Financing training

[Lazy8]

Hey folks,

I've got an aspiring student pilot who has had some trouble finding financing for his training. He was denied a SallieMae career training loan. He doesn't have a co-borrower. The only other options I know about are PilotFinance and AOPA Flight Training fund. Unfortunately, Key Bank (which is what I used) no longer has their aviation loan program.

You folks know of anything else out there?

Thanks
Grove

 

[eyelevelflyer]

Grove:

I have recently heard that many schools are trying to get back with Key Bank, I believe they call it a Title IV qualification. Have him/her stay in touch with the Financial Aid person at that school. This website is a good start for information on flying and the debt most of us have. Have them be careful with the debt load. I have 29 years left of the monthly reminders. Fly safe.

 

[350DRIVER]

If he was denied by SallieMae then likely it is due to one of two reasons, 1) Lack of credit history or 2) Poor credit history. Tell him to try Pilot Finance or a personal loan through a company that caters to those who have little or no credit history established or poor credit, quite a few companies specialize in this. Problem with going with a company that will get him a loan that may or may not view him as "higher risk" is that he is probably going to get slammed on the finance rates, terms, etc, and possibly may even have to secure the loan (clear car title, etc.). It is possible but is it really worth it at a much higher rate?. Only he can make that call but if it were me then I surely would look at other options that may be available. Anyone can get a loan, problem is that they are going to be paying on it for a long long time due to the higher rates that some are forced to except. Being young, little or no credit history established, lack of decent income, little or no assets, no co-signer, etc, isn't the best case scenario but an all too common one. I have seen many people in this same situation over the years, hard to swallow I am sure but try and tell him that if he wants it bad enough then somehow it will become a reality.

 

[macfly]

Make sure to brief him on what to expect after he gets his tickets, money wise.

I still have trouble figuring out how guys make it on 18k a year instructing/ FO with 25-50k of training debt on top of normal college loans, credit cards etc. Do these Flight school loans carry a 30 year term?

I have to ask why would someone set up to fail? Do these kids still live with thier parents?

If he is young, tell him to go down to the recuiters office and grab a flying contract from the gubament.

 

[minitour]

I still have trouble figuring out how guys make it on 18k a year instructing/ FO with 25-50k of training debt on top of normal college loans, credit cards etc. Do these Flight school loans carry a 30 year term?

Some do, yes...

My advice (from someone who's gettin' stuck) is not to finance it. Pay as he goes.

Get a job at WalMart and McDonald's and work overtime if possible...put every dime into training if that's what he really wants to do.

Or better yet, as has been said, get some money from Uncle Sam...

...but with all these tax cuts he should have a ton of money already.

-mini

 

[Lazy8]

In this gentleman's case... He's not a younger guy. He's over 40, with some negative credit history, and he just wants to live out a dream he's had since he was a kid. A Private Pilot certificate and possibly an instrument rating is as far as this guy will go in training so it's not like he's going to take a loan of $40,000+ to become a career pilot. Myself and this gentleman have both been looking into alternative ways(other than SallieMae) to pay for training. What it's coming down to is for him to hold-off training and save up the cash or get a loan with not-so-great terms. I've never been a fan of pay-as-you-go because inevitably the student always has 2-4 week breaks in training because "they don't have the money right now". I believe he can afford to pleasure fly once or twice a month after training, which is his ultimate goal anyway.

Thank you for your comments.

Grove

 

[macfly]

In this gentleman's case... He's not a younger guy. He's over 40, with some negative credit history, and he just wants to live out a dream he's had since he was a kid. A Private Pilot certificate and possibly an instrument rating is as far as this guy will go in training so it's not like he's going to take a loan of $40,000+ to become a career pilot. Myself and this gentleman have both been looking into alternative ways(other than SallieMae) to pay for training. What it's coming down to is for him to hold-off training and save up the cash or get a loan with not-so-great terms. I've never been a fan of pay-as-you-go because inevitably the student always has 2-4 week breaks in training because "they don't have the money right now". I believe he can afford to pleasure fly once or twice a month after training, which is his ultimate goal anyway.

Thank you for your comments.

Grove

Well, I was going to let it go, and believe me when I say I am not trying to sound like sour grapes; A 40 year old with poor credit trying to borrow money so he can fly once a month sounds, irresponsible as hell.

You say that your not a big fan of pay as you go? why? because there are breaks in training? I will assume you took out a loan to get your tickets? Do you realize what your total payback is going to amount too? Say you borrowed 25k, you total payback could be as high as 50k or more if you have long range terms such as 20-30 years. I think if your dedicated to becoming a career pilot then borrowing money MIGHT not be a bad why to go, although in todays market I personally think its foolish. Weekend warriors, really ought to pay as they go.

Minitour, thats good advice chief. A good bud of mine is still paying off his 20k flight school loan since we left DAB back in 2000/2001. He has a sales job and a family now and hardly flys anymore. His wife put her foot down while he was persuiing his CFI because she knew that he was not going to make enough $$$ to support his life situation, alas he dropped out. He blames no one but himself, as he knew the stakes.

Anyway grove, I hope I dont sound like wet blanket and I truly hope that training works out for the gent and you sir get your island hopping job(looks funs as HELL*!).

Good luck.

 

[Skyline]

Student Loans

I had a co-worker who graduated from ERU in the late 80's. He has been a pro-pilot ever since and is still 85K in debt from his school loans. It is a bad way to go. Training loans is a large part of what is killing our industry. If you don't want it bad enough to work three jobs then you don't want it bad enough.

