Professional and Career Development Loans guide
Could a Career Development Loan help you complete extra study after graduation? Make sure you know all the facts first...
A Professional and Career Development Loan could give you up to £10,000 that remains interest-free while you study on a course, postgraduate qualification or training programme that will help you to progress your career.
Sound too good to be true? Well, it kind of is. After you finish studying, interest rates will kick in pretty hard, and you'll need to keep up with the monthly repayments to avoid damaging your credit rating.
That doesn't mean Career Development Loans are a no-go - for many people they're a really useful way of funding extra study and qualifications. But you need to do your research first.
What’s on this page?
What are Career Development Loans?
A Professional and Career Development Loan is a bank loan you can take out to help fund any courses or training that will help progress your career, or help you to get into work.
The reason the loan is different from a personal loan is that you don't pay any interest on the loan while you're studying - this is paid for by the Government Skills Funding Agency instead.
What does a Career Development Loan cover?
You decide how much money you want to apply for - as long as it's between £300 and £10,000, and you can provide evidence it's going to be used for the following expenses:
- Up to 80% of the course fees, or 100% if you've been out of work for three months or more prior to starting the course
- Other learning expenses such as books, resources, equipment, travel and childcare
- Living costs including rent, bills, food and clothes.
Warning: If you receive state benefits to help with living costs, the Career Development Loan may effect your eligibility for these. Talk to the bank about this when applying for the loan.
Do you know what the average graduate salary for your degree is?
Eligibility for Career Development Loans
You will be eligible for a Career Development Loan if you meet the following criteria:
- You are aged between 18 - 69
- You've been living in the UK for at least three years before your course is due to start
- You plan to work in the UK, EU or EEA after study
- You're studying a course that lasts no longer than two years (three years if it includes one year of work experience).
You won't be eligible for a Career Development Loan if:
- You have access to £16,000 or more in savings
- You're eligible for a student loan (if you're studying an undergraduate degree, for example)
- You'll be working over 30 hours a week while studying
- You have a bad credit rating. What this means can vary, but make sure you're not in any arrears and you haven't missed more than two payments on a credit agreement in the past six months.
The Professional Career and Development Loan Register
Once you've established whether you're personally eligible for the loan, you also need to make sure your course is eligible too.
The loan can cover expenses for a whole range of courses including:
- MA/ MSc/ MBA (although a Postgraduate Student Loan will likely be better for these)
- PGDip/ PGCert
- Management courses
- Technical training
- NVQ/ SVQ.
Note, however, that a PhD course is not eligible for a Career Development Loan as they take longer than two years to complete.
The course you choose to study doesn't have to lead to a qualification - as long as it's equipping you with skills that will benefit your career, it should be eligible.
All courses that are eligible for the loan are listed on the Professional Career and Development Loan Register. The easiest way to find out whether it's on the register is by contacting the course provider itself.
How to apply for a Career Development Loan
You apply for a Career Development Loan through a bank, and currently the only one that offers them is The Co-operative Bank.
When applying, make sure you have access to:
- Your National Insurance number
- Your bank details
- Details of your course such as start dates and duration.
You need to apply for your loan exactly two months before your course is due to start - you won't be able to apply any earlier than this but you need to make sure you leave enough time for the loan to come through before you start.
If the bank accepts your application for a Career Development Loan, there's a two part process to getting hold of the money:
- You'll have to sign a credit agreement
- You must sign a Course Start Notification form and take it to your course provider. Once you officially commence studying, your course provider must sign and return this form to the bank to confirm you have started studying, and then you'll receive the money.
Any money designated as course fees will go straight to your course provider - you won't see it.
Any money designated for living costs or other expenses will be placed directly in your bank account. However, if your course lasts more than a year, you'll receive this money in instalments.
What happens if you're rejected?
You might be rejected for a number of reasons, such as not meeting the eligibility criteria or having a bad credit rating.
You can appeal the decision if you think you're been rejected unfairly, by recontacting the bank, or you could look at an alternative route.
Alternatives to the Career Development Loan
If you're unable to get your hands on a Career Development Loan, these alternatives might be something to consider - although not all of them will be feasible for everybody.
Even if you can get yourself the Career Development Loan, these might be a better option in any case, as you won't be faced with interest charges when you finish studying
- Take out a Postgraduate, Doctoral or Part-time study loan instead
- Look for bursaries or grants to cover the course fees. There are loads of different charities and organisations which do this, so research thoroughly
- Get your employer to sponsor you, if the course will benefit the company
- Study part-time and continue working to help cover costs
- Take some time out to work and save up the money you need.
These options might not be available to everybody, but they're worth looking into as every loan comes with risks and you could end up paying some hefty interest charges depending on how long you take to pay it all back - on which note...
Repaying a Career Development Loan
When you apply for your Career Development Loan you'll also set your repayment terms - which essentially means how much you pay back each month over how long a period of time. You can repay your loan over one to five years, or in a single lump sum.
Spreading your loan out over a longer period of time might mean smaller monthly repayments, but you'll end up paying back more in the long run as you'll accumulate more interest.
With a loan like this one, we'd recommend paying it off as quickly as you can before the interest stacks up.
However, make sure you'll be able to meet your monthly repayments - if they're too high and you're unable to pay them, this will affect your credit rating.
The Co-operative Bank
The Co-operative Bank currently offers an interest rate of 9.9% representative APR - which is the interest rate you're likely to pay over the course of the agreement including any extra costs.
This table gives you a better idea of how much interest you'll be paying, depending on how long you take to pay back the loan.
|Loan amount||Representative APR||Repayment period||Monthly repayment||Total repayment|
You may be able to find a personal loan with a better interest rate elsewhere. In this case, you could take out the loan with the lower interest rate to repay the Career Development Loan, and then pay back the new loan with smaller interest charges.
However, all loans come with risks, so make sure you research thoroughly before doing this, and don't forget to check early repayment conditions.
Don't forget that you'll still have to repay your loan if you drop out of the course, or the course provider goes out of business.
Can you repay early?
You are able to pay your loan off early if you'd like to, but you might still face some charges.
For example, The Co-operative Bank currently stipulates that if you agreed to repay your loan in one year or less, you'll be charged 28 days interest if you decide to repay early.
If you agreed to repay your loan over more than a year, you'll be charged 58 days interest if you repay early.
Have you used a Career Development Loan to climb the career ladder? Let us know in the comments!