Student Loans for Trade School

student loans for trade school

Many people may be talking about what college they may go to in the fall. Yet others could be considering whether a trade school will offer the right career training. If a trade school route is in consideration for you, there may be ways to find available financing if you qualify. Learn more about how to apply for student loans for trade school.

What are Student Loans for Trade School?

Student loans for trade school is a form of financial funding for students taking classes at a trade or technical school. You may wish to apply for trade school loans if experiencing financial need. You may also obtain students loans if your finances only partially cover school costs. A trade school is a type of post secondary educational institution. They typically offer shorter class programs that may be completed in two years or less. Many program fields offer hands on training to students.

A trade school may also be called a vocational school, technical school or career school. Students may earn credits from a training program that could transfer to a community college. Types of program fields that may be offered include:

  • Plumbing
  • HVAC tech
  • Cosmetology
  • Carpentry
  • Culinary arts
  • Paralegal
  • Real estate
  • Computer programming
  • Health and medical
  • Electrical technician
  • Auto body & mechanics
  • Construction
  • Marketing & business

A 2017 report from the United States Census Bureau shows about 3,495,000 college students enrolled in vocational programs. Roughly 1,864,000 students were fully employed. Meanwhile, about 679,000 students had part time employment. Another 953,000 vocational students were not employed.

What is the Difference Between a Trade School vs a College?

Trade school programs typically last for less than two years. They may focus on a specific career and provide hands on training that revolves around the chosen field. These programs may not include additional mathematics or English coursework like a traditional four year college. Some trade schools may provide these classes to high school students. Participating high schools may allow students to study these programs as an additional part of their curriculum.

Due to the shorter time spent in the program, you may jumpstart your career sooner. The vocational school also could provide a certificate program or associate degree. To earn a bachelor degree or higher, you may have to attend a traditional four year college.

You may want to attend a trade school so you could launch your career. Some entry level positions include plumber, electrician and HVAC technician. Many students may pursue a trade school when they are looking to make a career change to a different field. Costs could vary widely depending on the career program, and sometimes you may find lower tuition prices for the chosen program field. Also, another reason to pursue a trade school is to find an apprenticeship. Plumbing or electrical apprenticeships could offer hands on experience and valuable lessons to eligible students.

How Do I Apply for Student Loans for Trade School?

First, you could evaluate the trade or vocational school to see if it is licensed or accredited. Then you may determine whether school has federal student financial assistance programs. Financial aid may be available to those who qualify. Not every vocational school may participate in federal funding options. If this is the case, then you may have to pursue private loan lenders. Research direct loan lenders based on the types of student loans they offer. The lender may offer competitive loan structures specifically for students who are entering a trade school program.

Compare interest rates and repayment terms to see if they may align with your current and possible future finances. Each lender may have different eligibility criteria for a trade school loan. Yet these requirements are usually similar to traditional four year college personal loans. You may have to provide the following information to the lender:

  • Be a U.S. citizen
  • Attend an eligible trade school
  • Live in an eligible state
  • Meet credit score requirements
  • Have a creditworthy cosigner if not personally meeting credit requirements

The Federal Reserve Board indicated that in 2018, about 93% of students had some type of student loan. The amount of outstanding educational debt ranged between $20,000 to $24,999. This debt amount includes student loans, credit cards and home equity loans. So finding some financial aid and assistance could help you offset your trade school tuition costs.

Are there Federal Student Loans for Trade School?

Only accredited trade schools may be allowed to receive funds from federal student loans. You may be eligible for federal direct subsidized loans or unsubsidized loans from the federal government. These loans could offer low interest rates and good repayment plans.

A direct subsidized loan is for any undergraduate who shows some financial need. The US Department of Education could pay the interest if you are in school part time or for the first six months after leaving school.

An unsubsidized loan is for any undergraduate or graduate who does not need to demonstrate a financial need. You typically may need to pay interest yourself. Each federal aid loan could allow you to borrow up to a certain amount. The trade school that accepts federal student loans may decide on the amount for the loan. Here is a range of current (2020) federal loan amounts and interest rates:

  • Loan amount: From $5,500 to $12,500 per year depending whether you are a dependent or independent
  • Interest rates: 5.05% for undergraduates
  • Loan fees: 1.062% with a loan disbursement date on/after October 1, 2018 and before October 1, 2019
  • Repayment: May vary from 10 to 25 years as repayment options are available

These amounts, interest rates, and fees may vary over time. 

