Althought the government has chopped the Department of Education's loan and grants for college students, there is another route to low-cost higher education. The Pentagon runs it, with good intentions but not such good results.

Each year, the Army, Navy and Air Force award about 19,000 full, four-year Reserve Officer Training Corps (ROTC) scholarships to students at colleges across the country, including such high-priced private institutions as Massachusetts Institute of Technology, Duke and Notre Dame.

But according to Defense Department officials, about half these students drop out of the ROTC programs, although not necessarily out of school, by the end of their second year, with no obligation to serve in the military or to pay the U.S. Treasury for their tuition, room, board and books and monthly $100 stipend.

The ROTC program owns about $75 million a year, Pentagon officials say.

Timing of the decision to drop out of ROTC is crucial, because once students enter their third year they essentially sign a contract and incur an obligation to serve in the military. Students completing the four-year program at government expense serve four years as officers after graduation.

Those who call it quits after two years have no such obligation; they can just keep on going to school at their own success at the same institutions.

Although the Pentagon needs to attract bright young officers, it is not happy with the current situation. A Defense Department report says that, while the services have been recruiting sufficient numbers of students in the past several years, they have been unable to retain them.

According to the report, "Attrition is excessive, particularly after the sophomore year, for four-year scholarship students. Almost one-half of all attrition occurs then, and two-thirds of its is voluntary," meaning the student dumps the military rather than the other way around. "In other words, too many scholarship students decide to leave ROTC before they enter their junior year and have to incur an obligation to serve. . . ."

Furthermore, the report notes that in recent years the services have been reluctant to force students to serve in the military even when they breach their all-expense-paid contracts, because it would basically mean involuntary service in an otherwise all-volunteer armed force.

During the Carter administration, the Pentagon proposed legislation to discourage dropouts by requiring scholarship students either to serve as enlisted persons in the military or pay back what the government paid out in their behalf.

Instead, Congress passed last year an omnibus bill affecting ROTC and the military academies that does not contain any penalties for dropping out after two years.

Gary G. Kauvar, a special assistant for education in the defense secretary's office, says the Pentagon is conducting a survey, which will take about six months, to try to determine why students drop out.

The military, he says, has no good data on the intentions of young people -- whether they never really intended to go beyond two years, didn't like the taste of military life, or were simply among the students who drop out of college for other reasons.

"Sure there is the opportunity here for the government to get ripped off," Kauvar said, "but we don't have evidence that that is what is happening. I'm sure there has been some abuse, but I wouldn't want to say it is a significant proportion."