Serious Advice!!

[Dadinafix]

Can anybody please offer me advise. My son may soon be nearing a situation of signing for a bond of £70K or there abouts on a sponsorship deal. This frightens the living daylights out of me!! I am not involved in Aviation and reading through the threads for the past week I do not know how to disuss the best way foreward let alone advise my son. I am not as one person put it A DADS BANK. However, I would be prepared to sell my house should he get into trouble with the bond bank. I may add, I have tried to talk to him (my son), about making a business plan. This is poo pooed, thinking about it I never listened to my dad either. Anyway Guys and Gals thats the bones of my request.

Its awful to read you people have the same problems in employment as we mear minions, who hold you guys in such high regard.

Cheers A dad

[redsnail]

Just a little hint here, since you're the one that will lose big time should your son default then I wouldn't just ask your son to make a business plan, I'd bloody well demand it.

If he can't be bothered to comply with that request because it's boring or whatever, will he slog through the boring and mundane parts regarding his licence?

[flystudent]

A dose of reality may be just the ticket. Obviously it's very easy to focus on the, "here is the loan, and here is what I will earn when I get a job" e.g. the business plan that goes to the bank and if all goes well.

However there is a more important document which I think everyone's needs to do but not enough do.

The worst case scenario. There are people who were sponsored prior 9/11, the inevitable happened and obviously sponsorships went down the toilet and sponsored or not people found themselves several grand down, debted up to the eye balls and no pilot job.

Many of the younger people today (not all) are not so in touch with historical high interest rates. We have spent the last few years of lowering interest rates and rising property markets etc that so many people now are more than happy to borrow borrow borrow without planning for the "what ifs".

Take the following illustration for example....

Borrow £70,000
Interest 2% above base.
Term 11 years - (HSBC term)

Now this is the sort of numbers I had to think about when I started a full time Integrated course (not sponsored though) so based on todays numbers:

Base 4.75% so initial loan calculations 6.75%
Borrow £70,000, term 132 months = £752.74 per month repayments. loan calc (http://www.download.com/3000-2057-8555026.html)

So one has to plan on how you would raise that revenue if you dont get a job after the training. £9K a year in repayments. Allowing for tax and national Insurance (1.3 factor) means that would have to be on a salary of approx £12k p.a. and that's just for the repayments. Never mind living costs on top of that.

Assuming the base rate increases another 1.5% whilst he's training (which I personally can see happening, doesn't matter if it doesn't must plan for worst case), that 11Kpa becomes 12-13k etc.

Now I know you know all of this and can probably recall terribly high interest rates of the 80's (ouch 15%) but he probably cant.

If I was you I would think very hard about being a guarantor or even considering your house as part of the security if your son cant be bothered to draw a business plan yet alone a contingency plan. A dose of reality I think is just the ticket, a lot of people being churned out the system at present are not walking into jobs and have to take non pilot forms of employment just to repay the bank.

If he is not serious about it, then would he be serious to his financial commitment, doesn't sound like it, which overall would result in you losing out if he defaults. I know it's horrible to think like that and I too would want to help if I was in your situation but perhaps it's a case of you have to be cruel to be kind.

All the best FS

[Captain Ratpup]

It sounds like he thinks he knows what he's doing but in reality doesn't fully understand what he's getting himself into.

Does he have any flying experience? Most people on integrated courses of the nature he is thinking of already have substantial experience with air cadets, university air squadron et al. Some even hold Private Pilots Licences before they even enrol on the courses.

If he can't back his ideas up to you with some solid and objective experience, how will he ever do it in an airline interview?

Ratpup

[TRon]

You have to remember there are of course living expenses on top of this. I was not integrated, but over the 18 months it took me whilst I was training living costs (and I hardly went out!) was 13k just in petrol, food, entertainment, accomodation (which I believe Oxford dont include).

Not wanting to pi$$ on his fire, but if he instructs or gets a turboprop job which is traditionally the route most take after training the salaries are not going to cover the loan and allow him enough to live. Instructing if you are lucky will pull in 12-13k. A turboprop job with BA Citiexpress (who pay well for turboprop) was 20k all of which will leave you little to live on.

