Financing flight training

[Crusty Old Dude]

Not as depressing as it would be to pay $840 every month for twenty years for training that did not turn into a paying career.

okay now you're making a MIGHTY assumption at this point, Trevor.

[fly2001]

I came to a realization about 2 weeks on just how much money I would be borrowing. I was all set, loan approved 70k, application in the school, and some housing set up. Cold feet set in. Then it really just hit me all at once, the loan, including interst, the sacrifices involved, and the fact that I will be instructing for way less than I make now. Believe me my lifelong dream is to become a helicopter pilot, I daydream all day about, but I think now I will be taking it a little slower and making a commute to pay cash for some hrs. (I've got a whole 1.5 logged now) Then maybe if I get to 10 or 20 hrs and save money by working alot I can at least knock some of the cost of training down for when I go full time. And not have that much of debt. Good luck to all

[jehh]

Jehh...

 

Sounds all good, and not that hard, but a few points to think about:

 

1: You will have the loan while training as well, interest will at least have to be paid, so that means a minimum of $525/month while in flight school ($70K at 9% - if you are lucky enough to get that rate - $700/month at 12%)

 

Most of our students have at least 12 month deferrals, 24 month deferrals are coming soon, so that isn't an issue here.

 

2: You will NOT get a $60,000 a year job right out of flight school (probably not the first 2-3 years), you are more realistically looking at a $20,000 paycut if you had a $40,000 job to start with.

 

Ahh, not so quick there... I understand that is the viewpoint of those in the business for awhile, however the market has changed... The way it is right now, I haven't kept a CFI for 12 months in the past 2 years, they keep getting hired in the GOM or tours before then. I also haven't kept a CFI for 1,000 hours either, the last two were hired at 805 and 750 hours respectivly (Airlog (PIC) and PHI (SIC)).

 

My CFIs can easily earn $30K a year, some will make more, some less, depends on how hard they are willing to work for it. I pay a salary plus bonus for working more hours, both flight and ground.

 

3: WHEN/IF you start making $60,000 a year, Uncle Sam still wants his share (say 25% or so) so your $20,000 dollar increase in wages is really just a $15,000 increase.

 

Ok, however the loan is only $10K a year, still affordable on what you're used to making... In any case, most of our students have 15 year loans for $650 to $750 a month, not the $840 that fry is complaining about (and yes, those payments are with the deferral)

 

The loan is not a big problem to pay back in the scenario that you gave, but most people have to go through 2-3 years of instructing where you MIGHT earn enough money for your rent, utilities, insurance, phone, car and some food here and there, not nearly enough to make $840 a month payments. This is important for people to know before they go into training so they have a plan of how to "finance" those 2-4 years as well. Most people think about being a pilot as a lucrative career, it really isn't, at least not the first few years!!!

 

In fairness, I do discuss this issue with all potential students prior to signing them up. It is also why I pay my CFIs decently, so they can live on it. It is also why we're developing a 24 month deferral plan so that they can bridge that gap easier. Train 3 to 4 times a week, finish your CFI in 12 months, work as a CFI for another 9 months to a year, get your hours and your job. That is a reasonable goal in my experience.

 

For what it is worth, I understand the concerns, it is indeed a lot of money to invest, however as someone else here pointed out, have you priced the going rate for a 4 year degree recently? Flight training isn't all that expensive, by comparison...

 

One more point... If you really have concerns about the first 2 to 3 years, then I advise going to UVSC (Utah Valley State College). Get your 4 year degree, your flight training, and have up to 5 years to defer your payments, some of which might be paid by Uncle Sam.

 

As I tell everyone who walks through my front door, if you want this badly enough, you'll figure it out and make it happen. However, don't do it for the money, do it because you cannot imagine doing anything else.

 

Fly Safe!!!

[flyby_heli]

Most of our students have at least 12 month deferrals, 24 month deferrals are coming soon, so that isn't an issue here.

Ok, so instead of paying your interest you are adding it to the loan amount. It starts at 525/month for 70K @ 9%, 700/month @ 12% at the beginning of the first year and by the end of the second year you are looking at rates closer to 600/month @ 9% and 800/month @ 12%. So instead of having a 70K loan to pay back you now have approximatly 83K @ 9% or 88K at 12%

 

Ahh, not so quick there... I understand that is the viewpoint of those in the business for awhile, however the market has changed... The way it is right now, I haven't kept a CFI for 12 months in the past 2 years, they keep getting hired in the GOM or tours before then.

The business is definitly changing, but it is still more the exception than the rule that CFI's get a different job within the first year. And also remember, there are a lot of small schools out there that have instructors that don't fly 80-100 hours a month!

 

My CFIs can easily earn $30K a year, some will make more, some less, depends on how hard they are willing to work for it. I pay a salary plus bonus for working more hours, both flight and ground.

