A career development loan is available in the UK and works in a similar way to a student loan. It has free interest during the time of study, which is paid by the Skills Funding Agency, which is a government department; and then goes onto a variable interest rate afterwards. As soon as the course ends you will have just a month and then will have to start making repayments and the interest will start being added on. They can be used for training courses as well as academic courses which help you progress in your career or to get back into work. The courses can be up to two years and the loans are for £300-£10,000 at the moment. You will not be accepted if you have savings of more than £16,000 and if you do not finish the course you will still need to repay the loan. In fact as soon as you finish the course you will be expected to start making repayments, so if you finish early, repayments will be expected early.
You will be able to repay the loan over a series of months or in one go. There may be an early settlement fee for this and so you will need to check the terms and conditions. The interest rate, can be high, once you have to start paying it and so it can be worth working towards paying it off before that kicks in. This could mean saving enough to do so, which is likely to be difficult while studying or you could get a personal loan, with a lower interest rate to pay it off. Although you will still have to repay this and pay interest, it could be a lot cheaper. There is also a chance that you may not be able to get another loan unless you have a full time job. I you have been studying full-time with no job then a lender may not be prepared to give you a loan as you have no income to pay it back.
At the moment this sort of loan is only offered by one provider. This may change in the future though, but it is worth checking to see what is around. There are others which will advertise in a similar way and state that you will not have to make repayments while you study. Although this sounds good, they will still be charging you interest and so they will be a lot more expensive compared with the career development loan, where the interest is paid for you during the year of study. Therefore it is really important to make sure that you look really carefully at the terms and conditions as a year or two’s worth of interest could add up to a significant amount of money that will need to be paid back.
As the interest is being paid by the government you will need to show proof that you are going to be using it for the curse. 70% of what you borrow or more needs to be for the course fees and the money will be directly to the course provider. There are restrictions over what type of course it can be used for. It needs to help for your career but it does not have to lead to a qualification. These could include a postgraduate course such as an MA or MSc, A specialist course in a specific area, a management course, technician training, NVQ or SVQ, a course which gives a professional qualification. Even if your course is one of these, you will still need to check that it fits all of the other criteria required.
The loan can cover up to 80% of the course fees in most cases, which means that you will have to cover the cost of the other 20% However if you have been unemployed for more than three months you may be able to get up to 100%. It will also be able to be used to cover costs such as books, travel, childcare and living expenses such as food, rent, council tax, utilities. However, you must be working for less than 30 hours a week for the loan to be able to cover these costs. This means that you will need to think about whether you have the money to cover the rest of the costs. You may need to save up in advance to pay for it or be able to work while you are studying and cover the costs that way.
So a career development loan could be an option for someone hoping to do further study to further their career. It can be expensive to pay back though and so it is well worth considering whether it is the right option for you. It is worth comparing it to other forms of borrowing to see whether it is a good deal in the long term.