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I remember finishing my Aerospace Engineering degree in mid-2008 and struggling with my overdraft and loans in the early days of my engineering graduate job.
I had to deal with the embarrassment of the local council putting a court order on my company to pay my overdue council tax directly from payroll!
I still remember the meeting with HR to this day. Only people who have had financial difficulties will understand the ‘low’ you get in those moments. And to be honest, during that period, there were so many other issues.
I remember one payday morning checking my bank balance and being alarmed to find only £10.13. All my creditors had helped themselves to my salary in the early hours of the morning, and I now had to make £10.13 last me a month.
I went to my local supermarket (ASDA @8pm) that evening and found 1kg of potatoes reduced to 15pence, and there were loaves of tiger bread being given away for 10pence each.
I also got a bag of oats for 25pence. Breakfast: porridge (cooked with water) – milk was too expensive! Binge on free tea at work for snacks. Lunch: Toast. Dinner: Leek and potato soup. I NOW HATE LEEK AND POTATO SOUP.
I did well and managed to stretch out the supplies until lunchtime the day before the next payday when I finally run out. I went to bed early and got up at 3 am on payday to go to 24hr Tesco and buy food.
In this blog post, I wanted to share some common mistakes that can land you into severe hardship when it comes to pilot training loans in the UK.
Mistake #1: Do not take pilot training loans on a secured loan basis
There are two types of loan – unsecured and secured. A secured loan is money that is loaned against property or assets. With unsecured training loans in the UK, you promise to pay back the money (through the goodness of your heart) but the loan is not tied to any of your assets or property.
With a secured loan, the deal with the bank is that they can repossess your house if you do not repay. I remember applying from an MPL program and at the time trying to hatch a business case together to convince the bank (BBVA flight training loans) to lend me the money and at the same time put my house on the line.
Looking back, this was total madness.
I had worked 10+ years in the oil and gas industry, and I was now willing to ‘gamble’ my house for flying.
Thankfully I got rejected from the MPL program and did modular flight training instead. Although ultimately with an unsecured loan, if you don’t keep up repayments, banks you owe money to can force you to sell assets through the courts.
You are much less likely to lose your home via an unsecured loan vs a secured loan. Even worse, don’t put your parent’s house on the line. You don’t want your parents to have a homeless retirement!
Mistake 2#: When planning any lending and repayment, do not be too optimistic in your salary, i.e. I’ll get a job straight away making £5k a month as an FO, and I’ll get my command in 3 years.
Flight training is expensive, and while some people manage to fund it without borrowing, the vast majority of pilots rely on commercial pilot training loans in some capacity. The bank, mum and dad, friends etc.
Gone are the days of airline funded pilot training. Due to COVID, my salary has been slashed by roughly 40-50% through a combination of agreed pay cuts and part-time work on flexible furlough.
When you are running your numbers to figure out what you can afford to repay for any loans, plan it on the basis that you cannot secure a pilot job straight away and will only have a ‘regular’ salary. What figure you use for a regular wage should depend on what skills you have.
If you are a doctor, then you can bank on what you would earn in the profession.
If you are fresh from high school having only worked the odd Saturday job, assume you will be working on minimum wage. Also, expect seasonal employment from your pilot job if lucky to find one, i.e. you may only earn eight months out of the year.
Mistake #3: Not making use of flying scholarship opportunities and jumping straight into pilot training loans
I could be wrong, but I do not believe there were any ATPL scholarships in the UK in 2020? That said, organisations like the Air Cadets, Honorable Company of Air Pilots and Air League have various flying scholarships. Check them out and try to make use of them.
Through the Air Cadets and the Honorable Company of Air Pilots, I had my PPL and my first 50hours flight training completely free. Have a look at these organisations for grants for pilot training in the UK.
Mistake #4: Not considering government-funded pilot training e.g. Army, Navy or RAF careers
The military provides fantastic pilot training for those that are suitable and want to fly in the services – all completely free. Have a look – there may be an opportunity for you.
Mistake #5: Be careful with using 0% credit cards as a bank loan to become a pilot
Whilst I had some savings before starting my pilot training, I used some high street lending to fund the last part of my pilot training and some of it via 0% card. Your financial situation will change, and as that changes, the banks will react to how they view and lend to you.
So whilst you may be eligible for a 0% card offer today- if your credit behaviour and profile change, e.g. they see a significant reduction in your current account turnover, then the banks also adjust what they are willing to lend.
When you come to refinance your 0% card when the introductory offer runs out, you may find it difficult to move the balance to another 0% card. You are then stuck at a high rate. Also, the bank can at any time of their choosing change your credit limit.
If they see you as a high risk, they can write to you and announce that they have reduced your credit limit by X amount. If you are close to your limit, you may find that you suddenly have to repay large chunks of the credit card at short notice sometimes just within a number of days warning.?
Mistake #6: Not speaking to anyone if you get into financial difficulties from pilot training loans
One of the things I struggle with is picking up the phone and having what is perceived to be a difficult financial discussion. I could have saved myself many uncomfortable evenings and worry as an early graduate if I had just called by creditors and explained the situation.
Most recently, with COVID, what is ‘nice’ is that everyone is in the same boat, so the conversations are a lot easier to have with banks etc. as you are not in isolation.
Having taken a net 40-50% pay cut myself, all the lenders I have spoken to when money has been tight have been fantastic – although not a pilot training loan, getting some breathing space on other commitments could help.
Don’t be afraid to ask for help directly through your lender or excellent charities like Step change.
Mistake #7: Being in a rush to become a pilot. Take your time and explore other flying possibilities.
We are all rational, intelligent people, but I for one had been sold on the MPL program – the dream of signing up today and being in the right-hand seat A320 in 18 months.
It was only after getting rejected that I looked at the modular alternative. I was able to progress my flight training around my engineering job while continuing my mortgage repayments, pension contributions etc.
My modular training took 12 months (shorter than the 18months MPL), and I got a job four weeks after finishing, now flying the B737.
Whereas if I had jumped on the MPL bandwagon, I would have been £120k worse off financially, missed out on 18months plus of earnings and pension contributions, and most likely now be out of a job and almost certainly about to have my house repossessed.
Even if you have to borrow to top up via the modular route, the amounts are much lower and reduce the amount you stretch yourself. Critically, you can keep your current job at a time where finding any form of employment is extremely difficult.
Now, even with all my negativity, if interested in learning more about Modular Pilot Training, check out my pilot training guide on Amazon.
Take your time and think carefully about taking pilot training loans. Happiness is not only flying but being able to enjoy time with your friends and family (and sleep at night) – rather than stressing and worrying about pilot training loans to repay.
Please leave a comment in the section below if you have any questions or if I have missed anything on pilot training loans – I would love to hear from you!
DISCLAIMER: I AM NOT A FINANCIAL ADVISER, SO SEEK PROFESSIONAL ADVICE BEFORE TAKING OUT ANY PRODUCTS OR MAKING LIFE DECISIONS.
Kudzi Chikohora is a B737 pilot with around 2,000 hours flying in Europe. He holds a masters degree in Aerospace Engineering and is a chartered engineer and a member of the Royal Aeronautical Society.
Kudzi completed his pilot training via the self funded modular pilot training route and created kcthepilot.com to share pilot training and aviation content.