RECEIVING 100% FINANCING

[huckitfarther]

Just wondering if anybody else had 100% financing for school and how paying it back worked especially the first couple of years when getting hours is the biggest hurdle. i am about to take out $60000 in loans which i can handle with my current job but when i become a pilot i am not so sure i'll make enough in the first couple of years to make my payments any info greatly appreciated.

Edited August 24, 2007 by huckitfarther

[Sparker]

If you can handle payments on a 60K loan with your current job, why not work extra and put the would-be payments into savings for a year? Cut the loan down, and save a lot of stress for the next 10 years of loan payback. Impatience has a hefty price.

 

There is a lot of risk when taking out a 60K loan, not that it can't be done... but there are way too many "what ifs" for me to borrow that much money with nothing as collaterall if I can't make payments. A career in aviation seems espescially more risky if you consider what would happen if you lost your medical after you have such a huge loan.

 

Good Luck

[joker]

huckitfarther,

 

Absolutely second Sparker's advice. The courage / ability to abort or postpone a mission due to not being ready or fully prepared is one which all pilots must have.

 

Your first test is right now. Ask yourself, would 2 years extra working be a much more sensible option. You could start your flight training with no debt! Read my many posts regarding stress and how it retards progress.

 

Here's a sombring thought. You seem to plan to be hired and saving from your flying job in 2 years. Make that 5 years. That is a more realistic number. The first year is spent flight training, and the next 3 years are mostly spent trying to break even. They are spent with long periods unemployed. They are spent with costly relocations to new jobs.

 

I urge people to look for ways of starting with as little loan as possible. If that means hard saving for an extra 2 years, then this would be my decision.

 

My father always told me never to take a loan for a sum I was not 100% sure I could pay back. This meant being so certain of my outcome or having that money already - if everything went 'worst case scenario' I could come out still not in debt.

 

In other words, don't borrow money to get out of trouble. Work hard to do that. Make sacrifices to do that. Only borrow money to enhance your already good position.

 

Joker

Edited August 25, 2007 by joker

[jehh]

Your first test is right now. Ask yourself, would 2 years extra working be a much more sensible option. You could start your flight training with no debt! Read my many posts regarding stress and how it retards progress.

 

Wait a minute... How does being able to make payments on a $60K loan for 2 years mean that I can do flight training with no debt?

 

Payments on a loan that size are about $700/month. Times 24 months that is $16,800. Yes that is a chunk of money, but no where near what is needed to do this.

 

Here's a sombring thought. You seem to plan to be hired and saving from your flying job in 2 years. Make that 5 years. That is a more realistic number. The first year is spent flight training, and the next 3 years are mostly spent trying to break even. They are spent with long periods unemployed. They are spent with costly relocations to new jobs.

 

Since when? If a CFI these days cannot build his thousand hours in a year, then move on to the GOM or tours, he isn't trying hard enough. My CFIs get jobs the day they have their thousand, and I get calls and faxes every month from companies looking for pilots.

 

I urge people to look for ways of starting with as little loan as possible. If that means hard saving for an extra 2 years, then this would be my decision.

 

Now I do agree with this. Paying cash is usually better than taking out a loan. Then again, you have to consider the ability to save up this much money, vs just taking out a loan.

 

How many people would go to college if no one took out a loan for it.

 

My father always told me never to take a loan for a sum I was not 100% sure I could pay back. This meant being so certain of my outcome or having that money already - if everything went 'worst case scenario' I could come out still not in debt.

 

That is a good theory... However if you don't have the money, you don't have it. This is what loans are for.

 

Fly Safe!

[jehh]

Just wondering if anybody else had 100% financing for school and how paying it back worked especially the first couple of years when getting hours is the biggest hurdle. i am about to take out $60000 in loans which i can handle with my current job but when i become a pilot i am not so sure i'll make enough in the first couple of years to make my payments any info greatly appreciated.

 

If you work at it, you can have your training done in a year, and your thousand hours at the end of two years. So you need a loan that gives you 24 months of deferred payments, because paying that back on a CFIs pay is tough. Once you get your thousand hours, paying it back shouldn't be a problem.

 

Of course as I tell everyone who walks in our front door, be prepared to move for that CFI job. If you get one where you trained, great. If not, you need to be prepared to move for your first job.

 

Fly Safe!

[montu]

What loan company defers payments for 2 yrs?

[Sparker]

Both schools I am looking at said to expect about 70 hours a year as a CFI.

[Scott Chambers]

Both schools I am looking at said to expect about 70 hours a year as a CFI.

70 hours a year!! That means it'll take you over 11 years after you get your commercial rating to hit 1000 flight hours. I'd suggest looking into a different school..

[Sparker]

70 hours a year!! That means it'll take you over 11 years after you get your commercial rating to hit 1000 flight hours. I'd suggest looking into a different school..

SORRY! I mis-spoke or mistyped... 70 hours a month!

