The average vocational program will run you over $30,000 — which isn’t a small price to pay. If you’re in the process of determining how to pay for trade school, consider these 6 avenues for footing the bill.

Scholarships

Scholarships are free money, meaning you don’t have to pay them back. Because of this, you’ll want to maximize the number of scholarships you apply to and accept.

First, contact the trade school you plan to attend and ask about any institutional scholarships they may offer. Then, look for scholarships offered in your local area. Both will be far less competitive than most scholarships you find online.

If that doesn’t yield results, search websites such as Scholarships.com and Bold.org. These websites are, in essence, aggregators that compile massive lists of scholarship opportunities. That said, they’ll likely be more competitive in comparison to the aforementioned opportunities, so you’ll need to have a strong application.

When searching, try to narrow your search to specific aspects of your life. For example, try searches like:

• Scholarships for Boy Scouts
• Scholarships for disabled women
• Scholarships for Indian men

The more narrow the eligibility criteria, the smaller the applicant pool is likely to be, and the better your chances are of receiving the scholarship.

Grants

Like scholarships, grants are also dealt on a no-strings-attached basis, meaning you don’t have to pay them back either. As you can imagine, you’ll want to maximize how many grants you can rack up, too.

Most grants will come directly from the federal government. To access these, you’ll need to submit the Free Application for Federal Student Aid (FAFSA). If you’re eligible, you’ll receive notice in your financial aid award letter from the program(s) you apply to.

Sometimes, non-government entities also offer grants. These are typically need-based, meaning you’ll have to demonstrate financial need to be eligible to receive one. You can find these grants by simply searching online.

Federal Aid

After submitting the FAFSA, you’ll receive a financial aid award letter from the trade school(s) you apply to. Within this letter, you’ll see whether you qualify for any federal aid, which can come in the form of grants, work study, or federal student loans.

If you receive a federal student loan, it’s wise to accept it, but only after accepting gift aid like scholarships and grants. This is because federal student loans tend to have lower interest rates, more flexible repayment options, and the potential for loan forgiveness — three elements private student loans may lack.

Note that programs need to be accredited to be eligible to receive federal student aid. Make sure to consider this before selecting which program to attend.

Tuition Reimbursement Programs

If you’re currently employed, ask your employer about the potential for tuition reimbursement. Believe it or not, a wide range of employers will pay for your studies — some even paying 100% of the bill.

When you inquire about this, make sure to cover all the bases, asking questions like:

• What courses are eligible for reimbursement? Which wouldn’t be eligible?
• Do I need to complete the program within a certain timeframe?
• Do I need to agree to stay employed here for a certain period of time after completing the program?
• What percentage of my studies will be reimbursed? How soon after completing the course can I expect reimbursement?

Private Student Loans

After exhausting the above options, consider private student loans. Private student loans are offered by private entities such as banks and other financial institutions. They each come with their own unique interest rates, repayment plans, and terms.

To find a private student loan that works for you, submit a free application here.

Parent Loans

If you’re unable to qualify for a private student loan on your own, consider asking a parent or guardian to borrow a parent loan on your behalf. Like traditional private student loans, parent loans are offered by private organizations to parents to fund their child’s education.

Legally, your parent will be the sole individual responsible for repaying the loan, but you can contribute to repayment as you would with a traditional private loan. That said, keep in mind that some private lenders might not offer parent loans for trade schools, so you’ll need to search carefully.

Final Thoughts

When paying for any educational institution, it’s important to remember the following order of events: free aid (scholarships, grants) → earned money (work study, tuition reimbursement) → borrowed money (loans).

By accepting free and earned money first, you’ll be able to minimize the amount you need to borrow, which results in less student loan debt.

Trade schools offer a quick, cost-effective path to high-paying careers, but they may not qualify for financial aid, have limited program options, and may not offer as much career growth.

On the other hand, college is far more expensive and longer in duration, but it can lead to a higher income potential, more program choices, and broader career applicability.

Trade School vs. College: What’s the Difference?

