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If you’re looking to enroll in culinary school, you probably have a lot of questions on your mind. Where should I go? What course of study is right for me? What career opportunities could this open up after graduation? And, how am I going to pay for all this?
It’s understandable if this last question feels stressful—pursuing an education does require an investment of time and money, and you want to be confident you’re making the right decisions.
But with a little preparation and an understanding of the options available to you, you could come up with a plan that can help you focus less on finances and more on following your culinary dreams.
For many Escoffier students, a financial plan involves culinary school loans (often combined with other types of financial aid). Unlike grants or scholarships—financial gifts that do not have to be paid back—these student loans must be paid back over time, along with some amount of interest. The time frame for paying back your loan and the amount of interest you pay can vary, depending on the type of loan you take out.
Broadly speaking, there are two main categories of loans available to culinary students—federal loans, and private loans. Let’s take a closer look at the options and obligations associated with both types so that you can ultimately make the most informed decision about how to pay for your education.
Federal Loans
Federal loans are offered by the U.S. Department of Education and are popular funding options because they typically come with relatively low interest rates and processing fees, and more flexible payment options.
There are two main types of federal loans—Direct Loans and PLUS loans.
Direct Loans
Direct Loans (also known as Stafford Loans) are the primary type of federal loans; as the name suggests, these loans are made directly to students, and recipients are responsible for paying back their loans over time.
Qualifying applicants may be eligible for federal loans, offered by the U.S. Department of Education.
All Direct Loans come with a fixed 6.53% interest rate for the 2024-2025 academic year (rates are subject to change each year; check the federal student aid website for the most up-to-date information). Direct Loans do not need to be paid back until 6 months after you leave school or drop below a half-time status; this is known as a grace period, which allows loan recipients a chance to get a job and start earning an income before having to start making payments.
There are two kinds of Direct Loans—subsidized or unsubsidized.
- Subsidized Direct Loans are awarded to students based on financial need. With this type of loan, interest does not accrue until after the grace period is over and payments begin, meaning that students pay significantly less interest over the life of the loan.
- Unsubsidized Direct Loans differ in that they are not awarded based on financial need, and in that they start accruing interest as soon as the loan is disbursed; even though students don’t have to make their first payment until the grace period is over, interest is building up during the entire time they’re in school, meaning that the total amount they must eventually pay off is higher.
There are limits on the amount of subsidized and unsubsidized funding a student can receive for any given calendar year, meaning that many students will have a combination of the two types of loans (along with other types of financial aid options).
| Program Year | Dependent Students | Independent Students (and dependent students whose parents cannot obtain PLUS Loans) |
|---|---|---|
| Loan Limit for First-Year Undergraduates | $5,500 (Including a maximum of $3,500 from subsidized loans) | $9,500 (Including a maximum of $3,500 from subsidized loans) |
| Loan Limit for Second-Year Undergraduates | $6,500 (Including a maximum of $4,500 from subsidized loans) | $10,500 (Including a maximum of $4,500 from subsidized loans) |
PLUS Loans
The other main type of federal loan is the PLUS Loan (Parent Loan for Undergraduate Students). This loan is also considered a kind of direct loan, but instead of being made to the student, it is made to one (or more) of the enrolled student’s parents. For the 2024-2025 academic year, the interest rate on these loans is 9.08%; these loans are also unsubsidized, meaning they accumulate interest during enrollment, and repayment typically begins once the loan is fully disbursed, rather than after the grace period is over.
Not all students’ parents will be able to qualify for a PLUS Loan; a credit check is required, and parents with less ideal credit histories may not be eligible.
Parents of students may be eligible for loans as well, helping their children further their education.
Private Loans
Private loans are loans offered by private (that is, non-government) entities, including lenders like Sallie Mae or College Ave, banks, and credit unions.
Terms for private loans can vary widely from lender to lender—but generally speaking, private loans tend to have much higher interest rates than federal loans (sometimes as high as 15% or more) and less flexible repayment options.
That said, private loans can be useful in situations where federal loans do not cover the entirety of a student’s financial need.
Federal vs. Private Loans
- Federal Student Loans
- Offered by the U.S. Department of Education
- Lower interest rates, more flexible terms
- Limits to how much you can borrow
- Private Student Loans
- Offered by banks, credit unions, other private lenders
- Higher interest rates, less flexibility
- Can be useful when federal loans don’t cover all expenses
Understanding Your Options and Obligations
So, now that we’ve covered the basics of culinary school loans, how do these pieces fit together into a financial plan?
How Do I Know What I’m Eligible For?
Coming up with a solid financial plan starts with knowing what kind of financial aid you’re eligible for—and knowing what you’re eligible for starts with submitting the FAFSA® (Free Application for Federal Student Aid). This application is the gateway to government-sponsored financial aid, including the federal loans we already mentioned in addition to other types of financial aid, like Pell Grants and work-study programs.
Submitting a FAFSA® can help prospective students better understand the financial aid options available to them.
This application is free to file, and it’s the only way to find out what kinds of federal aid you may be eligible for, how much you may be qualified to receive, and if you do qualify for loans, what the terms of those loans would be. Once you’ve learned all that, you can determine whether that funding is enough to cover your culinary school expenses, or whether you may need to seek additional funding options.
When Do I Receive the Funds?
Loan recipients don’t actually receive their funding directly; instead, funds are disbursed to the school to cover the costs of a student’s tuition and other associated expenses.
Additionally, these funds are disbursed in installments, rather than all at once. As a student completes their course work and advances toward graduation, the loan servicer releases segments of the total loan amount; typically, these distributions are made twice per academic year.
How Does Loan Repayment Work?
