When to Use Student Loans for a Career Program

 Bruce McClary

Students enrolling in alternative postsecondary trade schools are drawn to the prospect of an education that leads to job placement at a lower opportunity cost.

Data from the National Center for Education Statistics show that the average cost of attendance at a two-year institution during the 2015-2016 school year was $10,432. By comparison, a four-year institution granting bachelor's degrees charged an average of $26,120 that year.

For those who would need to finance a portion of their education, the news is even better. According to a 2017 analysis by the Pew Research Center, the median debt load for borrowers with education less than a bachelor's degree was $10,000, which was 60 percent less than the debt burden among bachelor's degree holders who borrowed student loans.

To repeat a point that the Student Loan Ranger has made before, it's wise to consider alternatives to borrowing before applying for a student loan. Many students who are enrolled in career and technical education often work while they're in school to cover education-related costs.

For prospective students who plan to attend a technical or career college, here are few things to consider in financing this type of education.

Develop a strategy to reduce your student loan borrowing. Accomplishing the goal of low student debt requires a clear strategy before enrollment. Prospective students interested in career programs should take into consideration all the alternative financing options along with the timing and types of available student loans.

A recommended approach is to make the most of grants and scholarships to lower the out-of-pocket cost as well as the need to apply for loans. There are a variety of funding options from a number of state and local sources, giving students the opportunity for awards based on merit or financial need. Students can also apply for federal grants by completing the Free Application for Federal Student Aid, commonly known as the FAFSA.

There are also special employment programs that offer grants to offset the cost of attending a technical or trade school. One example is the Arkansas Future Grant, known as ArFuture, which aims to increase the education and skills of the state's workforce; the grant covers tuition and fees for some certificate and two-year degree programs for qualified state residents.

Some states and localities offer programs that are designed to retrain unemployed or underemployed workers through local employment offices. Besides programs funded by state and local governments, there are also career training grants available through employer partnerships at some community colleges.

Once the free money resources have been exhausted and available income has been applied, it's time to survey student loan options.

Know that federal loans may be available. Direct Stafford loans and Pell Grants are available to students who attend trade schools that participate in the Department of Education's federal financial aid program.

Unsubsidized direct Stafford Loans are awarded without regard to a student's financial need. Pell Grants, however, are awarded based upon a student's financial need; these students are typically from households that earn less than $50,000 annually.

Become familiar with recent legislation. Borrowers should know about more recent developments regarding the Carl D. Perkins Career and Technical Education Act, as it may influence the timing and the need to apply for student loans.

The updated version of the Perkins Act, signed into law in July as the Strengthening Career and Technical Education for the 21st Century Act, provides funds through three programs, two of which will affect borrowers directly.

The first involves basic state grant programs that allow states to distribute money to high schools, colleges and universities that offer programs that integrate academic and career and technical education. The second supports technical preparation programs that allow educational institutions to combine at least two years of high school education with at least two years of education at a college or university to result in an industry-recognized credential, certificate or degree.

This legislation is also intended to increase work-based learning opportunities that could lead to lower tuition costs for some students.

At the end of the day, borrowing responsibly and when necessary is the key to making a career and technical education an affordable investment. The Student Loan Ranger advises readers to remember that budgeting is an essential part of the equation to safeguard against overborrowing.

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