I wonder if the credit crunch will have an effect on the number of new pilots? It is no fun to have to earn the money first.

SkyHigh

 

I think you just described the entire problem!

 

As far as I know, myself and four other pilots around the nation were the last 5 to get the Key Alternative Loan for flying. They got out because of the high default rate because pilots were not able to repay the loans. Gee, I wonder why?

I know that US born pilot enrollment at my former school has plummeted. Not sure if it is because of the credit crunch or the Chinese invasion.

 

Yes, it will. It already has with Silver State Helicopters. They expanded locations and bought some more helicopters because they had a decent business model. They had their rough times, but they were still making some money. Now that it's much harder to get a huge loan, like for pilot training, the amount of students is decreasing simply because they cannot get a loan, and not many people have $80K in the bank to start career training. Anyhow, Silver State closed it's doors about a month ago nationwide because of the sudden decrease in new students. An direct result of the credit crunch.

 

Well.... Maybe there is hope for us yet.

SkyHigh

 

Does anyone know if student loans cover much flying? And if so,, Have they been cut back as well?

Skyhigh

 

If you mean federal student loans, they are limited to a certain rate of disbursement and they also have a cap. You can't be perpetual student because of the cap, and you can't tap it all out in one semester. But as long as the curriculum you wish to use it for is part of an accredited degree-seeking program it qualifies for the money. You can get quite a bit of money also, I got well over $60k and used a fair amount of it for flight training which was not for a degree at all. They send your quarterly check to your college and the remainder is sent to you to do with as you please. These are federal student loans, and I do not know much about other lenders except that they charge more interest. My guess is they will look at the cost of the curriculum you are proposing to get a degree in and make a limit based on that. So if avgas goes up 100% then they would put a 100% higher limit on the loan as long as it meets all the other requirements. Of course it still has to be repaid and if everyone defaults on their loan there will be repercussions, and this is no laughing matter because Citibank nearly declared bankruptcy largely because of student loan defaults last year. This is probably why the federal government has to subsidize student loans in the first place. The only real issue I think is whether the Embry Riddles and other accredited pilot producing colleges wish to continue to offer degrees.

 

Today there was a report on the local news about a state-funded education provider recording a multi-million dollar loss in Q4 last year. It was the first time they have ever reported a loss. Record numbers of borrowers are defaulting on their student loans.

You see the commercials for Sallie and other non-subsidized loans on TV mentioning how cool it is to have extra money for pizza and books. They're going to be feeling the crunch too. The economy is about to get really, really ugly and stupid lending/borrowing are going to be a big player.

 

I always thought those adds looked too good to be true...