Same as above, definitly more the exception than the rule in the business!!!

 

Ok, however the loan is only $10K a year, still affordable on what you're used to making... In any case, most of our students have 15 year loans for $650 to $750 a month, not the $840 that fry is complaining about (and yes, those payments are with the deferral)

Ok....lets use the numbers from above. 70K deferred for two years, your loan is now 83K with a 9% interest rate and 88K with a 12% rate.

The interest on those respective loans will amount to $7,470 @ 9% ($622/month) or $10,560 @ 12% ($880/month) So if you pay $750/month ($9,000/year) the loan would decrease by $1,530 the first year @ 9% or at 12 % it would actually increase by $1,560 the first year and more the next one and so on..... There is NO WAY this loan would be paid back in 15 years by paying $750/month!!!

At 9% interest it would take $841/month for 15 years to pay it off, and at 12% it would take $1,056/month for 15 years of paying, so that makes it a 17 year loan including the deferral.

 

Remember, I am talking about a 70K loan to start with, deferred for two years. If your training is cheaper and you finance less, the monthly payment, or payback time will of course be less as well.

 

For what it is worth, I understand the concerns, it is indeed a lot of money to invest, however as someone else here pointed out, have you priced the going rate for a 4 year degree recently? Flight training isn't all that expensive, by comparison...

 

.....don't do it for the money, do it because you cannot imagine doing anything else.

I couldn't agree more! Any form of education is expensive, however the worst part of flight training is that it has to be privately financed, there are no student scholarships/grants and things like that. And all the money has to be in place the first year, not over time like most other educations.

 

But hey, loan or no loan - there is nothing I would rather do!!

Edited July 6, 2007 by flyby_heli

[fry]

Ahh, not so quick there... I understand that is the viewpoint of those in the business for awhile, however the market has changed... The way it is right now, I haven't kept a CFI for 12 months in the past 2 years, they keep getting hired in the GOM or tours before then. I also haven't kept a CFI for 1,000 hours either, the last two were hired at 805 and 750 hours respectivly (Airlog (PIC) and PHI (SIC)).

 

Two supposed examples of low time pilots hired for GOM work is probably not the final word on whether "the market has changed". How about this from the FAA:

 

http://www.faa.gov/data_statistics/aviatio...dia/air7-06.xls

 

The number of active commercial helo pilots has flucuated within a 2.5% range for the past ten years. Basically, that would seem to indicate that the pool of working pilots (and that would include CFIs) hovers around 19,000 and, there has been no real growth in a decade.

 

As for the retiring Viet Nam era pilots, one estimate is that 3,000 pilots of that group will retire over the next 10 years (and that estimate comes from a source that has a vested interest in OVERstating the number). Replacing 300 pilots a year would not seem to be much of a problem from a pool of 19,000...certainly not creating the tremendous surge in demand that Silver State and other flight schools' marketing would have prospective customers believe.

 

A labor pool of 19,000 is just not very big and commiting to monthly payments of $800 for fifteen years in order to maybe become one of that number would seem to be a bet on par with taking your 401k to Vegas. You'd better win.

[mechanic]

Fry,

Here is something else to keep you awake at night. This is article is about college's and the cost ver's whether the students actually learn what they are supposed to in many colleges.

 

College Rankings Lists

Is Our Students Learning?

 

The higher-education sector is ultimately driven by the market. Colleges and universities will strive and compete on whatever terms the market provides. As long as status and success are predicated on building endowments and recruiting more students with high SAT scores, college leaders will continue to focus on fundraising, marketing, and little else. If, on the other hand, success meant teaching students effectively and helping them do well in their lives and careers, universities would change their priorities. They'd recruit better teachers and seek out the Carol Twiggs of the world. Institutions that had focused on their mission--teaching students--and been great at it would finally get the recognition they deserve. But success can't be defined by teaching and learning until public information is available about teaching and learning. We live in a time where that kind of information is finally within reach. Too bad most of it is locked behind ivy-covered walls.

 

After reading this, it brings it home that even many colleges are not such a good deal for the amount they charge for tuition.

 

UND Helicopter Program Costs 07-08'. It's pushing 100 g's for a 4 year degree. Imagine that loan note. I realize that you may get some form of Fin Aid, too. Still, its very high. I would like to know how many students go thru that don't go into the military.

[jehh]

Two supposed examples of low time pilots hired for GOM work is probably not the final word on whether "the market has changed".

 

Maybe not... However I have spoken with several of the recruiters in the GOM and the Canyon, and they all keep telling me they need more pilots. I have former graduates and CFIs flying in the GOM and Canyon, and they also tell me the companies are short pilots.

 

Beyond that, two former CFIs of ours fly EMS right here in town, Air Evac and CareFlite, and both companies need pilots and can't seem to find them.

