Jump to content

Best finincial option for a 21 year old living with parents?


Recommended Posts

Hey guys. To introduce myself, my names Clint and I just started flight school in Mesa, AZ back in February and I'm loving it. That is, everything but the financial part of it. I am currently paying for everything with some crazy 17% student loan that the flight school is contracted with. I obviously don't want to pay that high of an interest rate, so I'm looking for other places.

 

I'm 21 and have good credit, but not too big of a credit history. I live with my parents who have excellent credit and support me in this. I would like to know if there are better loans than that for someone in my position. Also, what kind of student loans will accept me going to flight school as a "student"? How much better of a percentage could I get if my parents cosigned with me (not puting up some type of collateral)? I'm hoping that some of you who have gone through this or who have a good financial grasp on this stuff can help me understand my options a bit better.

 

Thanks,

Clint

Link to comment
Share on other sites

Do what I did.....get power of attorney on both of your parents, put them in cheap nursing home, turn the house in to a rockin' bachelor's pad, and spend all their money on flight training! hahahahhahaha

 

Ok, really--you're getting raped on that student loan. My guess is that it's not really a true "student" loan; it's just some random loan from some credit company (like MBNA, or some other big credit card company).

 

Federal & state student loans should be around 3-4% (I think). I just paid off my wife's last private student loan through WellsFargo because it was reaching 10%.

 

One of the best options, is have your parents take out a Home Equity Line of Credit on their house. It's a variable rate deal that's usually 1.0-1.5 above prime--which adds up to ~8.0-8.5% right now. You get all the money up front and the interest is tax deductable just like a regular mortgage.

 

Or, if you're in a 141 school, or one that's associated with Utah Valley State College's online program, you can get all the government loans at cheaper rates. You'll need to fill out the dreaded FAFSA form on the internet to see how much the G will give you. You can all check out www.pilotcareer.org for more info on the UVSC deal.

 

Good luck!

Link to comment
Share on other sites

Oh, and the reason you're not being seen as a "student" in the way of loans, you're probably not in an ACCREDITED school. That's the key word. Since you're not accredited there's no guarantee that the school is any good. And if it's not any good, how are you going to get a job to repay the loan? Get it? Kind of like the Mont. GI Bill that will only pay up to a certain percentage AFTER you get your private. You can't earn or work with a private, so it's not "career" training.

 

The other reason banks don't like to loan out money for education, is that fact that's they can't come take it from you! It's not like your hoopdie that they can come tow out of the driveway when you don't make the payments. Education is GREAT in that respect....it's the best asset you'll EVER acquire. Because no matter how hard anyone tries, it's not something that can be lost, stolen, repo'd, or lost to an ex-wife in a divorce. It's the power to make money....without it, others are make money off you.

Link to comment
Share on other sites

I am currently paying for everything with some crazy 17% student loan that the flight school is contracted with. I obviously don't want to pay that high of an interest rate, so I'm looking for other places. I'm hoping that some of you who have gone through this or who have a good financial grasp on this stuff can help me understand my options a bit better.

 

Wow...17%. If you finish your training with $50k of debt on a twenty year payment plan you're going to pay $733 a month until you are 42 years old. That's a total of $176k. And when you do finish your training you will have only the first 200 hours...only 20%...of what you will need to get a real flying job (i.e., a job other than instructing at $18 an hour). And if...for any reason...you do not reach the magic 1,000 hours and actually get a glamorous flying job (probably chauffering roughnecks to an oil rig in the gulf for $60k a year), you will still have those $733 loan payments until you are 42. That's $176k for a private pilot license.

 

A full time college program would provide more future options and there is cheaper financial aid available...even some that does not have to be repaid.

 

Also, you are not going to find a loan at a much lower rate because basically any lender considers you the same as a credit card borrower...unsecured & subprime...and that's their going rate for taking that kind of risk.

Link to comment
Share on other sites

Maybe house equity?

 

Thats what my parents said that i could have. :mellow:

 

From a parent's point of view, I would not risk it. I would not saddle myself with an additional mortgage at the same time that I'm trying to figure out how to provide for retirement. The dropout rate in aviation is very high...of the students who do finish the training portion most will never get an actual flying job beyond instructing. The potential for a paycheck generating flying occupation is just too limited to risk $150k to $180k in training costs plus interest.

