To those thinking of getting out a big private loan

[aloft]

...I'm right there with you both in terms of the though process. But, no loans equals no career.

Kinda a catch 22 for most, so what do ya do?

Pay as you go.

Takes longer, but having no training debt = priceless.

 

[Murdoughnut]

I love how everyone looks at first year pay as the end all pay bracket. So you make 20k the first year, then 25 the second....it keeps going up doesn't it? You are looking at maybe 2 years of hardship, hardly seems like that much of a sacrifice (if you're single and live alone that is).

I think the point of the story was that it pretty much forces you to be single and live alone (or with your parents). If I remember correctly, most regionals have a FO cap - so say you're stuck in the right seat at Eagle for years - eventually you reach a point to where you're salary is stuck - which means you lose money (taking into account inflation).

 

[bike21]

I think the point of the story was that it pretty much forces you to be single and live alone (or with your parents). If I remember correctly, most regionals have a FO cap - so say you're stuck in the right seat at Eagle for years - eventually you reach a point to where you're salary is stuck - which means you lose money (taking into account inflation).

Exactly. Never count on a quick upgrade or getting a decent line quickly either. I have been on reserve since upgrading last summer and have no hopes of getting a decent paying line anytime soon. I am not making much more than the FOs I fly with since I do not break guarantee that often. Actually some of them make more than I do! But I am getting that ever so precious PIC time

Makes it kind of hard to pay my giant loan off early as previously planned. Folks, take Champ's advice to heart. You never know what will happen and taking a giant loan is very risky.

Pay as you go and limit your debt as much as feasible.

 

[Murdoughnut]

Exactly. Never count on a quick upgrade or getting a decent line quickly either. I have been on reserve since upgrading last summer and have no hopes of getting a decent paying line anytime soon. I am not making much more than the FOs I fly with since I do not break guarantee that often. Actually some of them make more than I do! But I am getting that ever so precious PIC time

Makes it kind of hard to pay my giant loan off early as previously planned. Folks, take Champ's advice to heart. You never know what will happen and taking a giant loan is very risky.

Pay as you go and limit your debt as much as feasible.

Good advice. And kudos to Champcar for coming out and telling his story - if one person learns from it and saves himself some heartache, then you owe Champcar a case of beer (at the very least). Good beer, nothing you drank in college.

 

[invertmast]

I unfortunately have to say i'm in the same boat as Champcar.. Took out a loan for $90k for flight school and expenses for DCA back in 05. finished in 1 year (i was in a hurry) instructed for a year.. and payments are starting soon at $1800 a month as a FO in a kingair 90.. i bring home. $1890 a month.. not looking to good at all, considering i dont live w/ the parents and have a car payment, credit card debt, rent, utilities, etc to pay and the the loan institution wont even discuss helping to reduce the interest rate or monthly payments at ALL!.

I'm sitting here kicking myself is the butt for doing it, but loving every minute of my career.. just trying to think of every possible way i can to not have to file bankruptcy at the age of 24.

 

[TXaviator]

...I'm right there with you both in terms of the though process. But, no loans equals no career.

Kinda a catch 22 for most, so what do ya do?

exactly. i could have not taken loans and then DEFINITELY not have the career and life of my choosing.

or

i could not take loans, and not do what i want to do with my life. but be modestly successful at some mindless job i have no interest in.

and its not shiny jets or "the dream"... its just a means to an end, and that end (choosing my own destiny if you will) is very important to me.


...and yes i know my loans are going to totally blow.

 

[panman-pilot]

exactly. i could have not taken loans and then DEFINITELY not have the career and life of my choosing.

or

i could not take loans, and not do what i want to do with my life. but be modestly successful at some mindless job i have no interest in.

and its not shiny jets or "the dream"... its just a means to an end, and that end (choosing my own destiny if you will) is very important to me.


...and yes i know my loans are going to totally blow.

How do you know that if you had not taken loans then you would "DEFINITELY" not have the career? How about this approach, take the mindless job or a field other than flying that you like and work at it and pay as you go, finish your flight training debt free or with little debt and then take on the career of your dream. That's the approach I took, it wasn't expedient but I have no regrets.

 

[chrisdahut1]

I unfortunately have to say i'm in the same boat as Champcar.. Took out a loan for $90k for flight school and expenses for DCA back in 05. finished in 1 year (i was in a hurry) instructed for a year.. and payments are starting soon at $1800 a month as a FO in a kingair 90.. i bring home. $1890 a month.. not looking to good at all, considering i dont live w/ the parents and have a car payment, credit card debt, rent, utilities, etc to pay and the the loan institution wont even discuss helping to reduce the interest rate or monthly payments at ALL!.

I'm sitting here kicking myself is the butt for doing it, but loving every minute of my career.. just trying to think of every possible way i can to not have to file bankruptcy at the age of 24.

