Service members will see an average increase of 6.9 percent in their January pay. "It's the largest pay increase in 20 years," said Navy Capt. Chris Kopang, director of compensation at the Defense Department, in a recent American Forces Information Service interview. In general, officers will see their pay increase 5 percent, he said, and enlisted service members get a 6 percent boost in their pay beginning Jan. 1. Several pay grades will see significantly larger increases. "We have chosen to target the pay raise to certain pay grades that we feel need an extra boost because of retention needs," Kopang said. For instance, officers in grades O-3 and O-4 will receive 6 and 6.5 percent increases respectively. Non-commissioned officers are also receiving larger raises, Kopang said, with the highest increases--up to 10 percent--going to the highest enlisted grades. Enlisted members in grades E-5 and E-6 will see an average 7.5 percent increase, E-7s an average increase of 8.5 percent, and up to 10 percent for E-9s. Certain lower-ranking grades also will see increases that have nothing to do with percentages or retention, but to fix inequities in the pay table, he said. For instance, on the 2001 pay table an E-3 with under two years of service would make more money by going over two years in service as an E-3 than by getting promoted to E-4. "We thought that sent the wrong signal," Kopang said. "We wanted to send the signal that people should strive for promotion quicker." President Bush in February 2001 pledged an additional $1.4 billion to go toward pay raises for service members. He signed the 2002 National Defense Authorization Act, which included the extra money, Dec. 28, 2001. Without this money, Kopang said, members would have gotten a 4.6 percent across-the-board increase on Jan. 1, 2002. Higher raises for NCOs reflect the changing demographics of a more-educated force. Kopang explained the military pay tables are based on the premise that enlisted members are high school graduates. Most of today's enlisted members have some college under their belts. The services strongly encourage members to further their education. Kopang estimated that up to 40 percent of senior NCOs are college graduates. "We can't pay them as much as a college degree holder right now," he said of the senior enlisted grades. The idea, he said, was to bring their earnings closer to civilian counterparts who are high school graduates with some college. Housing allowance rates have increased as well. In 2001, military members not living in government-provided quarters paid an average 15 percent of their housing costs out of their own pockets. Defense is working to ensure the Basic Allowance for Housing covers all of a member's housing costs by 2005. In 2002, for instance, members will pay 11.3 percent of their housing costs out of pocket on average. Housing allowances are tied to actual housing costs in a given geographic area, so some areas are getting larger rate increases than others. No rates are going down, though. Kopang said Defense has implemented individual and geographic rate protection. Even if housing costs decrease in an area, the rates won't go down. Members will not get a lower rate in 2002 than they did in 2001 as long as they stay at the same duty station, and members moving into an area won't get a lower rate than individuals who live there already, he said.