 

Basically the same reason that low cost student loan money is not available for flight training.

Link to comment
Share on other sites

From a parent's point of view, I would not risk it. I would not saddle myself with an additional mortgage at the same time that I'm trying to figure out how to provide for retirement. The dropout rate in aviation is very high...of the students who do finish the training portion most will never get an actual flying job beyond instructing. The potential for a paycheck generating flying occupation is just too limited to risk $150k to $180k in training costs plus interest.

 

Basically the same reason that low cost student loan money is not available for flight training.

 

Can you expand on this thought a little?

 

During my research, everything points to this industry having huge potential, and lots of jobs, with required flight hours for commercial jobs dropping, etc.

 

Is there something that I am missing? Is it just the skills (or lack of) that students are leaving school with that are the limiting factor, or is there really not as many jobs available as people say?

 

Thanks in advance.

 

Conor

Link to comment
Share on other sites

Can you expand on this thought a little?

 

During my research, everything points to this industry having huge potential, and lots of jobs, with required flight hours for commercial jobs dropping, etc.

 

Is there something that I am missing? Is it just the skills (or lack of) that students are leaving school with that are the limiting factor, or is there really not as many jobs available as people say?

 

Thanks in advance.

 

Conor

 

Here's a pretty good discussion of that subject:

 

http://www.justhelicopters.com/topics/deta...nChannel=Topics

Link to comment
Share on other sites

You may want to check out Sallie Mae. I've heard ups and downs about them but it may be a good answer. I've been doing a LOT of research on this subject as I'm trying to finance as well. Some advantages are a long repayment term, deferred payments, not horrendous interest rates, and a huge thing is you can request to have your cosigner removed from the loan after 24 full, on-time payments. A big plus for your parents if they cosign.

I've applied with Pilot Career and they just let me know that THEY have been turned down by the financing company, not me, and don't know when their program will be up and running. They actually told me to pursue other financing methods because they have no time table as to when money will be available.

One thing I would also seriously consider is getting a life insurance/longterm disabilty policy on yourself in the event that something tragic happens, your cosigner(parents) won't be stuck with your huge loan. Do it before you fly commercially to try to keep rates down.(According to my insurance agent. Yours may say differently.)

 

Best of luck and let us know how it turns out! Please feel free to email me with any other questions as I'm in the same boat and I've looked at quite a few options.

Joel

Link to comment
Share on other sites

From a parent's point of view, I would not risk it. I would not saddle myself with an additional mortgage at the same time that I'm trying to figure out how to provide for retirement. The dropout rate in aviation is very high...of the students who do finish the training portion most will never get an actual flying job beyond instructing. The potential for a paycheck generating flying occupation is just too limited to risk $150k to $180k in training costs plus interest.

 

Basically the same reason that low cost student loan money is not available for flight training.

Well my parents made it quite clear that if i took this option then i would simply have 50k less of the inheritence. They said that the only problem is the interest will high if they live for a long time longer.

Its not a great thing to talk about though and i feel awkward when talking about it.

Link to comment
Share on other sites

Well my parents made it quite clear that if i took this option then i would simply have 50k less of the inheritence. They said that the only problem is the interest will high if they live for a long time longer.

Its not a great thing to talk about though and i feel awkward when talking about it.

Rockin forget all the shitty financing deals most flight schools offer, look into UVSC. If your willing to do some extra work while your getting your ratings that being online college courses this is by far the best deal your going to find in the way of student loans. They are a full accredited state college which means you can take advantage of "real" student loan options with reasonable interest rates just for flight training and they will let train at most schools around the country which do not have to be part 141. Also you do not have to go full time while your in flight school or through out the whole program if you don’t want to, I’m doing 6 credits per semester right now and I start my flight training in 3 weeks. This is also nice being that my loan is deferred until six months after graduation from UVSC or a degree-seeking program, not the flight school!

So chances are in this type of scenario I will be working as a flight instructor long before I start to pay back my student loans which I applied for through sallie mae being that they have pretty good rates, not even close to 17%.

 

I know this post may sound a little like a sales pitch on behalf of UVSC but I just want to convey to all the other wannabe helo pilots this is a pretty good option in my opinion and after months of research and frustration this seemed to be the best choice for me.

Link to comment
Share on other sites

Rockin forget all the shitty financing deals most flight schools offer, look into UVSC. If your willing to do some extra work while your getting your ratings that being online college courses this is by far the best deal your going to find in the way of student loans.

