by Lyle Watts
Over the years, I have spoken to literally thousands of individuals who have expressed an interest in a career as a helicopter pilot. After thoroughly researching the industry, employment prospects, and the lifestyle that accompanies this career, they must also face the reality that this type of training is very expensive. Finding sources of funding becomes one of the biggest hurdles these individuals will confront.
Three quarters of a licence is no good to anyone!
If there is one piece of advice I firmly believe in, it is this: Don’t start your training until you know where all the money is going to come from. You don’t have to have it all 'in your pocket' when you start your training, but it must be available to you when you need it. There is nothing more disappointing, to both student and school, than a student having to quit (due to a lack of funds) at the 75 hour mark of a 100 hour training program. This not only disturbs the continuity of training, it also often results in the student having to purchase additional flight time as she/he struggles to regain skills lost during the disruption. In addition to these difficulties, most schools are simply not in a position to offer financing to their students and will, therefore, discontinue training shortly after the student’s account is empty.
A Plan of Action
In developing an organized action plan, it is necessary to recognize that there are two broad sources of funding (Your Own Money and Other Peoples’ Money) and you must be prepared to thoroughly investigate both.
Your Own Money:
Current Assets, Personal Savings, RRSPs, Tax Rebates and Incentives, High School Credits, RESPs
You must begin by taking stock of, and perhaps reorganizing, your current assets as well as current liabilities, and must be prepared to contribute your life’s savings to date. A thorough review of existing liabilities (such as car loans, etc.), that will have to be supported during and after training, should also be undertaken. It makes little sense to arrange additional loans for tuition, which then become unmanageable liabilities after graduation, forcing the newly-licensed pilot to return to an old job in order to meet payments (the banks, however, do like to hear that a student is prepared to do this, if necessary). In an effort to avoid this, you may have to liquidate unnecessary 'toys' to free up available cash.
Personal Savings
Break open the piggy bank! This is something worth spending your own money on. If you don’t have the money now, but have a lucrative job, perhaps it would be worthwhile to save for the course over time. Some students have come back to me three years after their initial interview, to let me know that they have now saved all the money, and are ready to start training.
I cannot overestimate the importance of maximizing your personal financial contribution to this endeavour. Firstly, I have observed, that those individuals willing to contribute a large portion of their own money to fund their training, tend to be the most successful in developing their careers as well. The more of your hard-earned money is at stake, the more motivated to succeed you are likely to be. Secondly, other lenders tend to be more comfortable, when they feel that they are sharing the risk with the borrower. In my 30 years in this business, I have come across few trainees, who were fortunate enough to be totally funded by government agencies, who were also successful in establishing themselves in our industry. In most cases, they simply weren’t motivated enough to do what had to be done.
RRSPs and the Lifelong Learning Plan (LLP)
While you are saving your money, consider starting an RRSP if you don’t already have one. When you place the money in an RRSP, you will receive a tax credit from the government of approximately 25% of your deposit. This means that you will receive a refund of taxes paid. This could amount to a tax rebate of up to $5000.00 that could be used to help fund your course.
Now here’s the neat part: In a little-known program called the Lifelong Learning Plan, the government will allow you to 'borrow' your own money back from the RRSP, interest free. CCRA will allow you to withdraw $10,000.00 per tax year, up to a maximum of $20,000.00 to fund your education. There are some conditions: The school must qualify for the purposes of the Education Tax Credit; the money must have been in the RRSP for at least 90 days prior to withdrawal; and the money must be repaid back into your RRSP over a maximum 10 year period.
Other Tax Rebates and Incentives
Most designated and accredited schools are able to issue you a TL11B Flying Training Tuition Receipt at the end of your training. This will result in a government contribution toward your education in the form of a tax rebate of approximately 25% or around $10,000.00 at today’s training prices. You could, of course, then use this money to pay down your loans after you complete your training. It could also be encouraging for a lender to know that you will have this money coming in as a future source of 'income'. Unfortunately though, you receive this money back in the years after you train, so it is not available initially when you have to actually pay for the training.
The school may also be able to issue a T2202 Education Amount form. This tax rebate will "contribute" a further $200 / month for each month you are in full time attendance at the school.
High School Education Credit Programs
Some provinces have programs for high school students that allow them to collect monetary credits for doing well in high school. These can add up to $1000 or more and may be used to fund training at designated educational institutions. A similar program for students who do certain types of volunteer work in the summer is available in some provinces. Unfortunately, you either have this already, or you don’t. I mention this since some students don’t realize that they can use this toward helicopter training if the school qualifies.