Colleges provide a longer, more general education, while trade schools offer a shorter, more specialized education. Colleges often have a wider range of career opportunities, while trade schools provide a direct path to a single career.

Trade schools offer hands-on learning, with programs such as plumbing, welding, cosmetology, nursing, and massage therapy. While college programs may have hands-on elements, the majority of learning takes place in the classroom, with programs like business, psychology, biology, and communications.

^{1 Vocational Training HQ, https://www.vocationaltraininghq.com/average-cost-vocational-school-usa-2017}

^{2 College Evaluator, https://www.collegeevaluator.com/trade-schools/massachusetts}

Trade School

Trade school prepares students for a specific role, ranging from car mechanics to hair stylists. Because of this, programs tend to be shorter and more focused, skipping over the general education courses required in college.

Some of the most popular trade school programs include:

• Computer programming
• Air traffic controlling
• Dental hygiene
• Plumbing
• Commercial driving
• Radiation therapy
• Culinary arts
• Electrical

Advantages of Trade School

Trade school has several incredible advantages:

Specialized education. Trade school programs get right down to business, teaching only what you need to know to perform the duties of your desired trade.

Shorter duration. Because time isn’t wasted on general education courses, trade schools are able to teach students everything they need to know in a much shorter time frame. Most trade school programs take around six months to two years to complete, depending on the program and whether it’s completed as a full-time or part-time student.

More flexible class times. Some trade programs offer night schools, perfect for working adults who can only take courses in the evening. This makes attending school easier for those already working during the day, as opposed to college courses that take place during the workday.

More hands-on learning. Given that many skilled trades require manual labor, trade school programs tend to have more opportunities for hands-on learning.

Cost-effective. Trade schools are significantly more affordable than most colleges.

Disadvantages of Trade School

That said, there are a few downsides of trade school programs:

Limited career growth. Trade school programs train you for one role. While there might be some overlap between what you study and other fields, it isn’t as flexible as a college degree. For example, a biology degree could help you secure a variety of roles — scientist, teacher, zoologist. However, a commercial driving program would only help you get a role as a truck driver.

Lack of financial aid. Most trade schools are ineligible for federal financial aid. Instead, students will need to cover the education with scholarships, student loans, and personal funds.

Fewer school options. Because trade schools offer specialized education, there tends to be fewer programs to choose from in comparison to college degrees.

College

College provides students with a general understanding of an industry such as business, psychology, or nursing. In some cases, students can choose a specific area of interest within their major, which allows them to focus their studies on that particular topic.

For example, a student majoring in business might be able to focus on accounting or management. A psychology student might be able to focus on clinical psychology or marriage and family psychology.

Some of the most popular college majors include:

• Business
• Engineering
• Nursing
• Biology
• Psychology
• Social Sciences
• Graphic Design/Arts

Advantages of College

College has several advantages, such as:

More programs to choose from. Top colleges offer 50 or more majors, and some offer even more. This gives students a wide selection of programs to choose from, which can be helpful if you’re undecided on your career path or decide to change your major mid-way through school.

Income potential. Some studies show that bachelor’s degree holders earn around 75% more during their career than if they had only a high school diploma.

Broad education. If you’re unsure what career you’d like to pursue, college may be for you. A broad degree can provide you with the education you need to pursue a wide variety of roles.

Disadvantages of College

Expensive. The average bachelor’s degree costs $127,000, leaving graduates with around $34,100 in student loan debt.

Longer program. College takes anywhere from two to four years to complete as a full-time student, depending on the degree.

Lack of job readiness. In a Cengage survey, one in five (19%) of respondents said their college education didn’t provide them with the skills needed to perform their first post-degree job. This means that even after completing a four-year program, students didn’t find what they learned to suffice.

Is It Better to Go to College or Do a Trade?

It depends. Here’s a general guideline of who trade school and college are right for:

Trade school is best for you if…

• You want to work in a skilled trade.
• You don’t thrive in a standard classroom setting and prefer hands-on learning.
• Your ideal career can be trained for in a cost-effective trade program.
• You’d prefer to work while in school and need nighttime classes.

