Guide to Trade School Debt Forgiveness
Trade schools (also known as vocational schools or technical or career colleges) offer hands-on training and education to prepare students for a specialized career in fields like carpentry, computer information systems, cosmetology, and welding. Most trade school programs range from less than one year to two years, and students graduate with a diploma or certificate.
While trade schools are typically more affordable than four-year colleges and universities, the cost can still add up. The average annual cost of trade school is approximately $15,000, according to the latest data. Many trade school graduates take out student loans to help cover the expense.
Fortunately, there are ways to help reduce trade school student loan debt, including payment plans and trade school debt forgiveness options.
Key Points
• Trade schools offer specialized career training, with annual costs averaging around $15,000.
• Federal Direct Loans taken out for trade school may be eligible for Public Service Loan Forgiveness and Income-Driven Repayment forgiveness as long as a borrower meets other qualifying criteria.
• Private loans for trade schools typically do not qualify for forgiveness programs.
• Employer-sponsored repayment assistance and state-based programs provide alternative debt relief options for private and federal trade school student loan borrowers.
• Borrowers may qualify for a closed school discharge if a trade school closes while they are attending it.
Understanding Trade School Debt
If you went to trade school for the chance to get a high-paying vocational job, you may have student loan debt to repay.
The average debt for students who attend trade school is approximately $10,000, according to one estimate. By comparison, the average federal student loan debt is $38,375 per borrower, according to the Education Data Initiative.
Borrowers can use private and federal student loans to help pay for trade school. If your trade school program is accredited, you may be eligible for federal loans. To apply, complete the Free Application for Federal Student Aid (FAFSA).
You can also take out private student loans for trade school. You’ll need to undergo a credit check in order to be approved. Unless you have strong credit, you may need a cosigner for the loan.
Are Trade School Loans Eligible for Forgiveness?
Students who take out qualifying federal loans may qualify for student loan forgiveness. Typically, you must make a certain number of payments under a qualifying repayment plan for a specific period of time, and then the remainder of your student loan balance is canceled.
Most private student loans don’t offer forgiveness.
Federal Loan Forgiveness Programs for Trade Schools
There are several federal student loan forgiveness programs borrowers may qualify for, depending on their situation.
Public Service Loan Forgiveness (PSLF)
Trade school graduates who are employed by a government agency or a qualifying nonprofit organization may be eligible for Public Service Loan Forgiveness. To qualify, borrowers must be employed full-time and have qualifying federal Direct loans.
While working for an eligible employer, borrowers must also enroll in an income-driven repayment (IDR) plan or the Standard Repayment Plan. After completing 120 qualifying payments, any remaining Direct loan balance they have is forgiven.
In March 2025, President Trump signed an executive order to limit eligibility for PSLF and requested an update to the program’s regulations. The executive order is being reviewed, and the PSLF program remains unchanged for now, according to the Federal Student Aid website.
Income-Driven Repayment (IDR) Forgiveness
March 26, 2025: The SAVE Plan is no longer available after a federal court blocked its implementation in February 2025. However, applications for other income-driven repayment plans and for loan consolidation are available again. We will update this page as more information becomes available.Income-driven repayment plans base a borrower’s monthly payments on their discretionary income and family size, typically resulting in lower monthly payments. Borrowers must update their income and family size yearly (a process called recertification). By the end of the repayment period, which is 20 or 25 years, the remaining loan balance is forgiven. However, forgiveness under most of these plans is paused as of the end of March 2025.
Applications for income-driven repayment plans were temporarily on hold earlier this year due to a federal court injunction. But online applications for three of the four IDR plans are now available.
The IDR plans are:
• Pay As You Earn (PAYE). Payments are set at 10% of a borrower’s discretionary income over 20 years.
• Income-Contingent Repayment (ICR) Plan. ICR calculates payments at 20% of a borrower’s discretionary income divided by 12, or the amount they would pay on a repayment plan with a fixed payment over 12 years, whichever is less. The repayment term is 25 years.
• Income-Based Repayment (IBR). Payments for loans borrowed after July 1, 2014 are 10% of discretionary income over 20 years. For older loans, payments are 15% of discretionary income for 25 years. On the IBR plan, forgiveness is still proceeding at this time since this plan was separately enacted by Congress.
• Saving on a Valuable Education (SAVE): As of March 2025, the SAVE plan is no longer available after being blocked by a federal court. Forgiveness has been paused for borrowers who were already enrolled in the plan, and they have been placed in interest-free forbearance.
Borrower Defense to Repayment
If you enrolled in a trade school based on misleading information from the school, or you were the victim of other types of misconduct by the institution, you can apply to have your federal loans forgiven under a process known as Borrower Defense Loan Discharge.
If your borrower defense application is approved, a discharge means you will no longer have to repay your federal student loans. In some cases, you may also see reimbursement for federal loans you’ve paid up to now, including interest on the loans.
You can submit a borrower defense loan discharge application on the Federal Student Aid website. It’s important to note that in 2023, a federal court delayed the effective date of the latest regulation for borrower defense. No applications can be processed under that regulation unless the injunction is lifted. However, you can still currently apply for borrower defense.
