Here’s What You Need to Know About Student Loans for Trade School

“Trade school” is an informal term for career-focused education, and programs that fall into this category may also be called career and technical colleges or vocational schools. These can prepare students to work in construction, mechanics, the culinary arts and much more. They typically cost less than a four-year undergraduate degree and take less time to complete.

But trying to finance trade school can be complicated, especially if you’re not sure where to start. Read below to learn how student loans for trade school work.

“Generally, to be eligible for federal financial aid, you have to be in an eligible degree or certificate program,” says Alisha Hyslop, senior director of public policy at the Association for Career and Technical Education.

Some schools grant associate degrees, while others only provide certificates. It’s possible to receive federal aid for either kind of program.

To apply for federal student loans, you must complete the Free Application for Federal Student Aid. The FAFSA is the government’s official application for federal student loans, as well as federal grants and work-study.

If you can’t get federal aid, you can apply for a private student loan. Unlike with federal loans, private lenders will run a credit check before approving you for a loan.

You will likely need a co-signer to qualify for a private loan, unless you have strong enough credit and meet other eligibility requirements. Adding a co-signer can also help you get a lower interest rate.

One major difference between federal and private loans is that private loans offer fewer repayment programs. Private loans also may have higher interest rates.

“For trade schools, if someone needs to borrow money, I would advise them to look at federal loans first,” says Jack Wang, financial aid advisor at Innovative Advisory Group.

Still, if you’re evaluating private lenders, your options include:

If you don’t qualify for federal student loans, you will have to choose a private lender. When comparing private lenders, start by looking at the interest rate. It’s also important to look at factors such as whether or not the lender requires a co-signer and what fees you’ll be charged.

When deciding how much to borrow, consider how much you can expect to earn with your new training. You can find wage data for your future profession through the Bureau of Labor Statistics.

In addition to federal student loans, you may qualify for federal grants. If you can afford to pay partly in cash, trade schools may also offer payment plans that charge low fees, such as $20 or $30 per semester.