and cannot be fixed individually. In other words, they prefer mediocrity because mediocrity is always fair. If my child gets a crappy education this year, so must every kid in America have a crappy education. as that would make it fair and equitable. Equitable now being its own religion
 
Do any ROTC cadets ever use the Cow Loan to pay off additional student loan debt? I'm still learning how this all works. I assume that most ROTC students come out with little student loan debt, but I would think for my own DS, if he doesn't get an ROTC scholarship right out of high school, there's going to be some debt because we won't be able to cover it all (we have 4 kids and live on public educator salaries in a state listed near the bottom in teacher pay). I just wondered if the interest rate was lower on the Cow loan if anyone ever uses it to pay off student loans.
 
Jman0714 said:
USAA offers a "Career Starter Loan" to cadets/mids in ROTC or SA's. You can find more information here.

The low interest rates for SA cadets/mids is what draws many cadets in. Its easy to think "oh i'll put this in a fund that averages a 10% return and make profit!! This is a great way to start my career" Others will buy a 2021 Jeep or Mustang with the loan.

Many advise against it because of the UNNECESSARY risk that is involved. Here is a great article I found that advises against it.

However, some people can make a profit off of it IF they invest smartly and conservative. Here is an article on how it could be used smartly. (This article is outdated and mentions CD ladders which are essentially non-existent anymore. Keep that in mind)

Taking out the loan should depend on if you need it. If you want to take it out to invest, that's on you. But do a lot of research before hand and make sure you have plan for what you are going to do with that money. It's possible to make a profit but its also possible to lose all that money. There's a common saying of "its impossible to build wealth when you are in debt". If you take out that loan, you will be in debt. Would you rather be in debt by choice or debt free? That answer will depend on the person.
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Thank you!
 
milmomsomeday said:
Do any ROTC cadets ever use the Cow Loan to pay off additional student loan debt? I'm still learning how this all works. I assume that most ROTC students come out with little student loan debt, but I would think for my own DS, if he doesn't get an ROTC scholarship right out of high school, there's going to be some debt because we won't be able to cover it all (we have 4 kids and live on public educator salaries in a state listed near the bottom in teacher pay). I just wondered if the interest rate was lower on the Cow loan if anyone ever uses it to pay off student loans.
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Yes, they do offer the loan to ROTC students, too. Unfortunately, it is at a higher rate of interest than academy graduates get (Grrrrrr), but is still a really great rate for an unsecured loan for a young adult with no/little credit history, typically.
 
USMAROTCFamily said:
Yes, they do offer the loan to ROTC students, too. Unfortunately, it is at a higher rate of interest than academy graduates get (Grrrrrr), but is still a really great rate for an unsecured loan for a young adult with no/little credit history, typically.
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One way to build credit history is to open a USAA card for the student with the Parent as a co-signer. Charge incidentals not he card...over 4 years DS or DD will have a credit history. Discuss this with the card provider to make sure...it worked for my to DS.
 
milmomsomeday said:
Do any ROTC cadets ever use the Cow Loan to pay off additional student loan debt? I'm still learning how this all works. I assume that most ROTC students come out with little student loan debt, but I would think for my own DS, if he doesn't get an ROTC scholarship right out of high school, there's going to be some debt because we won't be able to cover it all (we have 4 kids and live on public educator salaries in a state listed near the bottom in teacher pay). I just wondered if the interest rate was lower on the Cow loan if anyone ever uses it to pay off student loans.
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I don't know about cow loans but that may be a bad idea because fed backed loans will be cancelled in case if your health is bad. Also if your income is low enough your payments can be as low as 0. OTOH it can be nearly impossible to have them discharged with bankruptcy.
 
One thing to remember is that the ultra low interest rate on the loan is tied to the military service of the cadet or midshipman. There is a reason that the repayment period is the same as the service obligation. If they don’t commission or leave the service early, the interest rate jumps to a contracted prime+ rate that is probably in the 16-20% range. Read the loan contract before signing.