I know this post may sound a little like a sales pitch on behalf of UVSC but I just want to convey to all the other wannabe helo pilots this is a pretty good option in my opinion and after months of research and frustration this seemed to be the best choice for me.

 

For the record, not all financing deals are crappy, not to mention the fact that the flight schools rarely have anything to do with the financing aspect aside from the affiliation and credentials required by the lenders. UVSC is not nearly as wide spread as companies such as Pilot Finance or Sallie Mae, who you too are using to finance with. Also, by getting loans affiliated with UVSC you do get educational loans, but those are put towards your education courses, not just flight training. You also may not(I stress the word may) be eligable for as much money if financing through a University or have enough at the end to complete your full training.

People looking to finance a career may just want to get on with their training and start work in the field rather than bothering with a degree as well. Flying is all they want to do and feel they have no need for a degree.

This is not to knock UVSC as they have a great program and a degree is something that is nearly always worth while. A good option for you perhaps, but not for all.

Joel

Link to comment
Share on other sites

For the record, not all financing deals are crappy, not to mention the fact that the flight schools rarely have anything to do with the financing aspect aside from the affiliation and credentials required by the lenders. UVSC is not nearly as wide spread as companies such as Pilot Finance or Sallie Mae, who you too are using to finance with. Also, by getting loans affiliated with UVSC you do get educational loans, but those are put towards your education courses, not just flight training. You also may not(I stress the word may) be eligable for as much money if financing through a University or have enough at the end to complete your full training.

People looking to finance a career may just want to get on with their training and start work in the field rather than bothering with a degree as well. Flying is all they want to do and feel they have no need for a degree.

This is not to knock UVSC as they have a great program and a degree is something that is nearly always worth while. A good option for you perhaps, but not for all.

Joel

Well just for the record I was not implying that every single financing deal through flight schools in the world are bad just alot of them, nor was I saying that the flight schools are directly involved with the financing end. The flight school just wants you to acquire the funds to do your training with them; they do not care where those funds come from. However I’m sure alot of reputable schools out there do try to guide there students the best they can when it comes to financing so you don’t have terrible interest rates. Again not implying anything malicious about all the flight schools out there.

 

What separates UVSC from the pack in my opinion is there "alternative loan program" which is a student loan program allowing financing SPECIFCALY for flight training and know other cost associated with the UVSC unless of course you want to use some of that loan money for your tuition or living expenses which could be covered through federal loans, which if you qualify MAY be grants that you do not have to pay back. The Alternative loans are usually (depending on the lender) capped off at around 120,000.00 not to say that everyone will qualify for that of course.

 

Again for the record I initially took the pilot career foundation route like you and applied through Key bank for almost the total cost of my training, it didn’t work out. When I applied for the student loan through USVC for the total cost of my FLIGHT TRAINING it did work out. Not to say by any means that the pilot career foundation is bad because there deff. not I’m sure they were and still are very successful in helping alot of people make a great career for themselves.

 

May be I should not have said that USVC would offer the absolute best deal in the way of financing, but do you know of many other ways to get educational loans for a "ROTORY WING" program because I don’t. As far as I know there are 1 or 2 more colleges in the country that allow you to do this in which you may have to move there to go to school, but there could be more.

 

I know alot of people may not want to take college courses and I was not trying to TELL you this is the only way to do finance flight training, but like I said in my previous post it is a very good option and it can make financing easier as well as give you a degree. I know I addressed the post to you because I read that you didn’t have much luck with the pilot career route but I was also mentioning this for anyone that did not now about the program and all of its benefits.

Link to comment
Share on other sites

Easy, Easy, I wasn't trying to get you upset. I just wanted to point out that UVSC isn't the best option for everyone, but it is still a good program. Trying to offer a broader perspective.

Joel

 

The blind leading the blind! Whether a prospective student gets their financing through UVSC, the flight school or goes straight to the lender the loan is coming from the same retail lender. That's because there are no low-cost student loan programs available for flight training...none, nada, zip. Citibank, Wells Fargo, Student Loan Xpress, etc., etc., etc. all offer about the same deals (within a couple of percentage points) and all based on the student's credit status...i.e., established credit or none, with or without co-signor, etc. You're basically using the same loan arrrangements they offer in those tons of "you're pre-approved" credit card offers they mail out The loans are always variable (prime or LIBOR plus 5, 6 or 7 points), they generally entail up-front fees, some allow for deferral but the interest continues to build...and finally...they are all COSTLY AS HELL. The interest rates run from around 9% with a co-signor up to 17% without one.