[ADRidge]

70 hrs/mox12=840 hours. Plus that 200 or so it took to get CFII, and you're golden. Off to the better paying jobs in the GOM or flying tours.

[jehh]

70 hrs/mox12=840 hours. Plus that 200 or so it took to get CFII, and you're golden. Off to the better paying jobs in the GOM or flying tours.

 

That is pretty standard... However, I've had quite a few CFIs leave before 1,000 hours in the past year... One went to Air Log with 805 hours and the other went to PHI with 750 hours...

[joker]

Jehh,

 

Thanks for your queries on my post.

 

1. I guess I misunderstood his post. I thought he was implying he could clear a $60000 loan with his current job in 2 years. Obviously not. My bad. Just out of interest, how long are these loans usually for? Sparker suggests 10 years - that's horrible.

 

2. As for being hired and breaking even and saving after 2 years. What about those who don't even get hired as a CFI for 5 months after getting the ticket? They are the ones I'm talking about. For every 10 students only say 2 will get hired immediately (and that's being positive). Even 'your' CFIs will probably still not have broke even (paid back all flight training) after 2 years. They will still be on lower-end salaries. To get to this stage takes more time. That's where my 5 years comes in.

 

3. I have always felt your college system has always been a little sad. Sets people out on the wrong foot even before they've got the the big wide world. Still, its inevitable in today's modern world. State welfare is on the way out. So you have the money. Do you put it to flight training, or a degree? Which is more valuable? Which is more safe? I don't know, but that's the question.

 

4. "However if you don't have the money, you don't have it. This is what loans are for."

 

OR

 

"Only borrow money to enhance your already good position. This is what loans are for."

 

Just two different perspectives.

 

I reiterate, our difference in views is based on you looking at those who you hired straight up, and me looking at Joe Average student. How many students do you train who don't get hired. How long does it take them to get 1000 hours?

 

If you get hired straight out of your training, then YES, 2 years you should have enough hours to move onto bigger ships. If not, it will be a longer and harder route.

 

That's all.

 

Joker

[Merc]

Sparker's right "Impatience has a hefty price".

 

You could try saving a thousand a month for 60 months. Then you'd have the cash. If you want it sooner you could save 2k a month for 30 months. If you budget tightly and work lots of overtime and/or an extra job you could really bust this out. It may seem like a lot now, but just look at it in pieces. Every month you save 2k is a month you're one step closer. Not counting interest which will be paid TO you instead of collected FROM you.

At the end you'll be a graduated pilot and you get to actually enjoy not being paid much for a while until your worth it because you're not facing Debtzilla.

I know you feel like you gotta do it now, but try to think long term on this. Short term thinking will get you every time.

 

that's my 2 cents...wait I seem to be lacking in funds. Anybody got 2 cents I could borrow

 

I promise I'll pay you back

[Sparker]

$60,000 at 8% is $758.30 per month for ten years. I don't know what length of loans they offer, because I don't want one... but I know 30K in interest saved can buy ALOT!

 

Can a CFI afford $800.00/mo payments? Any CFI's out there who are making payments and getting by? I would like to hear from people who have done it... there is a whole lot of speculation going on.

 

 

"How many people would go to college if no one took out a loan for it."

 

How many people would go bankrupt if they knew how to manage money and avoid debt? A lot of people borrowing student loans are living off of credit cards and graduate way over their heads in debt. No thanks.

Edited August 30, 2007 by Sparker

[Gomer Pylot]

What the schools don't tell you is that there is absolutely no possibility that they can, or will, hire every student as a CFI. What happens to the other 90%? Bankruptcy?

[jehh]

What the schools don't tell you is that there is absolutely no possibility that they can, or will, hire every student as a CFI. What happens to the other 90%? Bankruptcy?

 

I tell every single person interested in doing this that I hire at most 50% of my graduates... I freely admit that I pick graduates that I feel will fit well into my school and that I have been impressed with during their training.

 

Those we don't hire, we provide job placement assistance. We help with the resume, interviewing skills, and provide contacts at other flight schools to send their resume off. Some get letters of recommendation, some don't...

 

You don't have to be hired by the school you trained at to get a job.

[huckitfarther]

$60,000 at 8% is $758.30 per month for ten years. I don't know what length of loans they offer, because I don't want one... but I know 30K in interest saved can buy ALOT!

 

Can a CFI afford $800.00/mo payments? Any CFI's out there who are making payments and getting by? I would like to hear from people who have done it... there is a whole lot of speculation going on.

"How many people would go to college if no one took out a loan for it."

 

How many people would go bankrupt if they knew how to manage money and avoid debt? A lot of people borrowing student loans are living off of credit cards and graduate way over their heads in debt. No thanks.

