Pilots' College Next to LaGuardia Must Grow or Sell

At a time when airlines are struggling with a shortage of pilots and the FAA needs more air traffic controllers, one of the few schools in the nation that trains them has been given a deadline by its lenders.

Vaughn College of Aeronautics and Technology, a specialized school located in proximity to LaGuardia Airport in Queens, has agreed to a deal with a trustee for municipal bondholders after the school fell into technical default on its debt.

To avoid selling its building, Vaughn must increase its fall 2024 enrollment to 1,209 students—a 6% increase—and freshman enrollment must hit 360 students, Bloomberg reported.

In a filing late last month, trustee UMB Bank reported that for the fiscal year 2023, Vaughn did not meet its debt-service ratio and fell into technical default under the terms of the loan agreement.

The aeronautics college has $46M of municipal bond debt that is outstanding. Under a forbearance agreement reached last month with UMB, the trustee has waived the default until March 15, 2025, during which Vaughn must meet the new enrollment target.

If the school fails in increase its enrollment by 6% next fall, it will be required to list for sale its building at 43-05 20th Avenue, the home of Vaugh’s Aviation Training Institute, in Astoria. Vaughn sold junk-rated bonds in 2016 to help finance the purchase of building for $9M, the report said.

Like many other colleges in the nation, Vaughn has been affected by the backlog at FAFSA (also known as the Free Application for Federal Student Aid), the filing system for the primary federal financial aid program for student loans.

Colleges and universities send out financial aid offers shortly after acceptance letters in April, with prospective students usually filling them out in May.

This year, the federal Department of Education decided to revamp the FAFSA digital forms to make it easier for students planning to attend college to apply for federal grants, loans and work-study arrangements. The DOE botched the roll-out of the new-and-improved FAFSA, clogging up the student enrollment process nationwide.

According to the US Bureau of Labor Statistics, the demand for airline and commercial pilots is growing at about 4% per year. BLS estimates there are about 16,800 job openings for airline pilots every year, and there will be a need for 5,400 more pilots in the US alone by 2032.

According to their numbers, the demand for pilots will greatly outstrip supply over the next decade. The US market will likely have a shortage of nearly 30,000 pilots by 2030.

Vaughn is part of the Air Traffic-Collegiate Training Initiative, which lets students bypass the first six weeks of training by the Federal Aviation Administration. The FAA estimates it will need an additional 3,000 fully certified air traffic controllers by the end of this decade.

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