Trade School Student Loans – Loan Cancellation Is Possible!
August 7, 2013

Not everyone is interested in or destined for a traditional college experience. One great feature of the federal student loan program is that it allows students without the financial means to get training in a skilled trade or certified profession. The downside of this is that wherever there’s money, fraudsters and opportunists sniff out ways to game the system. If you were taken advantage of by a shady trade school, getting your student loans cancelled is possible!

We’ve written before about ways to get student loans discharged and one of the reasons for cancellation comes when a school falls under false certification of ability to benefit (ABT) standards. This is particularly important when it comes to trade or vocational school students who don’t have a high school diploma or GED. Many students are fast tracked into enrolling in a program that they will never be able to work in just so the school can write student loans and make profits.

The New York Times recently wrote an exposé on NYC area beauty schools that preyed on low income women who spoke primarily Spanish, had not completed high school and who therefore struggled to pass the state certification exam required to get a cosmetology license. Herman De Jesus of the New Economy Project told the NY Times, “Schools are targeting low-income people and people of color for the sole purpose of drawing down large sums of federal aid dollars” and added that these schools had “no intention of providing them with a quality education.” You can see from the chart below how high default rates on student loans from for-profit schools (which include vocational schools) are.

Checklist for Cancellation

If you were a student at a cosmetology school, vocational school or other training program that was paid for through a student loan and you have not been able to utilize your training, you could be eligible for cancellation. Here are the basic requirements for a cancellation under ABT falsification:

$  You didn’t have a GED or high school diploma when you applied to the program.
$  The school certified the loan even though you likely wouldn’t benefit from the course.
$  Your loan or loans must have been issued after January 1, 1986.
$  You must apply for the cancellation and confirm that you were subject to false certification under the ABT guidelines.

How Is Ability to Benefit Determined?

When you were being considered as a prospective student of a trade or vocational school, if you didn’t have a HS diploma or GED, the school was responsible for determining if you could benefit from the course. Trade and vocational schools often try to meet this standard by giving an exam. But here are some issues that have been noted with testing and if they applied to your experience, could help you qualify for a loan cancellation:

–  Did the school improperly administered the test to you?
–  Did the school allow you to to retake the test sooner than a mandated waiting period?
–  Did the school allow you a longer than normal time to take the test?
–  Did school give you the full exam or just a partial exam?
–  Did the school give you test answers or allow cheating on the test?
–  Did the school accept you even after you failed to pass the test?
–  Did the school administer a non-DOE approved test?

Loan Cancellation – Final Thoughts

If you lacked a diploma or GED prior to signing up for your student loan financed coursework and were never able to use your education, it’s worth applying for a possible loan cancellation. Not only can this get the student loan monkey off of your back but can net you a refund of all student loan payments you paid in on the falsely certified loan! For hundreds of thousands of people across the US that have been victimized by for-profit trade schools and are unable to use their training but stuck with school debt, this can be a huge relief.

If your technical training was financed with an FFEL, use this form. If your technical training was financed with a Direct loan, use this form. No matter what your student loan circumstances are, sign up for’s free student loan tool to keep track of your debts whether they were borrowed for traditional college, trade school or a vocational training program. Also check out our blog for advice on paying your loans and strategies to deal with your debt.