 

I could go on and on... this business needs pilots... Those 19,000 pilots are not actually flying helicopters, half of them are probably flying airplanes (they have dual ratings).

 

If I had to guess, about 5,000 helicopter pilots actually work for a living as a full time helicopter pilot. Maybe that number could be as high as 8,000, but I doubt it. Keep in mind those numbers include people like myself, who doesn't fill one of those slots. Also keep in mind that a number of those pilots work overseas, and thus further deplete the pilot pool for the states.

 

Regardless, opportunity exists for those who are willing to work for it.

 

Fly safe!

[fry]

Those 19,000 pilots are not actually flying helicopters, half of them are probably flying airplanes (they have dual ratings).

 

If I had to guess, about 5,000 helicopter pilots actually work for a living as a full time helicopter pilot. Maybe that number could be as high as 8,000, but I doubt it.

 

OK, so the labor pool is even smaller than the FAA stats indicate. That would not seem to be an argument in favor of investing $800 a month for 15 years in vocational training.

 

Silver State says they have trained 4,000 students in the past four years; they currently have 2,500 in training; and, they are doubling in size each year. There seems to be a disconnect between the actual number of pilot jobs available what flight schools are telling prospective students.

[fry]

Here's R&W's 2006 Salary Survey:

 

http://www.aviationtoday.com/Assets/cmsima...SalSurv_WEB.pdf

 

The sidebar piece, "Managing a Mixed Bag of Jobs" seems to support the position that there is demand for "experienced" pilots but, the "Average Salary By Specialty" charts don't do much to justify spending $70k to get the training (what's with the EMS salary numbers?).

[jehh]

OK, so the labor pool is even smaller than the FAA stats indicate. That would not seem to be an argument in favor of investing $800 a month for 15 years in vocational training.

 

There are fewer pilots in training than you might expect...

 

We have about a dozen in training now, and we train maybe 20 a year total... Most schools are like us, a handful of helicopters and students.

 

Silver State says they have trained 4,000 students in the past four years; they currently have 2,500 in training; and, they are doubling in size each year. There seems to be a disconnect between the actual number of pilot jobs available what flight schools are telling prospective students.

 

Silver State is full of it, you know that... They probably have enrolled that many students, I'd be surprised if they have graduated more than 20% of that number. They certainly are not overwhelming the pilot ranks at any rate...

 

One thing that Silver State does not tell prospective students is that they can expect to have to move for work. I have spoken to several of their students and they are all convinced they'll get jobs in their local area. These are people with houses, kids, etc. who don't want to move anywhere.

 

Fly safe!

[jehh]

Here's R&W's 2006 Salary Survey:

 

http://www.aviationtoday.com/Assets/cmsima...SalSurv_WEB.pdf

 

The sidebar piece, "Managing a Mixed Bag of Jobs" seems to support the position that there is demand for "experienced" pilots but, the "Average Salary By Specialty" charts don't do much to justify spending $70k to get the training (what's with the EMS salary numbers?).

 

That is your opinion, however there are plenty of people who have spent $70K on a 4 year degree and earn far less than an EMS pilot.

 

Besides, most EMS jobs are 4/4 or 7/7, so a $50K salary on that schedule is equal to a $71.3K salary, or about equal to the cost for flight training. In addition, you keep tossing out the $70K number, plenty of people have gotten that training for far less. If you trained 5 years ago and are now flying EMS earning $50K, you probably spent less than $50K to earn your ratings. By the time today's students become EMS pilots, that job may well pay $70K.

 

In addition, you forget that over the 15 year term of the loan, pay will continue to go up while the loan amount stays the same. In 5 years, when you're earning $75K as an EMS pilot, that $700 loan payment won't be that big a deal.

 

It is all in how you look at it...

[fry]

That is your opinion, however there are plenty of people who have spent $70K on a 4 year degree and earn far less than an EMS pilot.

 

Besides, most EMS jobs are 4/4 or 7/7, so a $50K salary on that schedule is equal to a $71.3K salary, or about equal to the cost for flight training.

 

Over the past quarter-century or so, the return on human capital has risen significantly. Or to put it another way, the opportunity cost of failing to develop human capital is now much higher than it used to be. The wage premium associated with a college degree has jumped to around 70% in recent years from around 30% in 1980; the graduate degree premium has soared to over 100% from 50%. Meanwhile, dropping out of high school now all but guarantees socioeconomic failure. (Brink Lindsey, vice president for research at the Cato Institute and author of "The Age of Abundance: How Prosperity Transformed America's Politics and Culture" (Collins, 2007).

 

And with regards to the tortured math that increases $50k of compensation by more than forty percent...try buying something with that additional $21.3k of phantom income.

