Student loan forgiveness applies to a variety of degrees, even trade schools. So even if you went to a trade school, vocational school, or apprenticeship program, you could be eligible to get your student loans forgiven.
If you attended school for HVAC repair, cosmetology, the culinary arts, or any other trade program, your student loans could qualify for one of these student loan forgiveness programs.
We cover the factors that make trade school student loans unique, and how you can figure out whether your trade school loans qualify for loan forgiveness.
Why Trade School Loans Are Unique
Unlike a community college or a traditional university, Trade schools aren’t necessarily accredited and may not offer two or four-year degrees. In many cases, the schools offer short programs that allow you to meet state and local educational requirements to operate as a licensed professional.
When a trade school or a trade program isn't accredited, you can’t take out federal student loans to finance your education. You may have covered your costs with private student loans, credit cards, or another type of financing. These alternative loan options aren’t typically covered by student loan forgiveness programs because they aren’t truly student loans.
You Qualify If You Took Out A Federal Loan
In general, student loan forgiveness is focused on federal loan forgiveness. That said, many trade schools, including most for-profit colleges, are accredited. If you took out loans to attend a trade school, you probably took out some federal student loans to fund your education. That means you may qualify for one of the following trade school loan forgiveness programs.
Public Service Loan Forgiveness
Public Service Loan Forgiveness (PSLF) is one of the best loan forgiveness programs available. This program provides complete loan forgiveness after working 10 years (or 120 payments) in public service. The great thing for trade school graduates is that the definition of "public service" is very broad.
For example, if you're a plumber, electrician, or other trade, and you work for the government (federal, state, local), a school district, or non-profit, you could qualify.
Closed School Discharge
You may qualify for the Closed School Discharge program if your school closed while you were enrolled. The Closed School Discharge is only available if you were unable to complete your education through some alternative means such as transferring credits or a “teach out” program at another school.
In August 2021, the U.S. Department of Education discharged $1.1 billion to 115,000 borrowers who attended the now-defunct ITT Technical Institute (ITT).
Visit the Department of Education’s website to learn more about this discharge program. It has a school-by-school guide, so you can understand the exact steps to take to proceed with a discharge if you’re eligible.
Borrower Defense To Repayment Discharge
The Borrower Defense to Repayment Discharge allows for federal student loans to be discharged due to a school’s harmful acts, misrepresentations, or omissions of facts. Students who borrowed money to attend a school that lied to them may be able to have their loans discharged.
If your school ever signed student loans on your behalf or misrepresented information about any of the following, you may qualify for borrower defense to repayment discharge.
- Graduation rates
- Employment rates
- Earnings after graduation
- Teacher qualifications
- Ability to transfer
- Other material matters
Recently, a class-action lawsuit (Sweet v. Cordona) resulted in billions of dollars of automatic relief to approximately 200,000 borrowers. If you believe your school misled you or fraudulently influenced you to borrow money for school, fill out the Borrower Defense application.
Applying for this discharge doesn’t mean your loans are automatically discharged, so continue paying for your loans while your case is considered.
Discharge Of Student Loans In Bankruptcy
What about private loan borrowers? If you struggle with your student loan payments, bankruptcy may be an option for you. Both Federal and private student loans can be discharged in bankruptcy.
Some student loans require you to prove “undue hardship” during the bankruptcy proceedings. However, certain trade school loans are private debt that can be treated the same as credit card debt. If you attended trade school at an unaccredited school, your student loan could be fully discharged in bankruptcy proceedings.
Other Loan Forgiveness Programs
Trade school-specific loan programs are few and far between, but there are myriad loan forgiveness programs based on your state, your occupation, and other factors.
Check out these state-based loan forgiveness programs to see if you qualify for any of them. Some states will offer loan forgiveness programs for a variety of reasons, even simple things like buying a home. The programs can help cut down your payments while keeping your loans in good status, all of which can help you build or restore your credit.
Hannah is a wife, mom, and described personal finance geek. She excels with spreadsheets (and puns)! She regularly explores in-depth financial topics and enjoys looking at the latest tools and trends with money.