Trade schools are growing in popularity, and it’s really no wonder why. According to Value Colleges, they cost around $33,000 to complete, while a university degree can easily cost over $120,000. Further, the salary earned from a four-year degree may not justify the cost.
The average yearly salary for a trade school graduate ranges from $40,000 to $58,000, while the National Association of College and Employers says the average salary for a holder of a bachelor’s degree is $50,359.
A university graduate could end up paying four times more for their education than someone who attended a trade school and still make less per year. Even worse, jobs for holders of four-year degrees are scarce, while trade schools prepare students to enter growing job markets.
If you, like many Americans, are considering a trade school, the cost can still be a large chunk to pay out-of-pocket. Being so, here’s everything you need to know about trade school loans.
What are trade school loans?
A trade school—also sometimes called a vocational school, technical college, vocational college, or career center—provides programs that teach the technical skills required to perform the specific tasks of a job.
Programs usually run one to two years. In the end, you may earn a degree or certificate, begin work as an apprentice or journeyman, or prepare for a licensing exam.
Common programs include those for cosmetology, programming, culinary arts, locksmithing automotive repair, construction, home inspection, and many more.
Can you use federal student loans for trade school?
One of the general eligibility requirements for federal student aid is that you are enrolled (or accepted for enrollment) in an eligible degree or certificate program at an accredited school. Being so, you can potentially get federal student aid if you choose a trade school and program that are eligible.
You can view the eligible schools on the U.S. Department of Education’s online searchable database, College Navigator. It allows you to search by location, institution type, and award level.
Benefits of federal student aid loans:
- Low interest rates.
- Six-month grace period following graduation.
- Most affordable loan packages available to students.
- Deferment and forbearance options.
- Flexible income-dependent repayment options.
Where can you get federal loans?
To apply, you must fill out the Free Application for Federal Student Aid (FAFSA). The Department of Education will use it to determine your income level and the aid for which you qualify.
There are many types of federal aid you may receive including grants, low-interest loans, and the federal work-study program.
Where else can you get trade school loans?
What if the school you choose doesn’t qualify you to get federal student aid, or you need more than federal aid offers you? Don’t worry; you have other options.
Private loans for trade school
Some private lenders extend student loans. However, most of them are designed for undergraduates and graduates. The good news is, that is changing. As the enrollment in trade school has increased, private loans for trade schools have begun to crop up.
Benefits of a private loan for trade school:
- Can fill the gap between federal loans and education costs.
- Low or no payments required while in school.
- Grace period after completing the program.
- Competitive interest rates.
Many lenders are offering personal loans online. In most cases, you can use the loan proceeds for whatever purpose you want, including trade schools. Going this route, you can choose any school you want without restrictions.
However, the cost of the loan may be more than federal or private student loans, and you will likely have to begin full repayments right away. That being said, the loan amount you can get and its cost will depend on the lender you choose and your financial situation.
Borrowers with well-established credit may be able to get a better deal through a personal lender.
Benefits of personal loans:
- Loans up to $100,000.
- No restrictions on the school you choose.
- Interest rates can be competitive for those with excellent credit.
- Quick and easy approval online.
- Many options to compare.
Where can you get a personal loan?
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What to look for in trade school loans
Now that you know where you can get loans for trade school, how should you compare them?
First, you need to figure out which loan types you can get. Federal student aid is going to be the best deal usually, so find out if your program is eligible. Next, see if you are eligible for private student loans.
Then, find out if you qualify for personal loans. While your school of choice won’t impact your ability to get a personal loan, other factors like your annual income and credit score will.
Once you find out which loans you are eligible for, it’s time to compare how much they will cost you. You will need to look at the loan lengths, repayment terms, interest rates, fees, etc. It’s important to consider the monthly payment cost as well as the overall cost.
Flexibility is also going to be a key factor to consider. If something happens and you can’t pay your loans, it helps when lenders work with you through a hard time. Look into the repayment, forbearance, and deferment options.
Once you get a loan with a lender, you will need to work with them for many years (usually a decade). It makes sense to choose one with good customer service and helpful staff. Read up on reviews from past customers to see how satisfied they are with the companies you are considering.
How to find the best trade school loan lenders in 4 steps
Now you know your options are and what to look for in trade school loan lender, so here’s how to find the best one for you in four steps.
1. Become aware of your options
It’s important to understand what loan options are available. If you went straight to personal loans without considering any other options, you might miss a lower cost solution available through the federal government.
Further, if you pick a personal loan lender without comparing a few companies, you will likely end up paying too much. So do your research to understand your options.
If you’re attending a school that makes you eligible for federal student aid, fill out the FAFSA first. Then, look into private student loans for trade schools and personal loans.
2. Shortlist lenders
While there aren’t many private student loans for trade schools yet, there are many personal loan lenders. Review and compare the lenders, get preapproved, compare quotes, and shortlist the three lenders that offer you the best deal.
3. Review all loan solutions in-depth
Review all of your options in depth, considering all aspects of the loans. Remember to look at the flexibility, cost, eligibility, and quality of service.
4. Choose the best deal
After all this research, choose the loan(s) that will offer you the best overall value. Keep in mind—your final solution may be a combination of loans.
Find out what rates you can get
Ready to start your research so you can find the best loan for trade school? We can help! Head over to our personal loans review page to compare industry-leading lenders side-by-side.
Further, find your best rates in seconds with SuperMoney’s personal loan engine. We know how time-consuming it can be to do proper research, so we’ve made it much more manageable. With your personal loan quotes, you will be ready to compare all your options to find the best solution.
Andrew is the managing editor for SuperMoney and a certified personal finance counselor. He loves to geek out on financial data and translate it into actionable insights everyone can understand. His work is often cited by major publications and institutions, such as Forbes, U.S. News, Fox Business, SFGate, Realtor, Deloitte, and Business Insider.