College is best for you if…

• You know the field you want to work in requires a college degree.
• You thrive in a traditional classroom setting.
• You have the time and funds to enroll in a longer program.
• You prefer a more general education that can be applied across a variety of roles.

Ultimately, however, only you know which option is best for you. Take time to review your career goals, budget, and preferences to decide which program suits you best.

College is not only far more expensive than it was a decade ago, but the burden of paying for it has also shifted away from the public to individual students. At the same time, the odds of graduating and immediately landing a job that rewards you have become even more difficult. 

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College still provides a strong return on investment for many students. But the risk profile of that investment has gone up dramatically with the cost of college in recent years. One way that schools are sharing the risk and reward of education with their students is through the use of Income Share Agreements (ISAs). 

With this type of agreement, students pay nothing, in most cases, until after they complete their program. Then, once a student has finished the program and becomes successfully employed using their new skills, they pay a percentage of their income for a set period of time until they have either reached the Required Payments, Max Payment Cap, or Payment Window. 

Income Share Agreements have a whole host of student benefits that are often absent from traditional private student loans. For example, there is something called the Minimum Income Floor, which is the minimum amount a student needs to earn before they begin paying back their ISA. There is also a payment window, which is the set time frame that the ISA funder has to collect all of the required payments under an ISA.

In today’s post, we’re going to take a look at the ISA student benefit known as the payment cap.

The Payment Cap

One way to satisfy your ISA is by paying the Max Payment Cap. (The most common way to pay back your ISA is by making all the required payments. Read about the different ways to pay off your ISA here). The Maximum Payment Cap limits the maximum amount of income a high-earning student is required to share. This is in place to ensure that high earners do not overpay on their ISA.

The Max Payment Cap is built into your contract and is the most you’ll ever need to pay towards your ISA. A Payment Cap is usually some amount more than the funded amount (the amount the school is fronting you for their program as part of your ISA). Once you hit your Max Payment Cap, your ISA is completed.

For example, let’s say your agreement terms dictate that you pay 10% of your monthly income over 24 required payments (read more about required payments here.) Let’s say your Max Payment Cap is $12,000. Based on your income, you would pay $500 per month to your ISA. If your income doesn’t change for 24 months and you make each of those $500 payments each of those months, your ISA would be finished. But let’s say, you’re crushing it at your job, and 10% of your income would now be $1,000 a month. If you had to make the same 24 repayments, you would pay double the amount over the course of your ISA.

However, that’s where the max payment cap comes in. Instead of doubling all of your payments for the same 24 months, you instead would just continue making your monthly payments until the total sum of all your payments reaches the Max Payment Cap. If you pay your $1,000 payments each month, you’ll hit your payment cap in only 12 months thanks to the payment cap. You’ll pay it back a full year earlier than if you were making the 24 required payments!

The Cap Paydown

The Cap Paydown is a feature for higher-earning students to pay off their ISA as quickly as possible. The cap paydown is a feature of our ISA design that Meratas makes available to all our partners as an option to offer to their students.

This gives students who have an income while they are in their program the chance to potentially lower the overall cost of their ISA significantly over the course of the contract.

Essentially, the Cap Paydown allows students to make smaller, fixed payments (usually a few hundred dollars) each month while they are still in their education program. These payments continue until they find a qualifying job and are making above the Minimum Income Threshold outlined in their ISA, at which point they then switch over to making their ISA payments. In exchange for making these payments while in their program, students receive a discount on their Max Payment Cap of either the total amount of the initial payments made or a flat amount.

For example, let’s say your Max Payment Cap would be $15,000 in your ISA. But if your program offered a Cap Paydown and you started making $300 monthly payments during the program, your payment could be lowered by $3,000 to $12,00 depending on the terms of your program’s Cap Paydown.

This feature is especially important for students who are confident they’ll be able to get a well paying job after graduation and know they’ll reach the Payment Cap before their Required Payments or Payment Window are up.

