Options for Trade School Student Loans

Written by: Kristyn Pilgrim
Updated: 7/23/20

A four-year college or university is not the only option for students who want to pursue their education following high school. Trade schools exist for students who might not want to go the traditional route but still want to advance their skills in a specific industry to pursue their preferred career.

Just because a student is not pursuing a typical postsecondary education does not mean that they lose access to the same financial aid opportunities that those college-bound students can receive. If you are a student pursuing your education at a trade school, there are still student loan options available to provide you with the financial assistance you need to help pay for your education.

In recent years, a certain amount of money has been allocated to each state to support students who are pursuing career and technical education programs. In fact, in 2018, the federal government passed the Strengthening Career and Technical Education for the 21st Century Act (Perkins V). This law reauthorized the Carl D. Perkins Career and Technical Education Act of 2006 (Perkins IV), therefore continuing Congress’s commitment to providing vocational school assistance to students attending a trade school for various programs. The law states that Congress will provide about $1.3 billion each year to career and technical education (CTE) programs.

What Is Trade School?

A trade school, also known as a vocational or technical school or a vocational college, provides the necessary training and education required for a certain occupation in fields such as information technology, nursing and other health-related fields, automotive mechanics, culinary, and cosmetology, among many others. These programs can help students secure a good job, often much more quickly than if they went through a traditional college or university.

These programs differ from a typical college education in that the program lengths can be as short as eight months and will last no longer than two years. Unlike a four-year college or university, trade school students do not earn a bachelor’s degree. Instead, they receive a diploma or certificate that shows they have successfully completed the program of study. Students who take part in a program at a two-year school can earn an associate degree.

Federal Student Loans for Trade School Students

While most federal student loan money is given to students attending traditional four-year institutions, some trade schools students are eligible for federal student loans. Eligibility depends on whether the trade school you are enrolled in is accredited, which essentially means that the school is officially recognized, and it meets and maintains the minimum education standards. To possibly be eligible for federal student loans as a trade school student, you must be taking courses as a prerequisite to a degree program, taking teacher certification courses, or training for a specific career path through a certificate program. 

Basically, federal student loans are primarily reserved for students seeking a degree of some sort. Because of this, trade school students seeking an associate degree by going through a two-year program are most likely to be eligible. Your program can be fully or partially completed online, too, and still be eligible for aid. 

If you are unsure about whether your trade school is accredited, you can perform a quick check on College Navigator, or call your school’s financial aid office to inquire about your eligibility. If you do qualify, the next step is to fill out your Free Application for Federal Student Aid (FAFSA).

Private Student Loans for Trade School Students

Private student loans are also available for students attending trade schools. Private lenders are able to determine their own strategy for what kinds of programs are eligible and may have fewer restrictions. 

However, it is important to note that private loans can have higher interest rates and stricter repayment terms. These loans are based on certain credit and income requirements, unlike some federal student loans based on financial need. If you have bad credit or no credit at all, you might need the help of a co-signer to apply and be approved for a private loan.

If you decide to proceed with applying for a private loan, do not settle for the first one you come across. Look for loans that are specific to your particular program and compare all of the terms, such as interest rates and repayment plans. 

If you are going to be attending a trade school, you likely know what career you will be taking on after completing the program. You also may have an idea of what kind of salary you will be making. This crucial information can help you figure out what your financial standing will be like after completing school and starting to work full time, and ultimately confirm whether you can comfortably make your student loan payments on time.

Some private lenders offer specific loans for career training programs. It is important to carefully consider and compare the details for these loans before choosing the one that works best for you. Here are two examples of these types of loans:

  • Sallie Mae Career Training Smart Option Student Loan provides financial assistance to professional training and trade certificate courses, such as those in the culinary or technical fields at schools without degree-granting programs. You are allowed to borrow as little as $1,000 or as much as the total cost of schooling. The variable rates range between 4.50% and 11.89%, and fixed rates range from 6.62% to 13.83%. 

There are two repayment options. You can start making interest-only payments while in school and then start paying the principal after you have graduated, or you can make fixed monthly $25 payments while you are still in school.

  • Wells Fargo Private Loans for Career and Community Colleges provides financial assistance to students attending a two-year school, a career-training program, or a nontraditional school. You are allowed to borrow any amount up to $15,000 with this loan. The variable rates range from 5.00% to 10.43%, and the fixed rates range from 7.24% to 12.45%. 

As for the repayment plan, you may choose to make early payments at any time while you are in school, but nothing is required until six months after you have graduated, at which time, monthly payments will be necessary.

How to Choose the Best Student Loan for You

It is advised to begin your search with federal student loans before pursuing private lenders. Federal student loans tend to have better interest rates, more flexible repayment plans, and are easier to manage. However, if your trade school program is not eligible for federal financial aid, look into the private student loans offered for your individual trade program and find the one that works best for your college education and post-college career. 

When choosing between loans, take the interest rate into heavy consideration. A high interest rate can have a very big effect on how much you end up owing in the long run, so shop around until you find the best one suited for your financial situation.

Choosing to go to a trade school for your postsecondary education does not decrease your ability to receive financial aid. The money is out there, and it is available to you. College Finance has all of the necessary resources and information to help make sure you get the most out of your trade school experience and education if you are in need of guidance through the process of applying for trade school student loans.