By Brandon Martini, COO, Stratus Financial
Pursuing your dream of becoming a professional pilot comes with big decisions—including how to finance your flight training. At Stratus Financial, we believe student pilots deserve clarity, not confusion. Understanding the terms and conditions of your flight training loans is one of the smartest ways to take control of your financial journey.
This aviation loan guide breaks down the most common student pilot loan terms—translated into plain English—so you can make informed decisions and stay in command of your finances.
Common Loan Terms for Flight Training Loans
1. Principal
What it means: The original amount you borrow before interest is added.
Why it matters: Your interest and monthly payments are based on this number. The lower your principal, the less you’ll pay in total.
Example: Borrow $50,000 for flight school—$50,000 is your principal. Early payments usually go toward this amount, reducing future interest.
2. Interest Rate
What it means: The percentage you’re charged to borrow money.
Fixed vs. Variable:
Fixed: Doesn’t change over the loan’s life—great for predictable budgeting.
Variable: May start lower, but can rise over time.
3. APR (Annual Percentage Rate)
What it means: A yearly cost of your loan, including interest and any fees.
Why it matters: APR gives a more complete picture of what you’ll pay than just the interest rate alone.
Pro Tip: Always compare flight training loans using APR—not just the interest rate.
4. Origination Fee
What it means: A one-time fee charged when your loan is issued, usually as a percentage of your total loan.
Example: A $50,000 loan with a 10% origination fee = $5,000.
At Stratus, we disclose origination fees upfront so you know exactly how it impacts your disbursement and repayment.
5. Loan Term
What it means: The total time you have to repay your loan (usually 5–15 years).
Why it matters:
Longer term: Lower monthly payments, more interest over time.
Shorter term: Higher monthly payments, less interest overall.
6. Grace Period
What it means: The time after graduation before repayment begins.
Why it matters: Gives you time to secure your first aviation job before making payments.
At Stratus, many flight training loans come with grace periods aligned with hiring timelines—because your first paycheck shouldn’t be spent on loan stress.
7. Deferment & Forbearance
What it means: Temporary relief options if you’re facing hardship.
Deferment: Pause payments, possibly with no interest accruing.
Forbearance: Pause payments, but interest continues.
Why it matters: Life happens. Whether it’s an unexpected medical issue or delay in employment, it’s important to know that temporary relief may be possible. That said, deferment and forbearance are not guaranteed and are only approved in very limited, case-by-case circumstances. These should be seen as last-resort options rather than part of a repayment strategy.
8. Cosigner
What it means: A cosigner is someone (usually a parent or relative) who agrees to repay the loan if you can’t.
Why it matters: A cosigner can help you qualify for a loan or secure a better rate if your credit is limited. But it’s a serious commitment, and their credit is on the line too.
At Stratus, we work with both students with and without cosigners. If you can qualify on your own, we’ll tell you. If a cosigner can help you get better terms, we’ll show you the difference.
9. Prepayment Penalty
What it means: Some lenders charge you a fee if you pay off your loan early.
Why it matters: You shouldn’t be penalized for financial responsibility.
At Stratus, we never charge prepayment penalties. If you want to knock out your loan early—more power to you.
10. Default
What it means: Default happens when you fail to make your scheduled loan payments. This isn’t just missing a payment or two—it’s a serious breach of your loan agreement that can se-verely damage your credit, trigger collection efforts, and even lead to legal action.
Why it matters: Default can follow you for years, making it harder to rent an apartment, buy a car, or qualify for future loans. If you’re falling behind, don’t wait—contact your lender. Most would rather work with you to find a solution than pursue collections. Ignoring the issue only makes it worse.
11. Loan Servicer
What it means: This is the company that manages your loan once it’s disbursed—handling billing, payments, and customer support.
Why it matters: This is who you’ll talk to if you need help or want to change your payment plan.
Tip: Build a relationship with your loan servicer early. They can be a valuable resource as your financial situation changes.
Final Thoughts
Financing your flight training is a major milestone—but knowing your loan terms puts you in the pilot seat. At Stratus Financial, we’re not just here to lend. We’re here to guide you from classroom to cockpit.
Whether you’re comparing flight training loans or just starting to explore your options, we’re here to help you navigate the process with clarity and confidence.
Have questions or need help reviewing your loan options? Reach out—we’re here to support your aviation journey.