Stealth_81
 
VelveteenR said:
Many of the boarding schools are in the $60K range and still haven't figured out how to bring all their students back to campus.
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Though I tried, please forgive me for failing to summon any sympathy for people who are able afford this kind of tuition. They have many other options with that level of resources.
 
Bash On said:
Though I tried, please forgive me for failing to summon any sympathy for people who are able afford this kind of tuition. They have many other options with that level of resources.
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What about the ones who borrowed money to send their kids there? Or students who got athletic or academic scholarships?

Is there a line where sympathy for others ends?
 
Bash On said:
Though I tried, please forgive me for failing to summon any sympathy for people who are able afford this kind of tuition. They have many other options with that level of resources.
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@Humey was saying he can't imagine paying exorbitant tuition for online college classes, and I was pointing out that some high schools charge those same rates and are in the same boat. In those cases, no amount of money is moving the needle back to in-person sessions even though some of these boarding schools have endowments in the $500M - $1B range and can bubble their communities in ways most day/public schools can't. Like parents and students everywhere, these boarding school parents and students aren't happy about not getting what they paid for. Their "other option" is to leave to attend a school that IS in person, and many have opted to do so. Most are staying, though, because this situation is temporary and their other options are underwhelming compared to where they are. No one is asking for sympathy; that wasn't the point. As others have mentioned, many of these families receive financial aid (most of the NE boarding schools maintain a 60-70% full-pay/30-40% financial aid ratio), so this is not a rich person's insignificant problem. We're all in this together.
 
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VelveteenR said:
@Humey was saying he can't imagine paying exorbitant tuition for online college classes, and I was pointing out that some high schools charge those same rates and are in the same boat. In those cases, no amount of money is moving the needle back to in-person sessions even though some of these boarding schools have endowments in the $500M - $1B range and can bubble their communities in ways most day/public schools can't. Like parents and students everywhere, these boarding school parents and students aren't happy about not getting what they paid for. Their "other option" is to leave to attend a school that IS in person, and many have opted to do so. Most are staying, though, because this situation is temporary and their other options are underwhelming compared to where they are. No one is asking for sympathy; that wasn't the point. As others have mentioned, many of these families receive financial aid (most of the NE boarding schools maintain a 60-70% full-pay/30-40% financial aid ratio), so this is not a rich person's insignificant problem. We're all in this together.
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My kids went to very expensive Los Angeles private schools. One because we wanted him to have a great education and the other because he had learning issues. Lets put it this way, i think i paid less for my two kids in college than i did for my two kids in private high school. We could barely afford both school but with financial aid and help from my family we were able to do so.. So not everyone (not accusing you) who do attend this schools have money to throw away. And i honestly I would have considered sending them to public school if all they did was Zoom learning and although for the younger he probably still need to go to his school. These were days schools, not boarding schools
 
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Reported another suspect spam+link post above. Trusty mods will deal with it as appropriate.
 
Stealth_81 said:
One thing to remember is that the ultra low interest rate on the loan is tied to the military service of the cadet or midshipman. There is a reason that the repayment period is the same as the service obligation. If they don’t commission or leave the service early, the interest rate jumps to a contracted prime+ rate that is probably in the 16-20% range. Read the loan contract before signing.

Stealth_81
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I've known people who left school early with the loan, common practice was that they never exercised the option to increase the rates even though it's in the agreement.
 
Thankful for the ‘Spam Bump’. This is a GREAT thread, that I’ve sent to both of my Mids. Good stuff!!

Any advice to pass along, for finding a financial planner to help them? Other that Google?
 
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justdoit19 said:
Thankful for the ‘Spam Bump’. This is a GREAT thread, that I’ve sent to both of my Mids. Good stuff!!

Any advice to pass along, for finding a financial planner to help them? Other that Google?
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As a former Series 7 registered financial advisior, the most important advice i would give our mids and cadets is to start right now. Not tomorrow. Because if they wait until tomorrow, there will be another reason to wait another day and then before you know it, a year has gone by. The only guarantee in investing is that time is your best friend. Right now, both of my college-aged kids have Roth accounts. They are only putting in $100/month into a broad-based index etf, but compounding it a magical thing...
 
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