Did I read that right....an $1800 per month payment? That seems incredibly high, even for a 90K loan.

 

[tprops4me]

My options were take out the loan and get to a regional at 22 or pay as I go and get to a regional at 25 or 26 IF I got a high paying job straight outta college. I'm happy with the decision I made

Paying as I go. It is taking very long, but I am in no danger of being furloghed right now.

 

[invertmast]

Did I read that right....an $1800 per month payment? That seems incredibly high, even for a 90K loan.

yea.. $1800 per month.. double digit interest rates since signing the loan have already caused the payback value to almost triple b/c of interest...

 

[wheelsup]

yea.. $1800 per month.. double digit interest rates since signing the loan have already caused the payback value to almost triple b/c of interest...

Oh my God...

I'm a big proponent of facing the music but these loans are almost crushing. I know when I was in college, I just sorta signed up, got the loans, etc. and didn't really think about the long term payments. There really wasn't much you could do when it came to it - just get the loan and go to class.

I think some sort of student loan reform is needed. Maybe a "loan to value", so students have a maximum value of student loans they can receive based on the career they have chosen and starting wages for that job. For example, a student going to school as a CPA, average starting wage of $36k (a guess?) maybe a max loan amount of $750/month or something. It would be a ratio against gross income, say 1:4. Those loans would be guaranteed at a fixed interest rate, say 3%. Anything over and above the "loan to value" amount would be "at risk" of the creditor, in other words debt could be discharged in bankruptcy. Kinda like a first/second mortgage on a house.

It's unfortunate and extremely sad that the people just coming into the working world will be chained to their debt.

 

[planesiscool]

Is any career worth bankruptcy?

Tell me how you intend to pay a $50K loan with interest when your gross is $20K a year.

Ain't happening.

Besides, what is the rush? What's going on at the airlines right now? Furloughs. As in people losing jobs. Where are you going to get a job if people are laying people off?

Take your time, do it debt free, and hopefully the cycle will have turned around by the time you're ready.

Don't agree with you on the climate stuff but you are certainly right on this one. This is especially true given the state of the industry right now.

 

[planesiscool]

Oh my God...

I'm a big proponent of facing the music but these loans are almost crushing. I know when I was in college, I just sorta signed up, got the loans, etc. and didn't really think about the long term payments. There really wasn't much you could do when it came to it - just get the loan and go to class.

I think some sort of student loan reform is needed. Maybe a "loan to value", so students have a maximum value of student loans they can receive based on the career they have chosen and starting wages for that job. For example, a student going to school as a CPA, average starting wage of $36k (a guess?) maybe a max loan amount of $750/month or something. It would be a ratio against gross income, say 1:4. Those loans would be guaranteed at a fixed interest rate, say 3%. Anything over and above the "loan to value" amount would be "at risk" of the creditor, in other words debt could be discharged in bankruptcy. Kinda like a first/second mortgage on a house.

It's unfortunate and extremely sad that the people just coming into the working world will be chained to their debt.

It is true that having so much debt is sad; my wife and I had $20k in debt and just finished paying it off. However, people also need to think about things before they jump into risky financial situations, and not just pass the blame onto other people. You idea is not a bad one but the more people are babied the worse off they will be.

 

[moxiepilot]

Oh my God...

I'm a big proponent of facing the music but these loans are almost crushing. I know when I was in college, I just sorta signed up, got the loans, etc. and didn't really think about the long term payments. There really wasn't much you could do when it came to it - just get the loan and go to class.

I think some sort of student loan reform is needed. Maybe a "loan to value", so students have a maximum value of student loans they can receive based on the career they have chosen and starting wages for that job. For example, a student going to school as a CPA, average starting wage of $36k (a guess?) maybe a max loan amount of $750/month or something. It would be a ratio against gross income, say 1:4. Those loans would be guaranteed at a fixed interest rate, say 3%. Anything over and above the "loan to value" amount would be "at risk" of the creditor, in other words debt could be discharged in bankruptcy. Kinda like a first/second mortgage on a house.

It's unfortunate and extremely sad that the people just coming into the working world will be chained to their debt.

I think that's an excellent, common-sense solution to the common problem which will never be actualized because government aned institutions don't use common sense

 

[Champcar]

Oh my God...

I'm a big proponent of facing the music but these loans are almost crushing. I know when I was in college, I just sorta signed up, got the loans, etc. and didn't really think about the long term payments. There really wasn't much you could do when it came to it - just get the loan and go to class.

I think some sort of student loan reform is needed. Maybe a "loan to value", so students have a maximum value of student loans they can receive based on the career they have chosen and starting wages for that job. For example, a student going to school as a CPA, average starting wage of $36k (a guess?) maybe a max loan amount of $750/month or something. It would be a ratio against gross income, say 1:4. Those loans would be guaranteed at a fixed interest rate, say 3%. Anything over and above the "loan to value" amount would be "at risk" of the creditor, in other words debt could be discharged in bankruptcy. Kinda like a first/second mortgage on a house.