[Crusty Old Dude]

Maybe not... However I have spoken with several of the recruiters in the GOM and the Canyon, and they all keep telling me they need more pilots. I have former graduates and CFIs flying in the GOM and Canyon, and they also tell me the companies are short pilots.

 

Beyond that, two former CFIs of ours fly EMS right here in town, Air Evac and CareFlite, and both companies need pilots and can't seem to find them.

 

I could go on and on... this business needs pilots... Those 19,000 pilots are not actually flying helicopters, half of them are probably flying airplanes (they have dual ratings).

 

If I had to guess, about 5,000 helicopter pilots actually work for a living as a full time helicopter pilot. Maybe that number could be as high as 8,000, but I doubt it. Keep in mind those numbers include people like myself, who doesn't fill one of those slots. Also keep in mind that a number of those pilots work overseas, and thus further deplete the pilot pool for the states.

 

Regardless, opportunity exists for those who are willing to work for it.

 

Fly safe!

How did a CFI jump straight into any EMS flying job? Inquiring minds want to knoa...

 

Also, what is the difference between the canyon and GOM gigs? It seems that the flying done for tours would be much more limited compared to what you could do with PHI, AirLog, or Alaska companies such as TEMSCO.

[jehh]

How did a CFI jump straight into any EMS flying job? Inquiring minds want to knoa...

 

Also, what is the difference between the canyon and GOM gigs? It seems that the flying done for tours would be much more limited compared to what you could do with PHI, AirLog, or Alaska companies such as TEMSCO.

 

They didn't, they went to the GOM first... One flew for Air Log for a year, the other flew for Go Helitrans for a little less than a year, now both fly EMS locally.

 

Another two good examples, two CFIs from 2004 are now flying for Bristow, one in the North Sea, the other in Nigeria, both making a decent living.... It is really amazing when you sit down and think about where everyone has gone that I knew a few years ago. And here I am, right back where I started!

 

Fly Safe!

[Barks111]

The current rate at Student Loan Xpress (isn't that the outfit SSH uses?) for someone with "excellent" credit is 10.64%. Plus a 2% loan origination fee. OUCH!

 

http://www.studentloanxpress.com/student-l...press-loan.html

 

So if a student borrows $70k and defers the interest for 18 months, when he starts paying on the 20 year loan the monthly payments will be about $820.

 

That's $196,800.

 

Does that seem like an awful lot of money to anyone else?

 

Lots of interest in this subject because it affects many of us looking to finance our ratings.

 

I would think about how to fund training from different sources and apply a bit of lateral thinking. The aim is to get cheap money and as little as you need, only when you need it. The first port of call could be within your own family. It may be possible to borrow training fees from parents, grandparents or other relatives. If they have the capacity to loan you the money it should certainly be at a more favorable rate that a commercial loan. You would not need the full cost of training up front if you used on of the many 'pay-as-you-go' schools, so loans could be tailored to meet the immediate requirement and fund, say, the PPL first, and then the next stage. This allows you to work on other revenue streams at the same time as flying. Getting a second job, rise, promotion, change jobs for better pay, working more/some overtime, etc.

 

Relatives that don't have investments that are easily accessed (without penalties) could consider remortgage options that you could pay the increased premium on. Mortgage rates are low compared to commercial loans and it could be possible to significantly reduce you interest and, for you, the all important actual monthly payment. In fact, remortgaging may be in the interest of you and any relative kind enough to go this way, as they may benefit from a better refinance deal.

 

Another option is business friends of the family that are close to you or your parents. Successful business minded friends may be approachable, especially if you can show the kind of training to employment plan that looks achievable and realistic. You have the advantage of knowing them and they know you so they may look favorably on your business plan. If you don't ask you won't know if it was possible and you just might get a 'yes' if you try and avert those heavy interest payments.

 

These ideas may be long shots or even no starters for some people but it does no harm to ask and it is definitely worth a shot!

[apentico]

Ok so I am new to this stuff, I am 5 years from retiring from my first carrer. Iwill be 38 years old and I would like to fly. So I am just reserching this now because I am dead serious about living the dream. I have been working for an ambulance company in the Salt Lake City area and would love to stay close to home for school. After resurching the schools here in the area High Desert is #1 on the list. But I have been looking all over the contry for a more economic school but not sacrificing altitude, seasons, terain, etc and I have found a $20-30,000 differance in schools accross the contry. Why such a deffirance? What should I watch for? and what is the GOM, and the Canyon?

 

I have enough equity in my house to pay for school. Infact the wife wants to move to were ever school takes me and the sale of our home will cover the cost of school and pay for a truck and 5th wheel to live in wile attending school.....I say this to iondicat the amount of effort and sacrifice I am willing to make. And to brag about the smoken hot woman I call "WIFE"

 

"God wanted man to fly so who am I to disapoint the birdmaker"