RESP Proceeds
If you were fortunate enough to have had an RESP set up for you, check to see what the conditions are for cashing it in. If the course and the school you plan to attend meet the criteria, you may be allowed to apply the proceeds toward helicopter training.
Other People’s Money:
Training School Financing, Family Loans, Student Loans, Credit Cards, EI Support, WCB Sponsorship, and Union or Industry Funds.
All of the funding sources listed below have been utilized successfully by some students in the past. But keep in mind that the student, the course, and the training institution must all meet the specific criteria of the funding provider.
You will also find that many of the criteria change on a seemingly daily basis. For instance, HRDC has indicated that as of 2003, schools will have to be designated and accredited to qualify for some of the tax incentive and funding programs. In BC, the student grant program, for 1st year students, has been cancelled as of Aug 1, 2002.
I am sure that the list given here is not exhaustive. Check around. Most students I have encountered, have creatively pieced their funding together from several different sources.
Training School Financing
Unfortunately, most schools cannot offer direct student financing for basic training courses. The best they can usually do is to offer a 'pay-as-you-go' fee plan. This will allow you to delay physically borrowing the money, until you actually need it.
Some schools, however, may offer limited financing for advanced training such as Instrument Ratings, or Mountain courses.
Parents, Relatives, and Family Friends
Its amazing what can come out of the woodwork when people hear of your plans to get into this unusual field. This can take the form of an outright gift, a loan, or a willingness to co-sign a bank loan. Any of these can give a big boost to your funding program.
Student Loans and Grants - Government
The federal government’s student loan program provides approximately $165 per week of training for single students. The number of weeks allowed varies (between 17 to 30) across provinces. Students are afforded 'interest free' status during training, and principal repayment does not begin until approximately 6 months after graduation (check with the Ministry of Advanced Education in your province for details).
The provincial governments also have student loan, or grant, (in some cases, both) programs established. Across provinces, awards may range from a few hundred dollars up to $20,000.00, although not all schools, or courses, will necessarily qualify for these programs. In B.C. for example, a school must be 'accredited' to be designated for student loans. The accreditation process is not an easy one, and can take several years to complete. As a result, many schools have opted out of the process. Be aware also, that some provinces will not allow student loan funds to leave the province.
Student Loans - Private
Financial Institution Loans
It used to be that there were several 'association sponsored' loan programs available, that offered a somewhat easier path to an aviation loan. Unfortunately, most of these have been discontinued due to poor performance in the student repayment department. This means that you will probably be limited to dealing with the banks and credit unions directly, on your own, in order to negotiate an suitable loan agreement. While the loss of these programs might seem like a step backward, it has been my experience, that most students only used these programs as a bargaining chip, to attempt to negotiate a lower rate with their local banker who knows them personally anyway. While all banks have pretty much the same loan qualification criteria, you may have some extra legwork ahead of you having to explain to your local banker, that you aren’t actually buying the helicopter for your $55,000.00, and therefore they can’t assign the aircraft to your loan as collateral. (Yes, I’ve seen it happen.) Make sure you go in to see them well prepared and have answers ready for their common questions.
Since these loans are unsecured, the rates are a bit steep, often prime plus 3 to 5%. Still, it may be a good source to top up that last few thousand that you need.
Credit Cards
Steer clear of credit cards! The airline points aren’t worth it. First of all, most schools don’t accept them without tacking the 3 to 5 % user fee onto your course cost. Secondly, at the current outrageously high interest rates, you could end up paying considerably more for your course, after you take the cost of financing into account. How much more? Well … how would you feel about paying the equivalent of $900 / hour for your light piston training helicopter? Didn’t think you’d like that!
In all fairness, though, it may be suitable to use a credit card as a form of bridge financing, while waiting for another form of funding to arrive. For instance, you might not be able to withdraw a GIC early without penalty, and decide that the temporary use of the high interest card, will still end up saving you money. This is especially true, if you use the GIC as soon as it comes due to immediately pay off the card balance .
E.I. support
There are a lot of variables, and considerable legwork is often required, but some individuals have received up to $14,000.00 toward their training program. The tendency for EI (and, for that matter, WCB) is to support pilots who are already licensed, and are looking to upgrade their skills, or change over from fixed wing to helicopters. Check with your local office.