Skyline

 

[MFRskyknight]

My advice (from someone who's gettin' stuck) is not to finance it. Pay as he goes.

Get a job at WalMart and McDonald's and work overtime if possible...

I second this. I may spend up to a year working on my Commercial once I get back home, and then whatever else the CFI, etc. will take after that, but I'm done with training loans.

MFR

 

[Fly_Chick]

Can he put it on his credit card? Private should amount to about $5000, instrument another $2000 - $5000 (to build the 50 PIC). Just rough estimates. Not sure of your student's financial predicament, yet perhaps he can put it on credit cards and pay it off each month.

 

[Lazy8]

Well, I was going to let it go, and believe me when I say I am not trying to sound like sour grapes; A 40 year old with poor credit trying to borrow money so he can fly once a month sounds, irresponsible as hell.

I agree that it doesn't sound good when a 40 year old gets denied a training loan for bad credit; however, I never said he was getting a loan to fly once a month. I said AFTER his training he can afford to fly once a month with the money he makes at his job. He needs the loan to fly frequently through his training.

I'm opposed to pay-as-you-go for students who can't afford lessons because, like I said, students will inevitably have long breaks in training which *increases* there overall training costs because they have to do so much review from lesson to lesson. So you can look at it two ways for folks who just don't have the real cash on-hand. Pay as you go, which will take them longer to complete the certificate and cost more than usual OR take out a loan and complete the training in a shorter amount of time with $100 - $150 month payments thereafter. Remember this is just a loan for a Private Pilot Certificate.

Anyway, again, thanks for the input

Grove

 

[Lazy8]

Can he put it on his credit card? Private should amount to about $5000, instrument another $2000 - $5000 (to build the 50 PIC). Just rough estimates. Not sure of your student's financial predicament, yet perhaps he can put it on credit cards and pay it off each month.

I don't recommend putting ANY flight training on a credit card (or any revolving line of credit) if the student cannot pay the card off in full every month. That can get you into some serious credit hell real quick.

Grove

 

[Lazy8]

I had a co-worker who graduated from ERU in the late 80's. He has been a pro-pilot ever since and is still 85K in debt from his school loans. It is a bad way to go. Training loans is a large part of what is killing our industry. If you don't want it bad enough to work three jobs then you don't want it bad enough.

Skyline

Yikes...

I'm kind of in the same boat with Key Bank. I went to ERAU for two years before realizing it wasn't worth the cash. (and lets not let that comment get us off track ) At the freshman orientation when the direct question of how much everything would cost from semester to semester they just answered by presenting us with all sorts of wonderful loans that could make it "affordable".

Live and learn...

Anywho, whaddyado!

Grove

 

[macfly]

I agree that it doesn't sound good when a 40 year old gets denied a training loan for bad credit; however, I never said he was getting a loan to fly once a month. I said AFTER his training he can afford to fly once a month with the money he makes at his job. He needs the loan to fly frequently through his training.

I'm opposed to pay-as-you-go for students who can't afford lessons because, like I said, students will inevitably have long breaks in training which *increases* there overall training costs because they have to do so much review from lesson to lesson. So you can look at it two ways for folks who just don't have the real cash on-hand. Pay as you go, which will take them longer to complete the certificate and cost more than usual OR take out a loan and complete the training in a shorter amount of time with $100 - $150 month payments thereafter. Remember this is just a loan for a Private Pilot Certificate.

Anyway, again, thanks for the input

Grove

I cant stay away grove my man... I lub ya brother!


TimeValueOfMoney TMV. 100-150 for how many months? I AGREE that spacing training will increase training costs, but does that negate the amount of interest that some one will pay over the term of thier loan? Is the payback of someone's loan equal to or greater than the projected amount of "DO OVER" Loss.?



Caveat - Just something to think about while we agree on one thing, spacing = forgetting = do over = more money( i know from personal experience:<). That formula is fact and can not be adjusted, modiifed, lossened, tossed or bucked.

Mathematically we have one known(total cost of loan over X amount of years) and one variable cost which is DO OVER SPACING VARIABLE.

Each student has its own equation. Lets toke on that for a bit.

 

[Lazy8]

I cant stay away grove my man... I lub ya brother!


TimeValueOfMoney TMV. 100-150 for how many months? I AGREE that spacing training will increase training costs, but does that negate the amount of interest that some one will pay over the term of thier loan? Is the payback of someone's loan equal to or greater than the projected amount of "DO OVER" Loss.?

It all depends on what the student's goals are and how soon they want to accomplish them. We both understand you pay a price for dragging out training and you pay a price for taking a loan out. I leave it up to the student to figure out which of the two evils they prefer (because sometimes a loan IS better); moreover, when it comes to a person just getting a Private Pilot Certifiate, a loan isn't ~that~ evil. Someone taking out a loan with SallieMae for $8k will end up oweing about $10,500 all said and done. They'll easily spend that amount and more on a Private if they're going to drag it out over 100-150 hours. So in this particular instance a loan sounds like a better option because the student will spend less and take less time to complete training.

In my own case (career-pilot) I wish I had been a touch smarter with loans. Key Bank just made it WAAAAY too easy to get money and I wasn't smart about it at the time. It's going to be an exciting next several years making mortgage-sized payments for loan repayment! Anyone want to come over for Ramen and tap water?


Grove