What is the best way to pay for trade school?

With the cost of traditional four-year colleges on the rise and soaring student loan debt overwhelming many of today’s students, trade schools and vocational programs have become an enticing alternative. Typically completed in two years or less, trade schools offer hands-on experience and learning opportunities that can provide small business owners with a competitive edge.

Why trade school?

Blue-collar workers like plumbers, electricians and mechanics are earning more than many of their white-collar worker peers. In Atlanta, for example, plumbers average earning $90,000 per year, which is 70% more than the metropolitan area’s average income.

Trade schools meet the need for many of the fastest-growing industries. In fact, Business Insider reports that, of the ten jobs projected to grow the most through 2026, only one, registered nurse, requires a four-year degree.

Finally, trade schools generally come at a much lower price than traditional four-year higher education programs. The difference in cost between trade school and university averages around $90,000. If you’re interested in starting a small business, or you’re a small business owner looking to increase your employees’ knowledge and expertise, trade school offers a business investment and opportunity that can lead to long-term value.

You want to start your own business

If you’re hoping to start your own trade business, one of the best ways to build your reputation as a skilled and reputable expert is by earning a trade school diploma. While it’s true you are not required to be college-educated to become a business owner, having trade credentials can help you more easily gain the trust of potential clients and achieve your business goals. You’ll also gain more experience in time management, accountability and professional maturity.

You want to improve the skill set of your employees

If you already own a small business and you’re looking to improve your company’s credibility and performance capabilities, it could be a smart investment to help put your employees through trade school. Your employees will come out of the experience with greater knowledge and expertise, and, in turn, they’ll also be better equipped to handle existing and future contracts for your company.

Having certified or professionally credentialed employees gives your business a boost in both reputation and operations. Many companies already offer tuition reimbursement to employees who are building up relevant skill sets. Forbes contributor Tom Vander Ark states that the growing trend of employers offering educational benefits can serve as a talent development strategy, retention strategy and even a corporate social responsibility strategy.

With student loan debt weighing heavily on the younger generations, trade school reimbursement helps bring in workers looking to invest their time and resources to the industry. Over the long-term, the investments you make in your employees’ skill sets will more than pay off in the form of a better-educated workforce and less turnover.

How to pay for trade school

Though trade school definitely costs less than traditional four-year college programs, it’s important to evaluate the tuition fees incurred to determine your best options for payment. The average total cost of a trade school program is just over $30,000, costs can be reduced in many cases through state-sponsored programs and employer subsidies.  

On the contrary, the same amount is the average cost of one year at a four-year institution. While some trade programs may fluctuate below or above the average, it’s clear that trade schools offer a more affordable alternative that can pay off much more quickly.

For example, when you graduate with a trade school diploma or credential, you are typically job-ready. As opposed to liberal arts degrees that generally require entry-level work experience before delving deep into the field, you can begin working in your industry immediately upon completing a trade school program.

There are many ways to approach paying for trade school, from making use of grants and scholarships to taking out a private loan to utilizing a business credit card. Read on for the pros and cons of each payment option.

Apply for grants & scholarships

Unlike loans, scholarships and grants do not have to be paid back, which makes them a great option for helping reduce the costs of post-secondary education. Trade schools, in particular, often feature state or federally-funded grants to help keep costs down. For example, the state of Georgia recently allocated $3 million in funding to promote its technical colleges and tuition-free programs for more than a dozen high-demand trade jobs.

Scholarships generally require an application and written submission of an essay or project, while Pell grants are awarded based on financial need alone. Keep in mind that you may need to uphold certain academic standards in order to retain eligibility for these types of financial aid. These awards also have limits and may not cover the total cost of the program, meaning you’ll still need to provide payments via alternative means.

  • Pros: They don’t have to be repaid
  • Cons: They may not cover the entire cost of admission/tuition; scholarships are competitive

Take out a loan

If you do not qualify for scholarships or grants, you can also pay for trade school by taking out a loan. You can apply for federally-funded financial aid by completing the FAFSA, or Free Application for Federal Student Aid. You may apply for Stafford loans, which do not incur interest until after you have completed your program, or Perkins loans, which offer low-interest rates.

Whether you choose to apply for federal student loans or work with a bank to take out a private loan, there are benefits and pitfalls associated with each.

  • Pros: You can take out a loan that covers the cost of tuition and provides you with money to survive while you’re in school.
  • Cons: The loans must be repaid and can incur stuff interest costs. Defaulting on student loans can impact your credit score and impact your earnings.

Use a business credit card

In some cases, using a business credit card to cover tuition costs can be a viable option. If you have the cash on hand to repay the payment quickly, you can earn business rewards with a cash back or rewards credit card while receiving your education. 

If you already own a small business, this is a great way to optimize your business spending and earn rewards in the process. Even if you don’t use a business credit card to cover the entire trade program, it may make sense to use a rewards card to pay for incidental expenses like tools, books and other smaller fees.

  • Pros: You can earn business card rewards, points or cash.
  • Cons: You may incur high-interest rates if you can’t pay off the credit card balance quickly. Your credit score could suffer if you use a credit card, but don’t have the means to pay it off within a couple of billing cycles.

The bottom line

Whether you’re an entrepreneur looking to increase your reputation and marketability, or you’re an employer hoping to help your employees better hone their skills and credentials, a trade school education may be the best option. With lower costs than most traditional four-year schools, hands-on training, trade schools help you develop your expertise and make you job-ready on day one.