Meratas is the only ISA platform that offers this student benefit as an option to partners on our platform and is one of the many benefits of working with Meratas for all of your ISA needs. Ready to offer an Income Share Agreement program at your school or educational institution designed to increase student enrollment and accessibility? Partner with the leading Income Share Agreement software company that provides a full-service, turnkey, SaaS platform to design, originate, and manage ISAs.

Schedule a meeting with one of our ISA specialists today! 

Although every effort has been made to provide complete and accurate information, Meratas Inc. makes no warranties, express or implied, or representations as to the accuracy of content contained herein. Meratas Inc. assumes no liability or responsibility for any error or omissions in the information contained herein or the operation or use of these materials.

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With student debt in America amounting to $1.6 trillion and 5.2 million student loan defaults last year, many are beginning to wonder if there’s a better way to pay for education.

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This post was originally written by Richard Price of the Christensen Institute. The original post along with his full paper can be found here.

With one million defaults on traditional private student loans every year, and $1.6 trillion in outstanding student debt, it’s clear the U.S. is in desperate need of innovative funding models in higher education. Income Share Agreements, or ISAs, stand to provide a promising alternative to high-risk traditional private student loans, as they better align the interests of students, schools, and lenders.

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We know that Income Share Agreements can be confusing. They’re an uncommon way of financing that includes many terms people may not be familiar with.

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What if, instead of borrowing money for school at a certain interest rate, you promised a percentage of your future earnings to cover the cost?

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An Income Share Agreement (ISA) is funding for higher education in exchange for a percentage of your income if and once you land a decent job.

ISAs are becoming increasingly common. For some, they’re a no-brainer. An ISA, for example, could help fill in the gaps for financial aid if you’ve reached federal borrowing limits or are attending a school that’s ineligible for federal or traditional private student loans. They are also ideal for students looking to upskill using a Bootcamp or specialty school where they might not have a traditional means of funding.

In some cases, ISAs are available directly from your school, who partner with companies, such as Meratas, to administer and organize the ISA. But in other cases, it may be more difficult for you to find an Income Share Agreement if your school does not directly offer one. If you’re interested in comparing your options, here are different ways to secure funding for your degree through an ISA.

Schools That Offer Income Share Agreements

All sorts of schools are joining the ISA game, including traditional 4-year colleges and universities, online-only educational institutions, and a variety of bootcamps and career training programs. Although this isn’t an exhaustive list, this will highlight some key ISA programs offered across the U.S.

Purdue University

Through its Back a Boiler – ISA Fund, Indiana’s Purdue University offers ISAs as a supplement – not a replacement – for traditional private student loans. Eligibility is limited to non-freshman students who have exhausted their federal loans for the academic year and are considering traditional private student loans or asking their parents to borrow a Parent PLUS Loan. To qualify, students must have no significant negative incidents, such as wage garnishment or bankruptcy, listed on their credit report.

Nearly 800 students have received $9.5 million in funding through the program, according to the school. It caps each student’s repayment at two and a half times what they initially received. You could use the school’s ISA comparison tool to estimate your dues.

Lackawanna College

Lackawanna College, a private institution in Pennsylvania, reserves its ISA for covering remaining tuition costs after borrowing federal student loans. The program is available to students who sport at least a 2.5-grade point average and are pursuing select majors.

Lackawanna’s alumni who take part in an ISA enjoy a federal loan-like, six-month grace period before they start paying an agreed-upon percentage of their income for the following five years or so. At the end of those years, the participant no longer owes anything, even if they haven’t repaid as much as they originally received.

Clarkson University

Clarkson University’s donor-funded ISA program is competitive, available to only 20 students per year. The private upstate New York university disburses up to $10,000 per student per school year. Members of the 2018 class who receive a four-year ISA, for example, would get $40,000 and then repay 6.2% of their income for 10 years.

About 97% of Clarkson graduates find work in their fields after graduation, according to the school.

Messiah College

Messiah College, a private Christian school in central Pennsylvania, started its pilot ISA program in June 2018 for undergraduates. Messiah offers $5,000 per year and the payment cap is 1.6x the ISA amount that students take out. Messiah students in an ISA would be expected to repay 3-3.5% of their income for 84 months once their earnings surpass $25,000 annually.

