Student Loans for Trade Schools – What You Need to Know

Posted by in Loans | Updated on October 5, 2022
At a Glance: There are many student loan options for trade schools. You can go for a federal loan such as a subsidized or unsubsidized loan or consider a private student loan. It’s also possible to take advantage of income-share agreements, scholarships, or grants.

When you are dreaming about having a specific profession, you are willing to do anything to get there. You’ll study as much as you can, practice activities that prepare you for the said profession, and consider trade schools. A trade school can help you get ready for your future job, as it will train you in a particular occupation.

Although trade schools can be extremely useful in honing your skills and preparing you for what’s to come, they require money. Many times, people do not have the cash necessary to enter the trade school they set their eyes on. Still, this doesn’t mean you have to give up, as you can always consider student loans for trade schools.

But what are your options when it comes to these loans? Let’s find out.

Federal Loans for Trade Schools

While it may seem strange, federal loans are suitable for trade schools, and many people use them for this purpose. Contrary to popular belief, these loans are not only meant for universities and colleges. Therefore, if you want to start your vocational school soon, you can look for one of these loans.

It’s important to check with the school’s financial aid office or check the College Navigator tool in order to find out if they accept federal aid. If everything is okay, you can then complete your FAFSA and start your vocational school.

There are two different types of federal loans you can obtain, respectively subsidized and unsubsidized loans.

Subsidized Loans for Trade School

Subsidized loans are some of the most popular student loans for trade schools. They are suitable for individuals who are in need of finances for their education.

What’s great about subsidized loans is that while you’re attending school, you do not have to worry about the interest rates. The federal government will take care of the interest during your studies, but also during the post-graduation six-month grace period.

Subsidized loans let you borrow up to $5,500 every year and up to $23,000 in total. Then, you pay back your money over 10-25 years. Your income will determine how much you pay back. These loans also have a 4.99% APR.

Unsubsidized Loans for Trade School

Another option is the unsubsidized loan. This is also a type of federal loan, but it is different from the subsidized option.

Basically, your interest isn’t paid by the government. Instead, you do not pay interest while in trade school, but it will gather. This means that you’ll have to pay it off after your graduation. Therefore, there will be a higher amount of money for you to take care of once you finish trade school.

Although you end up paying more in the end, the interest rate stays the same over the whole duration of the loan.

Unsubsidized loans allow you to borrow up to $7,500 every year, and up to $31,000 in total. The amount is then paid back over 10-25 years. You also get a 4.99% APR.

Private Student Loans for Trade School

If you want to get a loan for your vocational school but federal student loans for trade schools are not what you are looking for, there is another option: private student loans. The great thing about this financing option is that it lets you borrow a higher amount, even though the interest rate tends to be higher.

You do not have to prove financial need to get one of these loans. Still, you must meet the requirements of the lender in order to get the money. Generally, private student loans can be obtained from online lenders, credit unions, and banks.

Here are some lenders you could consider for private student loans:

Ascent

Many people who want to go to trade schools consider Ascent. This private student loan option offers non-cosigned and cosigned loans, allowing you to borrow between $2,000 and 100% of the attendance cost of the trade school.

They have a 3-month grace period, and their repayment terms are 5, 7, or 10 years, depending on the case.

Sallie Mae

Sallie Mae is very popular among students, as it has great offers. First of all, it provides loans between $1,000 and 100% of the attendance cost of your school, while offering you a repayment term from 5 to 15 years. Secondly, its APR rates go from 2.00% to 14.08%, and you get a 6-month grace period.

What makes Sallie Mae stand out is its Smart Option Student Loan for Career Trading which is made for trade schools and similar programs.

College Ave

College Ave is great for individuals who do not want to pay a lot in interest. It has low rates while letting you borrow as much as you need for your vocational school. More specifically, you can borrow between $1,000 and 100% of the attendance cost of the school. The repayment terms are flexible – you can pay off the loan in 5, 8, 10, or 15 years.

Besides, there is a 6-month grace period and you can even apply for an extra 6 months. Overall, it’s a great alternative for trade school students.

How to Apply for Trade School Loans

Do you want to apply for a trade school loan? Here are the steps to go through:

  • Complete the Free Application for Federal Student Aid. It will look into your income and family size, as well as the costs of your schooling. Then, it determines whether you qualify for certain loans or grants.
  • Accept the Options for Federal Loans. You may apply for a subsidized or unsubsidized loan, depending on your eligibility.
  • Go for a Private Student Loan – Sometimes, a grant, scholarship, or federal loan is not enough to pay for all your trade school expenses. So, you can take out a private student loan to cover the rest of the costs.
  • Don’t Rush. Take your time to compare private loans before applying for one. You can add a cosigner with a good credit score as well for better rates.

Alternatives to Loans for Trade School

Loans are not the only way you can pay for trade school. Here are some alternatives to them:

Grants and Scholarships for Trade School

Grants and scholarships represent free money you can use to pay for your studies. Trade schools are also suitable to pay for with these funds. What’s amazing is that you do not need to repay this money, so you won’t have to worry about debt once you graduate.

Income-Share Agreements

Sometimes, private lenders or schools will let students borrow money for education without paying interest later. Instead, they let the student pay them a certain amount of their income when they join the workforce. This is known as an income-share agreement. It’s a new type of funding, but it becomes more and more popular every day.

Trade School Loans FAQ

Here are some questions you may still have about student loans for trade schools:

How much can I borrow for trade school?

You can borrow an amount equal to the attendance cost, but not more than that. If you consider federal loans, they cannot be higher than the amount the particular program has set in place. As for private loans, you can only borrow the attendance costs without the financial help you already received.

How else can I pay for trade school?

You can pay for trade school using grants or scholarships, personal loans, as well as payment plans offered by the school. Other than that, you can pay as you go.

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Final Thoughts

Student loans for trade schools can be very useful when you don’t have the budget to pay for the courses yourself. Consider the options above and you’ll be able to cover your education costs.


Need a Loan? Get One in 3 Simple Steps

If you are considering applying for a personal loan, just follow these 3 simple steps.

Apply

Apply online for the loan amount you need. Submit the required documentation and provide your best possible application. Stronger applications get better loan offers.

Accept

If your application meets the eligibility criteria, the lender will contact you with regard to your application. Provide any additional information if required. Soon you’ll have your loan offer. Some lenders send a promissory note with your loan offer. Sign and return that note if you wish to accept the loan offer.

Repay

The loan then gets disbursed into your U.S. bank account within a reasonable number of days (some lenders will be as quick as 2-3 business days). Now you need to set up your repayment method. You can choose an autopay method online to help you pay on time every month.

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