 

If a student gets all the way to CFI they are looking at 15 to 20 years of payments of $700 to $900 a month.

Link to comment
Share on other sites

That seems kind of risky. If you loose your medical, you still have to make the payments.

 

Oh it's even risker than that. If they get their CFI but never actually get to the magic 1,000 hour mark, for whatever reason, and get a paying job, they still have the payments. And, basically, they will then have just a private pilot's license. They will have spent...training cost plus financing costs...about $150,000 for a license they cannot use for anything else.

 

Most of the students who are now entering flight training will either drop out during training...in which case they will have lost $20k or $30k plus future interest costs (unless they go to SSH where they will probably lose the entire program cost plus future interest)...or, they will get their CFI but will not find an instructing position or will quit for some other reason before getting to 1,000 hours.

Link to comment
Share on other sites

Well, to be honest, i want to stay well clear of all the financing and loans etc etc.

I am not going to start training until i have 75% of the cash in a bank account.

Link to comment
Share on other sites

Hey guys. To introduce myself, my names Clint and I just started flight school in Mesa, AZ back in February and I'm loving it. That is, everything but the financial part of it. I am currently paying for everything with some crazy 17% student loan that the flight school is contracted with. I obviously don't want to pay that high of an interest rate, so I'm looking for other places.

 

I'm 21 and have good credit, but not too big of a credit history. I live with my parents who have excellent credit and support me in this. I would like to know if there are better loans than that for someone in my position. Also, what kind of student loans will accept me going to flight school as a "student"? How much better of a percentage could I get if my parents cosigned with me (not puting up some type of collateral)? I'm hoping that some of you who have gone through this or who have a good financial grasp on this stuff can help me understand my options a bit better.

 

Thanks,

Clint

 

When looking at loans, you're going to have to consider a few things. One, do you know your credit score? myFICO.com offers a free 30 day trial of their Score Watch program. This will give you an idea of where your actual credit score sits (and will be your primary indicator whether or not YOU can apply for the loan by yourself). The next issue is repayment. Any loan company is going to want to know how they are going to get repaid. If you have nothing to put on the table, and no job since you're going to school, they're probably going to say they can't help you. Realize that if there is a gap between your parents and your fico scores, this can cause the rate to be higher than if the loan was only in the name of the person with the higher score. This is where you'll need to decide if you want to use the loan to boost your credit score or if you want the absolute lowest interest rate possible. If you want to use the loan to boost your credit score and can't get it on your own, go ahead and grab your parents as cosigners. If you want the absolute lowest rate, it'll probably be best for your parents to get the loan and you repay it through them. Again, this all depends on the FICO scores involved, but I'm going with the assumption that at 21 you haven't had much of a credit history (and that will cause your score to be lower) compared to your parents.

 

As far as student loans, the FAFSA will use your parents income to determine eligibility for federal student aid. This can be a problem for most students, even those who haven't been supported by their parents since high school graduation. There are a few areas where the FAFSA will qualify you as an independent. Check finaid.com for more information to see if you'd qualify. If the FAFSA says you don't qualify as an independent, and your parents make too much for federal aid, there are still two options left, neither of which require collateral.

 

PLUS Loan

Alternative Student Loan

 

These will have higher interest rates than federal loans such as Stafford, but it's an option (check for school eligibility requirements).

 

Good luck!

Link to comment
Share on other sites

http://money.cnn.com/2006/05/01/pf/college...dowry/index.htm

 

"'My student loan debt is my biggest source of stress in my life at the moment,' said Steve Desroches, a 2002 graduate from Columbia University's Graduate School of Journalism. 'I live paycheck to paycheck.'

 

The degree left Desroches, who works for a newspaper on Cape Cod, $50,000 in debt with no savings. He's unable to buy a needed car or to even think about entering Massachusetts's "out of control" real estate market."

 

 

And this guy has probably got federal loans with a fixed rate of 6% or 7%. Imagine $69.9k of debt at 13% or 14%.

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.

Loading...
 Share

×
×
  • Create New...