The University of Utah

In the pilot phase of its ISA, the University of Utah’s Invest in U program is limited to undergraduates who are within one year of collecting their diploma and are pursuing one of 18 majors. After accounting for gift aid like grants from your state and scholarships, these students could receive between $6,000-$20,000 per academic year.

Depending on each student’s major and the amount received, they could expect to repay 2.85% of their employer’s paycheck for between 3-10.5 years. However, they can defer their income payments while they earn less than $20,000 or attend graduate school. Check out the university’s ISA comparison tool to measure its usefulness for your situation.

Colorado Mountain College

Officials at Colorado Mountain College had a specific goal in mind when the school launched its ISA program in 2018: help undocumented students pay for college.  CMC’s tuition per year is $2,400, so their ISA program offers $3,000 per year.

Depending on each student’s situation, they could expect to repay 4% for 60 months once they are earning $30,000 (or sooner if a student pays back the total amount of the funds they received before 60 months), and the great thing about this ISA is that students don’t pay more than the amount of ISA that they take out.

Norwich University

Norwich University in Vermont became the only military college of its kind to provide an ISA option to its sophomores, juniors, and seniors, rolling out the program in the fall of 2018.

You’d have to be comfortable giving back some of your salary to attend Norwich. By 2019, 48% of the graduating class of 2017 was employed – 38% of whom worked in the military, according to the school.

Northeastern University

Northeastern University is a private research university located in Boston Massachusetts. They offer both undergraduate and graduate-level programs. Northeastern’s students distinguish themselves as some of the nation’s top creative thinkers, intrepid entrepreneurs, and motivated researchers.

Northeastern understands that each student’s and family’s financial circumstances are unique and offer a number of payment and financing options including Income Share Agreements. The funds through their ISA program are typically provided per term in alignment with the billing cycle, academic year, and terms of enrollment. Exact disbursement dates are determined by your ISA provider.  Check out Northeastern’s ISA terms here.

Lambda School

Lambda School has built a curriculum designed to get you hired. They asked hundreds of top tech companies what specific skills they look for in candidates and then designed their lives and remote programs to include learning activities that help you master each key skill.

With Lambda’s ISA, they cover all of your $30,000 tuition in exchange for 17% of your income for 24 months, but you only start making monthly payments once you’re earning $50,000.

Make School

For some entering the computer science field, ISAs can prove useful. Many coding bootcamps and schools aren’t eligible for federal student aid in the first place, so ISAs are a way to fill the void of funding.

That’s the case at Make School, which claims to be the first start-up-style school to offer bachelor’s degrees in applied computer science. Here, you could finance your education with either a partial ISA (worth $35,000) or full ISA ($70,000): With a partial ISA, you repay 20% of your gross salary for 30 months. With a full ISA, you repay 20% of your gross salary for 60 months.

The school also offers a $1,500-per-month ISA for living costs that would be repaid from 5 to 7% of your income over 10 years.

Awesome Inc

Awesome Inc is a 16-week bootcamp that offers an online intensive training program for aspiring software developers based in Lexington, Kentucky. With over 500 hours of hands-on training, students will gain experience while building ten+ projects using HTML, CSS, JavaScript, web frameworks, GitHub, Agile, and more. The program is aimed at beginners, and students learn HTML, CSS, JavaScript, web frameworks, GitHub, Agile, and more. The coding Bootcamp is designed to feel less like school, and more like the first 3 months on the job. With their Income Share Agreement program, you can go to Awesome without any upfront payments! Check it out here. 

Redwood Code Academy

Redwood Code Academy offers software development bootcamps for either 12 or 24 months in either New York, San Francisco, or online. Redwood Code Academy covers full-stack software development, with a focus on web applications, but also includes mobile applications, desktop applications, and cloud services. The Academy focuses on real-world skills training by helping students learn the fundamentals of full-stack development.

Redwood Code Academy also provides students with career guidance including resume prep, optimization of LinkedIn and Github profiles, mock job interviews, and introductions to local recruiters and employers in Redwood’s hiring network. Redwood is powered through Meratas to offer an ISA to their students. Check it out here! 

