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Career Development Loans

Interest-free loans while you study

A Professional and Career Development Loan can give you the leg up you need to change career as the Government pays the interest on the loan while you're on the course.

They're useful while you study, but you need to give them the elbow sharpish after you graduate or the interest will pile up. The good news is that by manipulating them cleverly, you can finish your course in the money.

What is a Career Development Loan?

Career Development Loans are bank loans to pay for courses and training that help with your career or help get you into work.

The Skills Funding Agency foots the interest on the loan for the duration of your course (and for a month after it's finished). After this, it's down to you to start repaying the loan, plus interest.

Career Development Loan need-to-knows

You can only apply through Barclays and Co-operative banks

The interest is paid while you study

You may be able to borrow between £300-£10,000

Courses must only last up to two years

You can't have savings over £16,000

You have to repay the loan even if you don’t finish the course

What courses can I apply for?

To be granted a career development loan, your chosen course must help with your career – but it doesn't have to lead to a qualification. Examples of eligible learning includes:

  • Postgraduate courses, for example an MSc or MA.
  • A specialist course at a privately owned learning provider, for example, in homeopathy or studio sound engineering.
  • Management courses, for example, a professional consultant's course.
  • Technician level training, including plumbing or electrical installation.
  • A National or Scottish Vocational Qualification (NVQ/SVQ) at a local college, for example in hospitality and catering.
  • Courses leading to a professional qualification, for example, the Certificate in Programme Management.
Quick questions

What costs are covered by the loan?

Should I go back to school?

How to apply

  1. Check you're eligible

    First things first you’ll need to make sure you meet the eligibility criteria for a loan.

    To be eligible for a loan you must:

    • Be 18 or over (the Co-op has an upper age limit of 69).
    • Have been living in the UK for at least 3 years before your course starts.
    • Plan to work in the UK, European Union, or European Economic Area after the course.

    Reasons you might NOT be eligible

    Do you receive benefits?

  2. Check the course is eligible

    Once you've chosen the course you want to do, you’ll need to make sure the provider is on the Professional Career and Development Loan Register (check with your course provider), or that they’re applying for registration.

    Your learning provider should be able to tell you if it's registered. If it is, it will give you a registration number that you'll need to quote on your application form.

  3. Apply to the bank

    Next you’ll need to submit an application to one of the two banks which take part in the programme (Barclays and Co-op).

    Each bank has a different application form and it’s important you follow your chosen bank’s guidance when completing the form. You can only apply to one bank at a time, but if the bank you initially apply to turns you down, you can submit an application to the other bank. Processing your application can take time, so make sure you factor this in.

    If the bank agrees the loan

    How the loan is paid

Will it work?

Some MSE forumites have had success applying for a career development loan, while other posts demonstrate that it might not be as easy as it seems:

'If you get rejected,appeal!'

"It was the best decision to apply for the loan as it has allowed me to continue with my life rather than living on the edge. FYI - If you get rejected, appeal! I did and after much messing about with Co-op messing the application up, I was accepted."Lost Prophet

'I didnt realise there were such strict regulations'

"I applied for a career development loan from the Co-op. I assumed I would get accepted for it as I didnt realise it had such strict regulations, but I unfortunately got turned down. I then buried my head in the sand about it for weeks until I decided to try and find out why I got turned down. All the Co-op would tell me is that I have a bad credit rating." lizzybeth18

Share your career development loan successes and failures in the Career Development Loans discussion.

How much will it cost?

This depends on how much you borrow and how long you take to pay it back. By spreading your loan over a longer term, your monthly repayments may be lower, but the overall cost of borrowing may be higher as the APR for your loan will depend upon the length of your repayment period.

It's vital you know what the repayments will be after you've finished your course, and that you're confident you can meet them.

The table below demonstrates what repayments look like on loan amounts of increasing size with the Co-op:

Loan amount Representative APR Term Monthly repayment Total payable
£300 9.9% 36 months £9.63 £346.49
£5,000 9.9% 36 months £160.43 £5,775.43
£10,000 9.9% 60 months £210.39 £12,623.58

A brief glance at the bank's online info, and interest rates might look low. But don't trust the advertised APRs. Barclays, for instance, mentions 5.7% APR, but this rate is misleading.

It works out an average APR for the entire period of the loan - including the Government's interest-free period - and not just the period they're actually charging interest. As such, by far the most sensible thing to do is simply call the banks and get a quote for your loan.

After the interest holiday, rates are shocking (9.9%). So give your development loan the heave-ho as soon as the 0% period ends (one month after the end of your course). After checking any early repayment conditions, apply for the cheapest unsecured personal loan and use it to pay off the career development loan instead.

This should cost much less over the period you're paying back your loan.

The size of the saving

Borrow £5,000 with a Barclays professional career development loan, repay it over three years (after you finish study), and it would cost £800 in interest. Take out a development loan, pay it off with a personal loan as soon as the 0% period runs out and it would cost £540. That's £260 cheaper than taking out and sticking with the Barclays loan.

Example of a £5,000 loan, two-year course, then repaying over three-years:

  Rep APR Total repayment Interest Saving
Co-op or Barclays development loan 9.9% £5,800 £800  
Personal loan (to pay off DL) 6.8% £5,540 £540 £260

Earn while you learn

Even if you don't need to use all the cash straight away, make any loan for living costs work for you. When you get the cash, plonk it in a savings account (see the Starting Savings guide) – and you could sneakily make a little money from study. However, don't reply on this for huge wads of cash - with savings rates so dismal, you won't be the next Rockefeller any time soon.

When you've finished studying, if you've any of the living cost element of the loan left over, repay as much of your loan as you can before any interest is charged. Then move whatever debt remains to a cheaper personal loan.

Savings interest won't make a huge difference to the big costs of further education, but it's a nice addition to your finances.