USAA Career Starter Loan Review: Low Interest Loan for New Military Officers

The USAA Career Starter Loan is for military cadets, midshipmen, officer candidates, and newly commissioned military officers from any of the five Service Academies, ROTC programs, or OCS/OTS. USAA offers this low-interest-rate loan to help new officers in the military get their careers started, with no or little credit history. This review will help those eligible to understand and maximize the use of the USAA Career Starter Loan.

This personal loan is a good fit for: Cadets, midshipmen, officer candidates, and newly commissioned officers who want a low-interest loan.

Top perks

The USAA Career Starter Loan is a unique personal loan that offers low interest rates typically reserved for secured loans with collateral. Loan amounts can be up to $36,000 with payment terms up to 60 months. The interest rate is the same regardless of the term. Those without a solid credit score can qualify for the USAA loan.

Low-interest loan for those with little to no credit. Many people in their early 20s don’t have enough credit to qualify for a credit card, yet this low-interest loan is guaranteed for those attending a Service Academy. Cadets and midshipmen can get up to $36,000 at 0.75% interest. They can receive the loan as early as the beginning of their junior year. This loan is guaranteed for Service Academy cadets and midshipmen regardless of their creditworthiness.

Cadets and midshipmen commissioning through the Reserve Officer Training Corps (ROTC) college program and Officer Candidate or Training School (OCS or OTS) can qualify for up to $25,000 at 2.99%. ROTC cadets and midshipmen can receive their loans as early as 12 months prior to commissioning, and officer candidates up to four months prior. The loan for cadets and midshipmen for ROTC and OCS/OTS is subject to credit approval. USAA has not published the minimum score requirement, however many have qualified for the loan even with poor credit.

Flexible payment terms. The loan can be paid back over 12-60 months. Unlike most loans, where the longer the term the higher the interest rate, the interest rate with a USAA Career Starter Loan stays the same regardless of the term.

For Service Academy graduates, repayment of the loan starts as long as two years after they receive it. The first due date is August 15 of their commission year. The first due date for ROTC graduates is six months from their commission date. OCS/OTS graduates and military officers who receive their loans within one year after their commission date will have to begin paying back the loan 30 to 45 days after their contract date.

No collateral required. Typically the only loans with interest rates as low as 0.75% to 2.99% are secured loans. As a signature loan, however, no collateral is required to qualify for this loan. Military officers have an obligation to serve three to five years after their commission date. USAA understands that officers’ salary and job stability put them in a position to pay back the loan.

No prepayment or origination fees. There are no origination fees or prepayment penalties. USAA also offers a 15-day grace period with no penalty. However, after the 15 days, the penalty is up to 5% of the monthly payment.

What could be improved

The USAA Career Starter Loan is a niche loan only available for those about to commission as an officer in the U.S. military or within one year after their commission date. Eligibility is also limited based on commissioning date, and applicants must have bank accounts setup with USAA prior to applying for the Career Starter Loan.

Only cadets, midshipmen, officer candidates, and newly commissioned military officers qualify. Cadets and midshipmen at any of the five Service Academies, in a ROTC program, or a OCS/OTS program can qualify for the loan. Military officers also have up to one year after their commission date to qualify for the loan.

Limited time to qualify for the loan. In addition to only certain people in the military being eligible for the loan, eligibility is also based on a specific time frame from their commissioning date.

• Cadets beginning their junior year at the U.S. Military Academy at West Point, the Air Force Academy, or the Coast Guard Academy are eligible to apply for the loan.
• Midshipmen beginning their junior year at the Naval Academy and the Merchant Marine Academy are eligible to apply for the loan.
• Service Academy graduates have up to one year after their commissioning date to apply for the loan. After one year, they are no longer eligible.
• Cadets and Midshipmen at ROTC programs are eligible to apply for the loan 12 months prior to their commissioning date and 12 months after their commissioning date.
• Officer candidates at OCS/OTS are eligible to apply for the loan four months prior to their commissioning date and 12 months after their commissioning date.

Must have a USAA bank account set up with direct deposit. To be able to apply for the loan, you must first be a USAA member and have a USAA bank account with at least one direct deposit. The direct deposit transaction must be within 30 days of applying for the loan. Given that USAA is only for military service members, veterans, and their family members, this is one of the best ways they are able to grow their membership.

Need to call USAA to get more information and apply. There is very little information regarding the USAA Career Starter Loan online. Applications cannot be completed online and you must talk to a representative in order to get more information and apply for the loan.

Eligibility for the loan is limited to USAA members, those on a path to become a military officer, and those within a certain time period from their commissioning date. Follow these steps for faster loan approval.

Application process

• Ensure you are eligible for a USAA Career Starter Loan
  • A junior at the U.S. Military Academy at West Point, the Air Force Academy, the Coast Guard Academy, the Naval Academy, the Merchant Marine Academy or within one year after commissioning date.
  • A ROTC member within 12 months of commissioning or up to 12 months after commissioning.
  • Officer candidate members within 4 months of commissioning or within 12 months after commissioning.
• Become a USAA Member
• Open a checking account
• Set up direct deposit and show at least one direct deposit within 30 days before applying
• Apply for the loan by calling 800-531-4610

You are on track to be a commissioned officer in the U.S military or have been commissioned in the past 12 months and have little to no credit history. These low-interest loans can help you get started when you begin your military career. Many officers don’t have the credit to obtain a low interest rate. This low-interest loan can help new officers avoid the burden of high debt and help build credit.

Officers can use this loan to buy a car, consolidate high-interest credit card debt, build emergency savings, or pay for military uniforms and household goods for their first duty station. This loan cannot be used for educational expenses or to pay back student loans. As always, you’ll also want to make sure you know how to borrow responsibly. The USAA Career Starter Loan terms and conditions may change.