Closed School Discharge
If you were unable to complete your program or degree because the trade school you were attending closed, or if the school closed within 180 days after you withdrew, you may be eligible for a closed school discharge of your federal student loans. That means you will no longer be obligated to repay the loans. Contact your loan servicer for the application to get your loan discharged.
Alternative Ways to Reduce Trade School Debt
If you don’t qualify for trade school debt forgiveness or a loan discharge, there are a number of other ways to help lower your loan payments.
Refinancing and Loan Consolidation Options
Student loan refinancing involves paying off your existing loans with a new loan from a private lender. Ideally, the new loan will have a lower interest rate, which could lower your monthly payments, or better loan terms. You can refinance both private and federal student loans.
There are different types of refinancing borrowers might want to explore, including Parent PLUS refinance if you took out loans for your child’s education.
Just be aware that refinancing federal student loans makes them ineligible for federal benefits like income-driven repayment plans. Make sure you won’t need access to these federal programs before you move forward with refinancing.
Another option is loan consolidation. A Direct Consolidation Loan allows you to combine federal loans into one new loan to simplify your payments, potentially lower your monthly payment amount, and gain access to IDR plans and federal forgiveness programs.
However, with consolidation you may have a longer repayment period, pay more in interest, and lose access to some loan cancellation options.
Employer-Sponsored Loan Repayment Assistance
Some employers offer a benefit called loan repayment assistance, in which they help employees repay their student loans. The terms of these programs vary depending on the employer, but in general, an employer might establish a maximum amount they will contribute, and the employee may have to work for the company for a specific period of time to be eligible. Check with your benefits or HR department to find out if your employer offers loan repayment assistance.
Grants and Scholarships for Loan Repayment
There are private grants and scholarships that can help you pay off your student loans. These programs may be based on need or merit — or a combination of both. You can search for private grants and scholarships on online platforms like Fastweb and FinAid.
You can also reach out to professional organizations you are affiliated with and companies you have a connection to, to find out if they offer grants or scholarships for loan repayment.
State-Based Loan Forgiveness Programs
Most states offer student loan forgiveness programs for residents. Many of these programs are aimed at borrowers working in public service fields, such as health care, teaching, and law, and require specific service commitments. Borrowers must typically meet a set of criteria to have student loan debt forgiven.
To find loan forgiveness programs in your state, search your state government website.
How to Apply for Trade School Loan Forgiveness
The rules and criteria for applying for trade school loan forgiveness vary by program. In general, you can go to the relevant website and fill out and submit an application online.
But first, read about the program and make sure you meet the eligibility criteria. If you do, gather the appropriate documentation. Typically, you’ll need to provide proof of employment, loan statements, and payment history. Then fill out the application as directed and upload any required documentation. Be sure to continue making payments on your student loans in the meantime as your application is being reviewed.
The Takeaway
If you’re dealing with trade school student loan debt, it is possible to get loan forgiveness. You may be eligible for options like Public Service Loan Forgiveness, state-based forgiveness programs, and employer-sponsored loan assistance, among others.
You can also explore private grants and scholarships to help pay off your student loans, as well as loan consolidation and student loan refinancing. Consider different options to see which one is the best choice for your situation.
Looking to lower your monthly student loan payment? Refinancing may be one way to do it — by extending your loan term, getting a lower interest rate than what you currently have, or both. (Please note that refinancing federal loans makes them ineligible for federal forgiveness and protections. Also, lengthening your loan term may mean paying more in interest over the life of the loan.) SoFi student loan refinancing offers flexible terms that fit your budget.
FAQ
What types of loans can be forgiven for trade schools?
Most federal Direct Loans qualify for both Public Service Loan Forgiveness and forgiveness under income-driven repayment (IDR) plans. (However, as of March 2025, forgiveness under all but one of the IDR plans is paused.) In order to be eligible for forgiveness on either the PSLF or IDR programs, trade school borrowers need to meet certain other qualifying criteria.
In addition, most states have state-based loan forgiveness programs that may forgive both private and federal loans. And some employers also offer loan repayment assistance as an employee benefit.
Do trade school graduates qualify for PSLF?
Trade school graduates may qualify for PSLF if they work full-time in public service for the government or a qualifying nonprofit organization and have qualifying federal Direct loans. They must also make 120 qualifying payments under an income-driven repayment plan or the Standard Repayment Plan.
What happens if my trade school closes?
If your trade school closes and you were unable to complete your program, or if it closes within 180 days after you withdrew from school, you may qualify for a Closed School Discharge, which means you are no longer obligated to repay your loans. Contact your loan servicer for the application. They can also walk you through the process of getting your loan discharged.
Can private trade school loans be forgiven?
Generally, private trade school loans are not eligible for forgiveness. Private lenders rarely offer forgiveness — except, sometimes, in extreme circumstances such as if the borrower becomes completely and permanently disabled or dies.
However, private loans may qualify for state-based forgiveness programs, employer-sponsored loan repayment assistance, or private scholarships or grants that help with loan repayment. Do some research to see what options are available for your situation.
What are the best alternatives to loan forgiveness for trade school debt?
Alternatives to forgiveness for trade school debt include employer-sponsored loan repayment assistance if your employer offers it, or private scholarships and grants that help you pay off student loan debt. You can also explore options that could help you manage your payments and potentially even lower them, such as loan consolidation and student loan refinancing.
photo credit: iStock/sturti
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