Professional and Career Development loan
What you need to know:
- They are a commercial bank loan available for postgraduate and various vocational and professional training course and qualifications.
- The Government will pay the interest on the loan for the duration of the course and for one month afterwards.
- Applicants must fulfil a number of criteria, including having unlimited right to reside in the UK, have been resident in the UK for at least three years prior to application, and be planning to work in the UK or EU after their studies.
- Applications must also have a good credit rating.
- Loans are available to anyone with no application fee or early repayment charge.
- As with all loans, Professional and Career Development Loans are not risk free.
- Repayments must be made even if a course is not completed, and regardless of income levels.
- Deferral of repayments if unemployed is possible, but a complex administrative process.
What is a Professional and Career Development Loan?
Professional Career and Development Loans are commercial bank loans, available to support payment for courses or vocational training that will help you to secure job or boost your career.
They were first introduced in 1988, and since then over 304,000 people have taken one out, with more than £1.34bn being lent so far.
They are becoming increasingly popular. In 2013, almost 5,000 people took out a CDL with the Co-operative Bank alone.
The Government will pay the interest on the loan for the duration of the course, and for one month afterwards. It then reverts back to a standard commercial loan arrangement between you and the bank.
What courses are eligible for a Professional and Career Development Loan?
There are a number of types of courses which qualify for a Professional and Career Development Loan. Course must only last up to two years, but they do not always have to end with a qualification. Types of courses that are eligible include:
- Postgraduate courses: MA or MSc
- Vocational qualifications: NVQ’s or SVQ’s.
- Technician level vocational training: such as plumbing or electrician training.
- Specialist Skills courses: to acquire a specific skill, such as sound engineering or homeopathy.
- Management courses
- Courses leading to a professional qualification
Once you know which course you intend to study, you should check with the course provider whether the course is registered on the Professional and Career Development Loan Register before submitting an application.
Who is eligible for a Professional and Career Development Loan?
To be eligible for a Professional and Career Development Loan, applicants must be aged between 18 and 69, and have an unlimited right to reside in the UK. You must also have been resident in the UK for at least three years prior to your application.
You must also be planning to work in the UK, EU, or European Economic Area, after you have completed your studies.
If you already have savings of £16,000 or more, are eligible for a student loan or Local Authority Grant, or are in employment and your employer is receiving funding to pay for your studies, you will not be eligible for a Professional and Career Development Loan.
The banks will also run a credit check on you and eligibility is depending on having a good credit rating.
Rejected applications are not uncommon, but applications are allowed to appeal this and anecdotal evidence suggests that a fairly significant number of these appeals are successful.
What are the advantages of taking out a Professional and Career Development Loan?
The cost of studying for a Postgraduate degree has risen in recent years, with the average course now costing just a little under £6,000 a year in fees alone. This has seen the number of students signing up for such degrees, on both a full time and part time basis, dropping significantly.
Alongside this, taught master's degrees no longer qualify for research council funding, and while scholarships and sponsorship are available, competition for such funding is fierce.
But applications for Professional and Career Development Loans are increasing, which suggests that students are increasingly seeing them as a secure way of funding their further education.
There are a number of financial advantages to taking out a Professional and Career Development Loan.
Unlike many regular bank loans, there is no arrangement fee for taking one out. There is also no penalty charge if you are fortunate enough to be able to be in a position to be able to repay the loan early.
What are the risks of taking out a Professional and Career Development Loan?
As with all credit arrangements, there are some risks involved.
Whilst there is no interest to pay while you are studying, once you have completed your course, interest payments do kick in, and these are at a higher rate than some other types of credit.
The Government will cover the cost of interest on the loan until one month after you have finish studying. Then the repayments begin like a regular bank loan, with no allowance given for whether you income level makes the repayment affordable.
Recipients are also obliged to repay the loan even if they do not finish their course, with repayments due from one month after you finish studying.
If you are unable to secure a job after completing their course, there are some protections in place to help.
Repayments can be deferred for anything up to 17 months, but applying for such a deferral is a lengthy and bureaucratic three stage process, and not for the feint-hearted.
If you start to make repayments, and then lose your job or find yourself unable to meet repayments, securing a deferral is much more difficult, and you are at the mercy or your lender to negotiate a repayment plan.
Failure to make your repayments runs the usual risks to your credit rating and ability to secure credit in the future.
How much will a Professional and Career Development Loan cost?
Both Barclays and The Cooperative Bank offer Professional and Career Development Loans at 9.9%. Any information of their websites that suggests a lower rate should be treated with extreme caution as they will be factoring in the period when the Government is covering the interest payments.
In comparison with current interest rates, these rates are fairly high, so it is often advisable to consider looking for alternative credit options at a lower interest rate once your course ends, and using this to pay of your Professional and Career Development Loan, for which there is no penalty charge.
As with all credit options, it is advisable to read around the loan and consider all your options before applying for the loan.
- The National Career Service oversees Professional and Career Development loans and their website contains further information, including details of how to speak to an advisor.
- The UK Government website also contains information and links on how to apply.
- The MoneySavingExpert website offers a guide on Prefoessional and Career Development Loans with excellent independent advice and further links.
- The two lenders of Professional and Career Development Loans, Barclays and The Cooperative Bank, contains the details of their individual offerings.