WCB sponsorship
Support here, again depends on several variables, not the least of which, is the nature of your injury. If you can’t work as a long haul trucker because of the extended sitting and vibration hurting your back, you won’t be much better off as a helicopter pilot. It has been a long time since I have heard of WCB funding a complete ab-initio course for a client. It has only been a couple of weeks since the last client called me thinking this wouldn’t be a problem. Anyway, this would only be of interest to you, if you happen to have been injured at work, and are eligible for retraining.
Independent Funds/Union Funds
Every now and then there is money available through union or industry funds to assist in retraining displaced workers. Forest workers in BC had a program of this nature a few years ago, as did the health workers’ union. Usually these funds dry up fairly quickly as individuals rush to take advantage of these programs. However, if you are fortunate enough to be included in such a group, this can be an excellent source of funds for someone wishing to change careers.
Now … Prepare your 'Business Plan'
None of the above sources of funding will be of much use to you, if you can’t convince those in charge of the programs to consider you as a client. For most of you, this process will be totally new. You need to learn how to present yourself in a manner that is likely to be successful.
You will have to do your homework when preparing your 'business plan'. You have a product to sell (yourself!) and, you are searching for 'investors'. You need to convince them that you are knowledgeable, competent, dedicated, ethical, and sincere in your intent to succeed in this field, and therefore, be in a position to repay your debt. You need to consider carefully, that in most cases, the people you will be talking to, will be thinking … WIIFM? (What’s in it for me?). They need to feel that they have a good probability of getting a return on their investment (ROI).
Banks, and other lenders, want repayment of principal plus interest as their ROI. They want a reasonable assurance that you will not default on your loan. One of the reasons that funding is so difficult to find nowadays, is that Canadian lenders have lost millions of dollars in defaulted student loans over the past 30 years. (Their record on defaulted helicopter loans isn’t too good either!)
The ROI for family and relatives, is your success. They want to proudly tell everyone how their child/nephew/niece has mastered this difficult skill, and is changing the face of aviation in Canada. They don’t want to have to explain to their friends later, that Billy dropped out, or couldn’t get a job after completing that expensive 'pie in the sky' dream course. In addition, even if they are just co-signing your loans, they still want you to succeed, and pay your loans off (so they won’t have to).
For government agencies, the ROI is often that you will become a successful statistic in their databank. Returning to the workforce in a productive manner, and paying increased taxes on all those high earnings. I am convinced that the reason there is not much funding available from this source, is that, in these times of fiscal restraint, for $50,000.00 they can train 50 bridge painters or one pilot. Which do you think looks better on the books?
You need to get your 'ducks in a row' before talking to your 'investors'. Anticipate, and prepare answers to their potential questions and objections. Let them know that you have their interests in mind, as well as your own. You must convince them that you are a good risk, to get their support. A well organized 'Business Plan', showing that you have taken the time to research the industry, assess competition in the job market, and formulate realistic financial needs and repayment plans, will go a long way towards making your investor feel comfortable with their decision to support you.
By the way, I am not suggesting that you present them with a 42 page bound booklet outlining your career plans. However, if you develop such a document for yourself, I guarantee that you will be able to present your case in a more convincing manner when speaking with your benefactors. Yes, it will take some time, but remember, this is 'Big Business'. Start using the tools of big business to help get the support you need. You are not there for a handout -- you are negotiating your future. Learn to use the tools and the language that they understand. Dress appropriately for interviews. Be on time, and follow up on your visits.
And while we are on the topic, there is absolutely no point in asking your potential school to prepare this information for you on your behalf. You must go through the exercise yourself, to get any meaningful benefit from it.
It’s your decision!
Most of the accomplishments I consider worthwhile in my life, have involved some risk and exposure, financial or otherwise. After collecting as much information as possible, take the time to reassess your situation, and decide if its all worth it. If you feel, that a failure to make this into a successful career is going to ruin you financially for life, then perhaps you should look into that bridge-painting course instead.
Yes, training as a helicopter pilot was, and still is, expensive. But, I do not regret for one minute, going against the advice of most of my friends when I first considered training. They told me I was "crazy to go so deeply in debt, give up a university degree, and a shoo-in job as a geologist, for my 'pie in the sky' dream of aviation". I did it anyway. So did most of the other working helicopter pilots in Canada. You can too, if you want it badly enough. Some careful financial planning along the way, however, can help make it somewhat easier to succeed.
If you need information on enrolling at Heli-College Canada, or other related topics, please contact me at my offices in Langley, B.C., Canada. I can be reached at :
1-800-363-HELI (4354) or (604) 530-3812
Ask for Lyle Watts , and please leave a message if I am not immediately available. I will return your call as soon as possible.
Good luck and safe flying!
