A Career Development Loan is a bank loan and offers extra financial help for students. In the same way as any other bank loan it needs to be repaid although during the time of study the government pays the interest on the loan.
Currently Barclays offers a Career Loan at 5.7% APR typical with amount of £300 to £10,000 available with flexible repayment periods of 12 to 30 months. The Co-operative bank is also offering a similar product at 9.9% APR.
A typical example from the Co-operative Bank shows:
£4,400 borrowed for a 12-month course
Repayable by 24 monthly payments of £206.67
Total amount payable £4960.08
For those wondering about the disparity between the interest rates of Barclays and Co-operative, financial journalist Martin Lewis says Barclays rate is “misleading because it works out an average APR for the entire period of the loan including the government interest free period, whereas the others [co-operative} list the rate for the period they’re actually charging interest.” Career Development Loans, in the same way as other loans, are subject to a credit history check.
What Kinds of Study is Eligible for a Career Development Loan?
The UK government website Directgov gives some guidance on what kind of course might be suitable for a Professional and Career Development Loan. It emphasises that the period of study need not lead to a qualification and the course can last up to two years, three if it includes a year of work experience.
Study could be for:
- A postgraduate course
- Technical or management training
- A professional qualification
Students Can Use a Career Development Loan to Assist With:
- Course fees (up to 80% of the total or up to 100% if unemployed for three months)
- Books, travel and childcare
- Some living expenses like rent and food if working less than thirty hours a week
To be eligible for a Professional Career and Development Loan the Applicant Must:
- Be 18 years or over
- Be settled in the UK, or have been resident in the UK for at least three years prior to the start of a course
- Have an intention to work in the UK, EU or EEA (European Economic Area) after completion of period of study.
A Career Development Loan Can’t be Used For:
- A foundation or access course leading to a degree course
- Careers advice or help with job search
- The cost of starting a business
Once the period of study has been completed the Career Development Loan is repaid with interest in the normal way.
This article was compiled using journalistic research and is not offered as financial advice.
Sources:
The co-operative Bank, Professional and Career Development Loan, website accessed 3/5/10
Barclays Bank, Professional and Career Loan, website accessed 3/5/10
Directgov, Professional and Career Development Loans, website accessed 3/5/10
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