Again though I have no one to blame but my self. It is what it is, but for some of you who think its not bad....it is.

It's unfortunate and extremely sad that the people just coming into the working world will be chained to their debt.

There really needs to be a cap.

SLM should of never given me that large of loan all on my own. They are careless at giving these large amounts of money away. The bankruptcy laws need to be relaxed a bit for student loans. SLM should be taking a risk when they loan that amount out, just like any business. But with the bankruptcy laws they are protected and put a ball and chain on students.

There is a small provision in the bankruptcy laws for student loan. You have to prove that they will provide long term economic hardship and you must of attempted to pay on them for at least 5 years. I've herd though that it is nearly impossible to get a judge to agree to this

 

[Champcar]

I unfortunately have to say i'm in the same boat as Champcar.. Took out a loan for $90k for flight school and expenses for DCA back in 05. finished in 1 year (i was in a hurry) instructed for a year.. and payments are starting soon at $1800 a month as a FO in a kingair 90.. i bring home. $1890 a month.. not looking to good at all, considering i dont live w/ the parents and have a car payment, credit card debt, rent, utilities, etc to pay and the the loan institution wont even discuss helping to reduce the interest rate or monthly payments at ALL!.

I'm sitting here kicking myself is the butt for doing it, but loving every minute of my career.. just trying to think of every possible way i can to not have to file bankruptcy at the age of 24.

Like i said in my post bankruptcy is not a immediate option for student loans. Its a long, hard, and nearly impossible road.

 

[aifiji]

All great stories to learn from! I myself will finish my ratings next Spring and will have paid as I went, with zero debt! Thanks to some great advice on this board (and the use of the ever so handy "search" function), I talked myself out of a Jet University mistake and a huge loan. I also have a good friend starting her training now and she was wise enough to walk away from a 141 school and their "$60K" in flight training (which would have been more like $80K) and went through another local FBO.
Good luck Champcar, and thanks for the advice!!!

 

[tonyw]

I love how everyone looks at first year pay as the end all pay bracket. So you make 20k the first year, then 25 the second....it keeps going up doesn't it?

You're also making the assumption that you can get that $20K in the first place.

When you've got companies laying people off, guess what that means?

They're not hiring.

But let's go back to the numbers.

I'm only going to use the guarantee, because that's all you can count on.

At the four year turboprop FO rate at American Eagle, you'll be grossing $2,304 per month.

So you're making $27K. And you've got a $50K loan to pay off.

Oh, but you say, there will be an upgrade. Well, I'm not sure about that with companies laying off employees, but let's say you're right.

So you'll gross $3,600 a month.

Even there, that loan payment is going to be a big chunk of your gross, not to mention your take home pay.

Let's crunch the numbers there.

Let's say you take out a loan for $50K, with an interest rate of 6.8 percent and a ten year payment term.

Your monthly payment will be $575.

I did a little more number crunching. I took out FICA and then I assumed a 15 percent tax rate. Your take home pay at the lower rate will be $1,811. At the higher rate, it will be $2,830.

Your loan payment will be 32 and 20 percent of your take home pay, respectively.

Do what you want, but don't dismiss the loan payment as something that's so easy to take care of.

Even at the higher pay, you'll be working with less than $2,300 to cover everything. That's your housing, your food, your car, your insurance, your clothes, your gas, everything.

And that loan will NOT be discharged in bankruptcy. You will owe it no matter what. On top of that, I'm going cheap. The $50K I've used is a LOW estimate based on other people's postings.

So, you have to ask yourself. Is any career worth bankruptcy?

 

[wheelsup]

It is true that having so much debt is sad; my wife and I had $20k in debt and just finished paying it off. However, people also need to think about things before they jump into risky financial situations, and not just pass the blame onto other people. You idea is not a bad one but the more people are babied the worse off they will be.

I don't think it's about being babied. These students getting the loans really don't have much life experience and probably can't comprehend what $1800/month in loan payments will do. I would consider myself of average intelligence and I can't for the life of me every remember ever thinking about the ramifications of the loans. It was just "get the loan, pay for school, worry about passing class".

Student loans are essentially a license to print money. And since they can't be discharged, it's a win-win for the company. It's almost like a legal loan shark.

 

[wheelsup]

Even at the higher pay, you'll be working with less than $2,300 to cover everything. That's your housing, your food, your car, your insurance, your clothes, your gas, everything.

That's not bad, I've spent on average $1200/month on all those items the past 4 years out of college. Actually before I moved into my house, my monthly outflow was $<1050/month.

Now that I just bought a house, it's gone up quite a bit, but still reasonable IMO.

It can be done. Get a roommate, etc. if you need to. Short term sacrifice for a long term gain.