Wyncode

This bootcamp offers full-time and part-time Full stack development, front end web development, digital marketing, and UX/UI design programs in Miami, Florida. The program is 10 weeks full time and 12 weeks part time. 

Wyncode’s Income Share Agreement program allows three candidates in every cohort to enroll in a full-time Wyncode program with no up-front tuition costs. Wyncode’s Income Share Agreements are granted to candidates that have a financial need. ISA recipients can pay back tuition once you’ve landed a job making $40,000/year or more. ISA applications are open for our full-time programs: Full Stack Web Development and UX/UI Immersive. 

Insight Data Fellows

Insight is a seven-week professional training fellowship and data science program designed to be your bridge to a thriving career. Applicants should have a background in Physics & Astrophysics, Mathematics & Statistics, Neuroscience & Bioinformatics, or Engineering & Computer Science, as well as their PhD. Students are mentored by employees of top tech companies, who then hire graduates as data scientists and engineers. Insight’s ISA is designed to lower the barrier of entry to making career transitions, allowing Fellows to join the program without requiring any upfront payments. You can find an example agreement here.

 Holberton School

 Holberton School is a two-year software engineering school that trains individuals to become Full Stack Software Engineers with courses in full stack web development, machine learning, augmented and virtual reality, and algorithms.  The school’s mission is to train the next generation of software developers through 100% hands-on learning. The bootcamp is broken into three different components. Students complete the 9-month Foundations school then a 6-month internship followed by a 9-month Specializations course. Their curriculum focuses on collaborative, project-based learning with no formal classrooms or teachers. Holberton’s students have been hired by the world’s leading tech companies. They also offer their students Income Share Agreements to fund their education.

Companies That Offer Income Share Agreements  

A company that offers ISAs means that any student can apply with them and use those funds for any school, regardless of whether that school offers an ISA. You would apply with the company for a certain ISA, they would then disburse those funds to you, and then you could use those funds for your school or program. For now, only a few private companies provide ISAs directly to students – Blair, Lumni, and Align are among them – although more are expected to join. Edly and Tradeup also provide direct to consumer ISAs.

As you review these ISA providers, compare terms such as income threshold and repayment cap, just as you’d judge traditional private student loans by their interest rate and repayment term. By looking at the income share terms, you can help ensure you land an ISA with the company that best fits your needs.

What if My School Doesn’t Offer an ISA?

That’s where Meratas comes in.

Meratas

Meratas provides a full-service SaaS Platform for Schools and Skills-Training Courses to design, administer, and service custom ISA programs. We help institutions create impactful ISA programs designed to promote student accessibility and increase enrollment.

Our programs are intended to incentivize students, schools, and capital providers to work together to promote and finance only the best educational programs that lead to more successful careers.

If you’re interested in offering an ISA option at your school or program that has been proven to increase student enrollment, there’s no better time to offer one then now! Click here to schedule a call with one of our ISA specialists and get your ISA program up and running today.

Are you a student and don’t have an ISA option at your school? Want one? Let us know here so one of our ISA specialists can reach out to your school!

Ensure an ISA is a long-term plan for your degree

If you like the idea of an ISA – as a way of borrowing less  traditional private student loans  – check in with the schools above. Although this list is not extensive, if none of these schools line up with your plans, check out our student’s page for a list of even more schools. (Please note these ISA statistics are as of August 2020 and are subject to change in the future.)

Before you decide, however, note that not all jobs or training paths are the correct ones for an ISA – take a look at our suggestions for some fields that are a better fit for this type of funding.

If an ISA sounds intriguing, take a look at some of the pros and cons. Interested in more ISA programs? Check out our student’s page for a full list of schools and programs offering an ISA through Meratas!

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Student debt in the US has grown significantly since the passage of the 1965 Higher Education Act, which mandated the Federal government to guarantee student loans made by banks. As a response to the 1.75 trillion in student loan debt as of 2022, many are starting to rethink tuition funding.

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