When I was in my early teens, I once asked an older pilot if he had any advice for someone just starting flight training, and he half-jokingly replied, “Ah, yes, have rich parents!” I didn’t quite recognize the sage wisdom of this advice and failed to follow it, having had the temerity to get myself born into a large family of rather modest means.
So I scrapped and schemed and worked a number of odd jobs through my teen years to pay for primary training and then went off to college and amassed an eye-watering level of student loan debt while completing my advanced ratings, all to graduate just after the 9/11 attacks. In retrospect I was fortunate. My seemingly poor timing put me in a very good position when the pilot shortage finally gathered steam, and as expensive as flight training seemed then, it has become even more so. It was also an era of easy borrowing and low interest rates.
If you, like me, lacked the foresight to be born into wealth and are now trying to finance your dream of becoming a professional pilot, you face greater obstacles than I ever did. Post-COVID inflation has made most things more expensive, and everything in aviation from used aircraft to engine overhauls to insurance has outpaced it. Meanwhile, interest rates have skyrocketed, with prime lending rates above 8 percent for a full year now and most unsecured loans at least 3 percent above that. Few reputable banks are offering noncollege flight training loans these days, and this void has been filled by lenders who can be described as little better than loan sharks. Predatory interest rates of 17 percent or more are common.
Sadly, many of the flight schools appear to be willing accomplices, prominently advertising “easy” financing “as low as 4.5 percent” or some similarly unrealistic rate. Many of their partner lenders will not reveal actual rates or terms until the student has already been accepted to the training program, with a proposed start date. Every week there are posts on aviation forums by students who have just learned, shortly before starting training, that their proposed $130,000, 15-year loan will end up costing $250,000 or more, with monthly payments above $2,000. Unfortunately, many see little alternative but to sign on the dotted line, justifying the terms with optimistic career earnings projections and the perceived rush to get their ratings “before the pilot shortage is over.” It’s an effective trap for lower-income kids with a dream but not much financial literacy.
Honestly, had I been put in that position at 18 years old, I probably would have signed on the dotted line myself. I was financially illiterate at that age too. I’ve learned a lot about money since then, though, and about the aviation industry. Let me offer some really sound advice:
- Be very wary of any flight school that requires significant money up front. There are many cases of schools suddenly closing or otherwise absconding with students’ funds or refusing or delaying repayment of the balance after the student has flunked out or quit midway through training. At the very least, they should require no more in your account than is required to complete the next block of training (e.g, private pilot certificate, instrument rating, etc).
- If a flight school’s preferred lender isn’t upfront about rates or terms, be very skeptical. Anyone who requires you to be accepted at the school and have a start date before revealing loan terms is likely springing a debt trap on you.
- A hard truth of aviation is that the majority of those who start primary training quit before earning their private pilot certificate, and the attrition rate for professional programs is similarly high. Not everyone will enjoy flying, and not everyone is cut out for it. You won’t really know if it’s for you until you’re at least through primary training. Don’t make any momentous financial decisions until then.
- Career earnings for a pilot can be high, but also vary quite widely depending on timing, keeping a clean record, maintaining a Class I medical, networking ability, and sometimes just plain dumb luck. Do not base financial decisions on best-case scenarios. And in any case, plan on several early years of earning less than $50,000, perhaps substantially less.
- Do not, under any circumstances, accept any substantial loan at more than 12 percent interest. It will be a millstone around your neck. Unlike most debt, student loans are not dischargeable in personal bankruptcy. Having to repay a crippling amount of high-interest debt early in your career will cause a high level of stress and may well lead to career decisions that prioritize short-term earnings over long-term advancement.
- There was a period during the pilot shortage when it made some sense to spend more and even accept less than satisfactory loan terms in order to finish training quickly and reach the airlines ASAP. In my opinion, that period is over. Hiring is starting to return to traditional norms, and there’s even a bit of a glut of low-time pilots. It’s difficult to be hired at regional airlines at 1,500 hours right now, for example.
All of this points to doing your training in a way that minimizes borrowing until interest rates come down. First, get as far into your training as you can while paying cash. If you have a decent job now, pay cash to train toward a private pilot certificate at a local flight school while still working. Make the decision to quit and take on debt only once you have your certificate. If you don’t have a job that will pay for primary training, put major effort into securing aviation scholarships and grants. Most aviation organizations offer them, and you should apply for every single one. Some are relatively small, but the dollars add up, and there’s a multiplicative effect as your name gets out there. In fact, this is a fantastic way to get a head start on networking.
When you reach the point that you simply have to finance your training, shop around. You’ll be surprised to find there’s a fair amount of variance among private student loan lenders—not all are loan sharks. If your intended school is pushing use of a predatory lender, I’d be very skeptical about training there. After all, when the lending is more lucrative than providing the actual training, that makes the training a loss leader—and quality is likely to suffer accordingly.
Rates vary significantly based on credit scores and history. If you know that you’ll be applying for loans in the next few years, put a strong effort into increasing your credit history and scores now. Alternatively, you’ll get better rates by having a cosigner with good credit. This doesn’t need to be a parent, but given that they’ll share responsibility for the loan with you, you had best have a good relationship and proven yourself trustworthy to anyone you ask to cosign on a loan.
The Federal Reserve is expected to start lowering interest rates next summer. As long as your lender does not tack on substantial origination fees, you may well be better off taking multiple smaller loans throughout your training, versus one big loan at the start. And while variable rate loans can be a gamble, I think they’re a decent bet now, so long as yours is adjusted monthly or quarterly and is tied to a fair index (the former standard, London Interbank Offered Rate [LIBOR], has been discontinued, and Secured Overnight Financing Rate [SOFR] is the best replacement).
Finally, the best interest rates going these days in the U.S. are for federal direct subsidized and unsubsidized Loans. For the 2023-24 school year, they’re set at 5.5 percent for undergraduate students and 7.05 percent for graduate/professional students. The catch is these loans can only be used at nationally accredited institutions, which largely limits you to college flight programs (both four-year and two-year). With pilot supply and recruiting returning to normalcy, however, I think that college programs will become attractive again.
Even if the major airlines do not reinstate their long-standing degree requirements, a degree will always be preferred and may well make the critical difference as the hiring process becomes more competitive.