To apply for either of these loans, you will need to fill out the FAFSA. You may start by creating a FSA ID online using your name, birth date and social security number (SSN). If you do not have a SSN, you need to print out a signature form. Other requirements needed to complete the application include:

  • Your SSN
  • You parents' SSN (for dependent students)
  • Driver's license number if applicable
  • Alien registration number (for non U.S. citizens)
  • Your federal tax information or returns
  • Spouse's federal tax information if married
  • Parents' federal tax information if you are a dependent.
  • Untaxed income records
  • Cash and asset information (bank accounts, investments and real estate)

When completing the FAFSA application, you must submit it to the trade school you will be attending. You may list more than one school. Try to submit the application before the deadlines. The processing of the FAFSA form could determine your eligibility for federal student loans.

What Private Student Loans Can You Apply for Trade School?

Some private lenders may offer trade school loan programs if you qualify. Other lenders may not offer financing unless you enroll in a degree program. Research lenders to find out their requirements for trade school student borrowers. Eligibility requirements could vary, but many lenders may require:

  • Being a US citizen, permanent resident or national
  • Attending an eligible or participating school
  • Meet credit requirements
  • Meet debt to income requirements
  • Having an employment history
  • Having a creditworthy cosigner if you don't meet credit requirements

Some private lenders such as Sallie Mae may offer student loans for trade school. Sallie Mae offers the Career Training Smart Option Student Loan. The loan provides variable APRs of 4.25% to 11.64% and fixed rates of 6.62% to 13.83% APR. You may borrow as low as $1,000 up to 100% of the cost of attendance. 

Sallie Mae offers two repayment options. You may obtain a fixed repayment option to pay a set amount each month. You can also select to pay off the interest while in school and six months after leaving school. The payment term is from 5 years up to 15 years.

How Much Money Should I Borrow in Student Loans?

The amount you borrow could depend on the school tuition, living costs, books, and other expenses. It could also be based on whether you are paying some of the tuition yourself and just need a trade school loan to fill in the financial gap. To figure out the amount, you may use a student loan calculator. Many lenders may offer the student loan calculator on their websites.

To figure out the amount, you may use a student loan calculator. Many lenders may offer the student loan calculator on their websites. You can calculate the student loan amount by taking your total college expenses and subtracting the total financial aid you'll obtain. This answer could be how much you borrow in student loans. The U.S. Department of Education also has a loan simulator tool. You may use this tool to figure out possible loan repayment options.

How Do I Pay Back Trade School Loans?

You may be worried about student loans if you plan to attend full time. Many federal and private student loan terms may allow for a six month grace period after leaving school. You may also be able to get a deferment for federal loans. They also may offer repayment plans where you can make low payments. Sallie Mae could allow you to make low monthly payments of $25 per month.

Having a cosigner with good credit may also help you get better interest rates and repayment terms. If you don't repay student loans, the balance may continue to increase due to the interest rate. You may also be levied late fees.

A delinquent loan could also negatively impact your credit history. With a bad credit history, it may be difficult to obtain other types of loans, home mortgages and credit cards. It is also a bad idea to pay off your student loans with credit cards. Federal loans typically cannot be repaid in this manner. Also, you might end up paying both the loan interest and the credit card interest if you miss payments.

How Do I Reduce My Student Loan Interest Rates?

You may consider getting a cosigner if you have bad credit or no credit to get an interest rate reduction. Some private lenders may also provide customer discounts if you have a bank account or existing loan with the lender. Another option is to set up automatic loan repayments as the lender may offer a discount. If you have multiple loans,  refinancing student loans for trade school may help lower interest rates.

Are Student Loans a Good Way to Pay for Trade School?

Student loans are not the only funds to help pay for trade school. Grants and scholarships may also offer financial help. Pell Grants and Federal Supplemental Educational Opportunity Grants are some types of federal financial funding available.

In addition, some companies may offer tuition reimbursement programs where they could cover the costs of attending a trade school. You may also be eligible to enter a work study program. A work study program may provide jobs to undergraduates and graduate students in financial need. Students may provide community service. You could also obtain work related to your course o study. You may earn money that could be put toward the student loan.