Trade School Loans: How To Finance Your Career Training

Trade school can open the door to an entire new chapter of your career. Recently, more students are taking an interest in trade school, with an enrollment increase of 4.9% from 2020 to 2023, according to an October 2024 analysis from Validated Insights. In 2023, approximately 1.5 million students were enrolled in trade schools across the U.S.

Although pursuing a career in the trades might be a smart financial decision, paying for career training up front might involve taking on some student loans. This guide breaks down what you need to know about trade school loans.

What are trade school loans?

Trade school loans are designed to help students pay for vocational programs. In contrast to traditional college loans, trade school loans might cover costs at a technical school or vocational school. During the program, you'll receive career training in a specific field, as opposed to the more general education you might receive while pursuing an undergraduate degree.

Federal loan options for trade school

If you attend an accredited trade school and maintain at least half-time status, you might be eligible for federal student loans for vocational training.

“Federal student loans are a great way to be able to help fund your education, no matter what industry you are in,” says Lindsay Worthen, campus director at Ogle School, a trade school offering cosmetology and esthetics programs.

Depending on your situation, you might qualify for Direct Subsidized Loans, Direct Unsubsidized Loans, or both. Take a closer look at the differences below:

• Direct Subsidized Loans: Direct Subsidized Loans are available to undergraduate students with demonstrated financial need. The Department of Education covers the interest on these loans while you're in school, during your 6-month grace period, and during any periods of deferment.
• Direct Unsubsidized Loans: Direct Unsubsidized Loans don't require students to demonstrate financial need. However, you're responsible for the interest at all times on these loans, which starts to accumulate as soon as the loan's disbursed.

Each of these loans comes with annual borrowing limits based on your year in school, as well as aggregate limits. Below are the loan limits for dependent students:

Direct Subsidized and Unsubsidized Loans disbursed on or after July 1, 2024, and before July 1, 2025, have an interest rate of 6.53%. If you qualify for Direct Subsidized Loans, lean on those first to limit your total interest costs.

In order to access any federal student loans, you must complete the Free Application for Federal Student Aid (FAFSA). You'll provide personal details like your Social Security number, as well as financial details, such as tax information. After submitting the form on the Federal Student Aid website or mailing in a print FAFSA form, you'll learn what federal loans for trade school you might qualify for.

Private loans for trade school

If you aren't able to take out federal student loans or you hit your federal student loan limits, private student loans offer another way to pay for trade school. Although private student loans tend to come with higher interest rates and fewer borrower protections than federal loans, the funds can help you get through school.

For students considering private student loans for trade school, it's essential to compare your options across multiple lenders. This way, you can find the most affordable loan for your situation.

Top lenders like College Ave and Sallie Mae offer private student loans for technical programs, and Ascent offers private student loans for programs like coding bootcamps.

If you struggle to get approved, consider adding a cosigner to your application. A cosigner with a strong credit score and steady income can help boost your approval chances and may even be able to help you get approved for a lower rate.

Current private student loan rates

Other financial aid options for trade school students

Trade school students aren't limited to loans. Below are some other financial aid options for trade school to consider:

• Scholarships: Scholarships don't have to be repaid and can help you pay for education costs. Applying to a range of scholarships increases your chances of landing one.
• Grants: Grants are another form of funding that you don't have to repay. When seeking out grants to pay for your education, consider asking your school's financial aid office for information about potential grants.
• Employer tuition reimbursement: Some employers, like Starbucks and Chipotle, offer tuition reimbursement programs that can help cover your trade school costs if you plan to work during your program. You can also look for employers who offer this benefit after you graduate.
• Payment plans: Some trade schools offer payment plans to break up your educational costs.

Tips for managing trade school debt

Although student loans can help you cover trade school costs, leaving school with too much debt can put a burden on your finances after graduation.

Here are a few ways you can manage your student debt:

Make a budget for school

Before committing to a trade school, make a list of all the costs. With a better idea of the costs, you can set up a budget for school. Generally, this means you'll cut back on everyday expenses while attending classes. It's also a good idea to save up ahead of time.

“Start saving as early as possible,” says Martha Kortiak Mert, chief operating officer of Saving For College.

Depending on your situation, you might use savings you've grown through other working opportunities to cover this investment in your education.

Refinance to lock in better rates after graduation

Once you land a job post-graduation, consider shopping around to find out if you can lock in a lower interest rate by refinancing your student loans. Since a lower rate often leads to savings on your total loan costs, a refinance might be worth it.

Just keep in mind that refinancing federal student loans turns them private, which means you'll lose access to federal benefits and protections like access to loan forgiveness and income-driven repayment plans. Think carefully before making this decision.

Explore repayment assistance programs

In some cases, a state or federal repayment assistance program might be able to help you pay down your debt. For example, if you went to trade school to become a dental hygienist, you may be eligible for the National Health Service Corps Loan Repayment Program, which offers up to $55,000 in loan repayment assistance if you meet the requirements.