That said, there are not many pilots you meet nowadays that arent in a lot of debt somewhere down the line so it will not be an isolated problem, but if he cant be bothered to do you a business plan has he really explored all his options training wise?

Not wanting to open the can of worms regarding integrated vs modular but it is a cheaper option, with no loss of quality. You just need to plan a bit more (which sounds like he wont do!).

There is also the very real possibility that he will have to pay for his type rating (20k) or an instructors rating (5k).

All in all I would nail him down for a little more than a grunt or tantrum.....there will be far more to come over the next two years!....trust me!

It took me from Sept 2002 to June 2004 to get on a 737. All in all I spent 36k on training plus living. Fortunately didn't have to pay my type rating thanks to CTC.

I read this and thought it was quite apt!:

"There are valley men and mountain men. The valley men look up and excuse themselves with sayings such as, 'I could have been up there if wasn't for....'

The mountain men simply smile and look down. They know what it took to get there".

Frank Dick. UK Athletics director and Daley Thompson's Coach.

Best of luck, it's a long rocky road but worth it!

TRon

[Goldfinger]

Dadinafix,

Please please take the beer goggles off.

There have been quite a few threads on here discussing the severe possibilities of becoming a bankrupt due to the gargantuan levels of debt that follow following intergrated and modular courses. Have you considered that this could seriously happen.

There are a great many who have yet to get a job several years after graduating with a shiny blue licence. Take a stroll to the Balpa conference in October to get an idea of how long it can take (for the tough/lucky/in the right place at the right time) for your son to get a job.

I took out an HSBC loan with my parents to back me up. My father isn't loaded either. They recently sold they're house at a profit......but what happens if the housing market bursts and you suddenly find yourself in negative equity....who and how will you pick up the pieces - IT HAPPENS. Most UK housebuilders are scaling back their investment and housebuilding schemes, WHY ?

Also, what would you do if your son gets knocked down by some drunk in a car the week before finishing his IR - has he taken out any sort of life assurance ??

And finally. Get him to do a business plan. Most banks will have a much more favourable outlook (especially if you can maintain a good relationship for the few years it will take to get that all elusive job). IF he can't be bothered, then he will not likely get to the RHS to pay you back.

Goldfinger:*

Oh and for goodness sake, get out there and go and speak to some people (for your own piece of mind ehh)

(If i could sell doses of hard reality for just a fiver I'd be a frickin millionaire by now):E :E

[Alex Whittingham]

It depends on the company you're dealing with. Some 'sponsorship' deals are considered close enough to a sure thing by banks to allow unsecured loans of as much as £70K, on other deals you would be struggling to get more than £35K or so unsecured, usually because there are too many ifs and buts in the contract. Ask how much a bank will lend unsecured, it will tell you how good the deal is.

A really good deal will have a seamless payback system arranged so that, when your son starts work, the debt is subtracted from his salary. If that is the case you don't need a business plan. Loss of licence insurance is a must, as soon as you can get it.

Unfortunately its a father's lot to watch his sons make the same mistakes he did, the young never listen to the old. As my white haired old dad is always saying, "Experience keeps a dear school, but some will learn in no other". For some reason he always glares meaningfully at me when he says it.

[EGPFlyer]

Guys,

It's not 70k for just any old course but rather a bond for a sponsorship (I'm assuming it is the CTC one). You are pretty much guaranteed a job at the end with a major UK airline at the end who will make payments to your son to cover the bond repayments to the bank (at current rates you actually make a few grand over the 7 years).

There is also the insurance that if your son does not make it then he will only be liable for up to a maximum of half the bond and thats only if he drops out in the latter, more expensive stages of the training.

The best thing to do is have a good read through his contract before he signs it or better still ask the questions at the meet and greet. You will get the answers you are looking for.

Apologies if it aint the CTC one and I've just been rambling on!

[Mooney12]

It is obviously the CTC cadet scheme.

I have just taken out a bond of 65k. My Dad is extremely worried about this also. However (excluding the RAF) it is the most risk free way of getting an airline job. The bond is only to ensure commitment from the cadet, so we wont just leave at the end of training. A job is almost a cert.