 

thanks for all the advise, i am planning on working for a few more years. I was approved for a 50000 loan for 15 years, deferred for one year at 9.5%,( they add and extra 1% for deferring the loan) is it worth deferring then?. This more then doubles the amount of the original loan. Risky yes but you have to take risks, i agree i should save for a couple years and take out a smaller chunk over a shorter time. But i have no debt, nothing holding me to any one place and i am ready to move where ever i have to. It seems like anyone can get a loan to fly, there are loans offered everywhere, i figured somebody has had to receive 100% financing and made it through as a successful career, but maybe not.

[Gomer Pylot]

The loan situation in the US is about to undergo drastic changes. The Fed just had to waive the rules for two of the biggest bank corporations in the world, and mortgages are defaulting all over the place, with the mortgage holders going under also. Rates are going to go up, and with them inflation is coming. I'm not sure how things are going to pan out, but I believe it's going to be a rough ride. I'm very glad my mortgage is paid off, but the value of my home is going to go way down, I'm afraid.

[nicepants]

The loan situation in the US is about to undergo drastic changes. The Fed just had to waive the rules for two of the biggest bank corporations in the world, and mortgages are defaulting all over the place, with the mortgage holders going under also. Rates are going to go up, and with them inflation is coming. I'm not sure how things are going to pan out, but I believe it's going to be a rough ride. I'm very glad my mortgage is paid off, but the value of my home is going to go way down, I'm afraid.

 

If inflation goes up, wouldn't that drive up your home price? Or would this be counteracted by the higher mortgage rates?

[toad]

thanks for all the advise, i am planning on working for a few more years. I was approved for a 50000 loan for 15 years, deferred for one year at 9.5%,( they add and extra 1% for deferring the loan) is it worth deferring then?. This more then doubles the amount of the original loan. Risky yes but you have to take risks, i agree i should save for a couple years and take out a smaller chunk over a shorter time. But i have no debt, nothing holding me to any one place and i am ready to move where ever i have to. It seems like anyone can get a loan to fly, there are loans offered everywhere, i figured somebody has had to receive 100% financing and made it through as a successful career, but maybe not. <_>

 

Just wondering.....You said "It seems like anyone can get a loan to fly,there are loans offered everywhere" Do you know of any specific lenders offhand????

Thanks

 

 

TOAD

[puravida]

The loan situation in the US is about to undergo drastic changes. The Fed just had to waive the rules for two of the biggest bank corporations in the world, and mortgages are defaulting all over the place, with the mortgage holders going under also. Rates are going to go up, and with them inflation is coming. I'm not sure how things are going to pan out, but I believe it's going to be a rough ride. I'm very glad my mortgage is paid off, but the value of my home is going to go way down, I'm afraid.

so take the loan go in default and live the next 7 years in bankruptcy....free training?

 

Sounds like good advice

[Gomer Pylot]

The housing market is bottoming out. Houses everywhere, because of the huge default rate, are worth much less. There are so many repo'd houses available the entire market is crashing. Inflation won't help, because the dollars are worth much less. If the value doubles but a dollar is worth only $.50, there has been no gain. Inflation hurts everyone. Between that and the huge deficit we've run up with the spending in Iraq, I just hope we're not headed for a major depression. I'm not optimistic.

[Rookie02]

I've also heard What GomerPilot is saying about interest rates on student loans, but I came across this article today........

 

 

 

Will student loan reforms cut borrowers' costs?

When the fall semester starts and Congress returns to work next month, students and their families may get a break on the cost of borrowing to pay tuition. But the details of how those breaks will be apportioned are very much up for grabs.__ -- By John W. Schoen

http://www.msnbc.msn.com/id/20397254/from/ET/

[fry]

I've also heard What GomerPilot is saying about interest rates on student loans, but I came across this article today........

Will student loan reforms cut borrowers' costs?

When the fall semester starts and Congress returns to work next month, students and their families may get a break on the cost of borrowing to pay tuition. But the details of how those breaks will be apportioned are very much up for grabs.__ -- By John W. Schoen

http://www.msnbc.msn.com/id/20397254/from/ET/

 

Any "student loan reforms" involving Congress will only apply to federally guaranteed loans...Stafford and PLUS loans...which are not available for flight training. Congress likes to give things away (generally other peoples' money) so they have been talking about reducing student loan rates. They may or may not, but, it would not impact flight training loans because those are private.

 

Private vocational training (i.e., flight training) loans come from banks or Sallie Mae and the rates are a function of the market. The sub-prime mortgage mess currently going on does not directly impact training loan rates but it likely will impact the willingness of lenders to make unsecured loans. The general rate structures may remain the same, variable and tied to the prime rate, but the lenders may express their unease about lending in other factors...e.g., an increase in origination fees or a stricter criteria for who qualifies as an "Excellent" vs. just a "Good" credit risk.

 

Bottomline: the easy money days for flight training loans are probably over.

[Rookie02]

Crap, I didn't know they were considered private loans. I guess I should hurry up and try and get my loan approved now; or has this already happened??