Trade school loans: How to finance your vocational education

By 2027, about 70% of jobs will require education or training beyond high school, according to the U.S. Department of Education. However, this education doesn't have to come from a traditional college or university.

Trade schools, also known as vocational or technical schools, offer specialized, hands-on training for careers in fields like healthcare, technology, marketing, culinary arts, and construction. They're generally more affordable than a four-year degree and take less time to complete. If you're considering trade school, certain student loans can help you cover the costs.

Current private student loan rates

Best trade school loans

Ascent: Best no-cosigner loans

Sallie Mae: Best for specialized loans

Abe: Best for payment relief

Methodology

The lenders in this list are all Credible partners. We evaluated them based on interest rates and origination fees, loan amounts, loan terms, discounts, whether cosigners are accepted and more. Our team of experts gathered information from each lender's website, customer service department, directly from our partners and via email support. We verified all the data points to make sure they were accurate and up to date.

What are trade school loans?

Trade school loans are a type of student loan designed to help cover the cost of attending vocational schools, technical schools, or trade programs. They can come from the federal government or private lenders and are intended to cover expenses like tuition, tools, equipment, and living costs while getting an education.

Types of trade school loans

Federal student loans for trade school

​​Federal student loans are a go-to option for many students because they offer low, fixed interest rates, and most don't require a credit check. These loans also come with flexible repayment options like income-driven plans, deferment, and forbearance if you hit a rough financial patch.

However, not all trade schools qualify for federal student loans. To be eligible, the school must be accredited by an agency recognized by the U.S. Department of Education. Accreditation ensures the school meets specific standards and that your training will meet employer expectations in your field.

Keep in mind that the federal government caps how much you can borrow. These limits depend on your year in school and whether you're classified as a dependent or independent student. If the borrowing cap doesn't cover all your costs, you may need to explore other financing options.

Private student loans for trade school

Many banks, credit unions, and other lenders offer private student loans, but not all provide loans specifically for trade schools. It's important to check with each lender to ensure they offer loans for the type of program you're pursuing. Some popular lenders that do offer trade school loans include College Ave, Sallie Mae, and Ascent.

Interest rates on private student loans are generally higher than those on federal loans, and they don't come with the same repayment flexibility. Unlike federal loans, private loans typically require a credit check and may also require a cosigner. However, they can be a valuable resource to cover the cost of trade school when federal student loans and other forms of financial aid fall short.

Check Out: Federal vs. private student loans: Which should I choose?

Eligibility criteria for trade school loans

Federal and private trade school loans have different eligibility requirements for accessing trade school loans.

How to qualify for federal loans

To qualify for federal student loans, you need to meet these basic requirements:

• Be a U.S. citizen or eligible non-citizen with a valid Social Security number
• Be enrolled in an eligible degree or certificate program at an accredited trade school
• Complete the Free Application for Federal Student Aid (FAFSA)
• Have a high school diploma, GED, or a state-recognized equivalent

How to qualify for private loans

Eligibility requirements for private loans can vary by lender, but typically include:

• Be a U.S. citizen or permanent resident
• Be at least 18 years old or the age of majority in your state
• Meet the lender's minimum credit score requirements or have an eligible cosigner

How to apply for trade school loans

The process of applying for student loans varies depending on whether you're seeking federal or private student loans.

Application process for federal loans

1. Submit the FAFSA. Fill out the FAFSA online at FAFSA.gov. You'll need to provide information about your financial situation (and your parent's finances if you're a dependent student) so the U.S. Department of Education can determine your eligibility for federal aid.
2. Receive your award letter. Your chosen school will use your FAFSA information to create a financial aid package including federal loans. Your award letter details the types and amounts of financial aid you can receive.
3. Accept your aid. Decide which loans and other financial assistance you want, and follow your school's instructions for accepting the aid.
4. Complete entrance counseling. If this is your first time taking out federal student loans, you'll need to complete entrance counseling to ensure you understand the terms and conditions of your loan.
5. Sign a Master Promissory Note (MPR). Sign your MPN, a legal document confirming you agree to repay your loan according to the terms.

Application process for private loans

The application process for private loans can vary by lender, but here are the general steps:

1. Do your research. Compare different private lenders to find the best interest rates, terms, and borrower benefits. Be sure to check the eligibility criteria for each lender and make sure your trade or technical school is covered.
2. Prequalify with multiple lenders. Many lenders offer a prequalification process that allows you to see potential loan offers without affecting your credit score. This step gives you an idea of your loan options and helps you compare rates and terms more effectively. Prequalifying is free and won't impact your credit.
3. Complete an application. Once you've chosen a lender, fill out their online application. You'll need to provide details about your income and, if applicable, your cosigner's information. The lender will perform a credit check on you and/or your cosigner during this stage.
4. Review and accept the loan offer. If approved, the lender will provide a loan offer outlining the interest rate, loan amount, and other terms. Carefully review the offer and follow the lender's instructions to accept it if it meets your needs.

Pros and cons of trade school loans

If you're still wondering whether taking out trade school loans is the right move for your future, here are some pros and cons to help you make an informed decision.

Advantages of trade school loans

• Access to education. Trade school loans can provide the financial means to enroll in vocational programs you might otherwise not be able to afford.
• Flexible repayment plans. Federal student loans often have flexible repayment options to help you manage your budget while getting your career off the ground.
• Career advancement. Gaining specialized skills through vocational training can lead to job stability and career advancement opportunities.
• Loan forgiveness. Some federal loans offer loan forgiveness programs for borrowers working in certain fields or under specific conditions. For example, the Public Service Loan Forgiveness (PSLF) program forgives the remaining loan balance after 10 years of qualifying payments for those working in public service jobs.

Potential drawbacks of trade school loans

• Going into debt. Borrowing money means accumulating student loan debt, which can be a financial burden after graduation. To minimize the financial strain, borrow only what you need. After completing your training, create a budget to manage your loan payments and other expenses.
• Interest rates. Both private loans and federal loans charge interest. Lenders might add that interest to your loan balance while you're in school or during periods of deferment or forbearance, which increases your total repayment amount. Be sure to shop around for the best interest rates. If possible, make interest-only payments while you're enrolled in your training program to avoid having it added to your loan balance.

FAQ

Can I get a federal student loan for trade school?

Yes, you can get federal student loans for trade school if the program and institution are accredited and participate in federal student aid programs. The first step to determine your eligibility is to complete the FAFSA.

Do trade school students get loan forgiveness?

Yes, federal loans used for trade school can qualify for loan forgiveness programs, including Public Service Loan Forgiveness (PSLF) and forgiveness through income-driven repayment plans.

Is trade school debt the same as college debt?

Federal loans for trade school are the same as those available to students attending four-year colleges and universities. Some private lenders also offer loans specifically designed for trade, vocational, or technical schools.