The recruiter I spoke with said it's 4 years inactive unless you've prior military service and have met the requirement already.
And yes, I've looked into the scholarship. If I get into dental school, I will also be applying. This is the first year they've offered the 4 year AF scholarship to 'regular' applicants. Previously they were only given to ROTC and USAFA applicants (1,2, & 3 year for regular folks).
It's a very nice program for those who are going to private schools. When all the $$ is totaled, will you make less than someone just taking the loans and working immediately? Probably...but I tend to go for security, rather than the risk. I've a wife and children to support and would like to not stay up late at night worrying about money while in school.
Tuition, books, tools, fees, and $1235/month stipend. 1 to 1 year service requirement. Also require that you apply to AEGD or other specialty training via the USAF. If you get the 'additional' training, then it adds to your time in service. The remainder of your service totals 8 (even if you only take 1 year scholarship).
If you plan to apply, make sure you're in good health (no asthma for instance), have nothing bad in your background checks (drugs, felonies), are within AF weight standards, and a dozen other qualifiers.
Good luck!