Toward the end of your time at Escoffier, you’ll complete what’s called an exit interview at StudentAid.gov, which will explain your loan repayment obligations and help you understand what it will take to stay current with your payments. Depending on the type of loans you’ve taken out, you may have different repayment options available to you; for federal loans, options may include:
- Standard Repayment, where you make a fixed monthly payment for a 10-year period after graduation.
- Graduated Repayment, where your monthly payments start small and increase over time throughout the 10-year repayment period.
- Extended Repayment, where you pay off your loan over 25 years rather than 10, with either a fixed or graduated monthly payment. This applies to those with more than $30,000 in direct loans.
- Income-Driven Repayment, where your monthly payments are tied to your income and family size—and could potentially be partially canceled if you meet certain criteria.
For private loans, repayment terms can vary widely.
Regardless of the size of your payments and when you’re required to start making them, the most important thing is to try to stick to making at least the minimum payment each and every month. This can help you avoid falling behind in payments, potentially incurring additional costs or even running into problems with your lender (more on that in a moment). Consider setting up autopayments, so that you never miss a payment (this may also be good for your credit score).
Understanding Interest Rates
For the most part, student loans are what’s known as “daily interest” loans—meaning that more interest accrues on the loan each and every day. You can calculate the amount of interest owed at any given time using this formula:
(Outstanding Principal x Interest Rate Factor) x # Days Since Last Payment = Interest Owed
The part of the formula in parentheses tells you how much interest accrues each day; multiplying this by the number of days since your last payment tells you how much interest you currently owe.
To obtain the Interest Rate Factor, divide the interest rate on your loan by the number of days in the year.
Here’s a quick example:
- Imagine you had an outstanding balance on a direct loan of $10,000, an interest rate of 5.5%, and it’s been 30 days since you made your last payment.
- First off, your Interest Rate Factor would be 5.5% ÷ 365 = .00015068. When we multiply our outstanding balance by this number, we find out that approximately $1.51 of interest accrues every day. Multiplying that by 30 (the number of days since your last payment), you find that you currently owe $45.21 in interest.
- All told: (10000 x (.055 ÷ 365)) x 30 = $45.21
You can find more information on federal student loans through the U.S. Department of Education’s website.
What If I Can’t Make My Payments?
If you find you’re having trouble making your payments, don’t put off addressing the problem! If you miss a payment, your loan will become delinquent which can negatively impact your credit score. If you get back on track relatively quickly, the impact can be minor—but if this situation persists, it can wind up having major, long-lasting effects on your finances.
A loan that is delinquent for an extended period (270 days for federal loans; often 120 days for private loans) will go into default, which can seriously impact your credit score and may lead to your servicer garnishing your wages or tax refunds or even seeking legal action against you.
Graduates concerned about their ability to make their minimum loan payments should consider reaching out to their loan servicer.
Instead of letting things escalate to that point, reach out to your loan servicer, who may be able to help you come up with a solution. They may be able to offer you loan deferment, effectively putting your loan on pause for a period of months or years, with no interest accruing if it’s a subsidized loan. You can also enter loan forbearance, another type of pause on your payments, though interest keeps adding up in the interim, regardless of whether the loan is subsidized or unsubsidized.
Which Loans Should I Pay Off First?
If you keep making your minimum payments every month, you’ll eventually pay off your loans over the course of the predetermined loan period.
However, if you can afford to put even a little extra money toward paying off your principal every month, you may be able to pay down your loans faster, potentially saving a significant amount of money.
If you only have one student loan, all you have to do is pay a little extra each month; if you have multiple loans, there are two approaches to paying down your loans faster.
- Snowball Method: With the snowball method, you keep making minimum payments on all your loans except the loan with the smallest outstanding balance, toward which you pay a little extra. By paying more on this loan, you can pay it off faster—getting it off your plate, so you can focus on paying off the rest of your loans. This method can help keep you motivated to stay current with your loans by giving you a sense of accomplishment as you cross each loan off your list.
- Avalanche Method: With the avalanche method, you instead focus your effort on paying off the loan with the highest interest rate as quickly as possible. This can potentially save you a greater amount of money in the long run, since you’ll be eliminating your “most expensive” loan first. It may take you longer to pay it off, which means you may have to wait a longer time to experience the “win” of eliminating a loan—but the overall savings can make this strategy a compelling one.
What About Loan Forgiveness?
If you have federal loans, certain loan forgiveness options may be available to you as well. With loan forgiveness, part of your remaining loan balance may be canceled if you meet certain criteria. For qualifying culinary school graduates, loan forgiveness programs could include:
- Public Service Loan Forgiveness (PSLF), which forgives the remaining balance on Direct Loans after a recipient has made 120 qualifying monthly loan payments while working in a full-time position with a qualifying employer—like the federal government or select nonprofits.
- Income-Driven Repayment (IDR) Forgiveness, which allows recipients with income-driven repayment plans to cancel their remaining loan balance after making a certain number of qualifying payments.
Your loan servicer or other financial aid specialists, such as the staff at Escoffier’s Financial Aid office, may be able to help you understand any loan forgiveness options that may be available to you.
Explore Financial Aid Options That Could Help Advance Your Career!
Enrolling in culinary school is a big decision, and could be a big step on the path toward your culinary dreams. During this exciting time, you should be able to focus on your studies and on preparing for your career post-graduation—not on worrying about money.
Having a solid financial plan—including a plan for how you’re going to pay for your education—can help you feel confident in that path, and allow you to focus on what matters. Both of Escoffier’s campuses (and, by extension, its online offering) are nationally accredited, a prerequisite for federal aid. That might make Escoffier a smart place to start if you’re considering culinary school but concerned about how you can afford it.
Reach out to our Financial Aid office to speak with a representative who may be able to help you start coming up with a plan that can enable you to pursue the course of study that could help you land the culinary job of your dreams!
