4 Ways You Can Get Student Loans for Trade School
From carpentry to cosmetology to the culinary arts, trade school programs put you on the fast-track to a steady career. But since many vocational programs come with a steep price tag, you might need student loans for trade school.
Once you’ve maxed out your options for trade school grants and scholarships, student loans can fill a gap in funding. Here’s how to get trade school loans to pay for your education.
The federal financial aid program provided $246 billion in loans, grants and other types of aid in 2019, but most of it went to students enrolled in four-year programs, reported the College Board.
This stat begs the question, can you get a student loan for trade school? It depends.
Some trade schools are eligible for federal student loans, but some are not. If your school is accredited, you could get federal student loans.
You might also be eligible if any of the following apply:
- You’re taking courses you need to enter a degree program.
- You’re taking courses to get certified (or recertified) as a teacher.
- You’re participating in a certificate program that’s training you for a specific career.
If your program doesn’t end in a degree though, you might not have access to federal student loans.
This limited access to financial aid for a trade school education is unfortunate, considering federal direct loans have some of the lowest interest rates on the market, along with a variety of protections and repayment plans.
Before nixing the idea of federal student loans, take these two steps:
- Use the National Center for Education Statistics’ College Navigator tool to find out if your program is accredited and eligible for federal aid.
- Call up your school’s financial aid or student services offices to learn about your options.
If your program is eligible for federal aid and you meet the necessary criteria, you can apply for federal student loans by submitting the FAFSA.
Whether you qualify for federal student loans, they may not fully cover the cost of your program. That’s where private student loans for trade schools come in.
Each lender sets its own requirements, but some offer trade school loans for career training schools, such as this option from Sallie Mae:
Sallie Mae Career Training Smart Option Student Loan
- Borrowing limits: $1,000 minimum, up to the total cost of attendance
- Interest rates: Variable rates from 5.87%–13.23%, as of January 2020
- Repayment options: Immediate repayment; interest-only payments while you’re in school; or fixed monthly payments of $25 while you’re in school
With private loans like these, the criteria is different from federal ones. Along with being a U.S. resident or qualifying resident, you’ll also need to meet credit and income requirements. If you’re worried about qualifying for career training loans with bad credit, you could try applying with a trusted cosigner, such as a parent.
Applying for private student loans is easy, and most lenders let you apply online or over the phone. Just be careful not to borrow more than you need, as you could end up with steep monthly payments for years after you graduate.
Carefully weigh the costs of borrowing with the salary you expect to make from your future career so you don’t take on too much student loan debt.
Let’s say you’re eligible for both federal and private student loans. Your next step is figuring out which one is the better option for your situation.
For the most part, the answer to this is simple: Find your lowest interest rate.
Interest on a loan can seriously add to your costs of borrowing, so you want to find your lowest rate possible.
For many borrowers, federal student loans offer lower interest rates than private ones. All direct loans disbursed after July 1, 2018 and before July 1, 2019, for example, had a fixed rate of 5.05%.
As for private student loans for certificate programs, your interest rate depends on your creditworthiness as a borrower. Those with better credit usually qualify for a lower rate.
By applying to different lenders, you can compare offers. For example, let’s compare a $10,000 loan at a 10.00% interest rate with one at a 7.00% interest rate. Over 10 years of repayment, that 3 percentage-point difference could mean the difference of $1,925 in interest charges.
Since every lender is different, shopping around will help you score a student loan with your lowest possible rate.
Although finding a low interest rate is a priority, don’t forget to also consider repayment options.
As mentioned above, federal student loans have lots of plans to choose from, including income-driven repayment and forbearance in the case of economic hardship.
Chances are, a private lender won’t offer income-driven repayment, but some offer a variety of multiyear terms. Plus, lenders like Sallie Mae don’t require immediate repayment. You can make fixed monthly payments or interest-only payments while you’re in school.
That way, you can pay down some of the interest and save the big monthly bills until you’ve graduated and started working.
This kind of flexibility is helpful, since a lot of students can’t make full payments right away. Before choosing a loan, learn about your options for repayment so you’re not left scrambling later.
How to get student loans for your trade school education
Going to trade school can be a smart move that can help you land into a successful trade career. But before you can move into your chosen vocation, you have to pay for your education.
When choosing a lender for trade school loans, compare rates and terms to ensure you’re getting the best deal. You might also use a student loan calculator to estimate the long-term costs of borrowing.
By choosing trade school, you’ve made a conscious choice to invest in your career. Before signing any financial paperwork, make sure your choice of student loans for trade school is just as thoughtful.