The worldwide credit crunch is forcing flight students to take up smaller student loans at higher interest rates, yet the impact on flight schools in the USA is minimised due to surging enrolment from China and India.
The revelation comes as students of the ill-fated Silver State Helicopters continue to wrestle with the debts they incurred when the world's largest flight training academy filed for banckruptcy earlier this month.
Students who need student loans will have a tougher time securing a private loan," says Mindy Kaplan Eline, marketing director for the National Association of Student Financial Aid Administrators.
"Some lenders are also scaling back their federal student loans, only lending to schools with students who have decent graduation rates, which they feel makes them more likely to pay back their loans," she says.
Loans to degree-granting institutions are guaranteed by the federal government, but loans to private flight academies have no guarantees.
"Presumably students who have had to rely on private student loans, and who have poor credit histories and don't have parents or co-signers to fall back on - may be the hardest hit," Kaplan Eline says.
Guidance Helicopters of Arizona president John Stonecipher sees more requirements for co-signers. "We've had probably 40% of our students who apply for us get turned away form the financial aid process. That's up from 20-25% two years ago."
Students need higher credit scores to qualify and are agreeing to shorter payment periods and a higher interest rate," says Jeremy Wilson, marketing director of Seattle's Galvin Flying Services.
At the same time, Wilson notes, airlines are hiring flight instructors with fewer hours. "The only way a flight school can retain an instructor is by paying him a higher rate, more benefits and so on, and that cost gets passed to the prospective new student," he says.
Simultaneously, thousands of students from China and India are enrolling at US schools, which Wilson predicts will ease the financial impact. "There are no local aviation infrastructures in China and India to meet this demand," he says.
Source: FlightGlobal.com
