If you’re looking to develop your skills or make a career change, you may be considering a Career Development Loan or a Professional Development Loan. These types of loan is specifically designed to help individuals in the UK fund their training or education, so they can take their careers to the next level.
In this blog we take a look at what a career development loan is, what the benefits are and also the possible drawbacks. This infomation is compiled from 2022/2023 and is not financial advice, we encorage you to do plenty of your own research ahead of taking on any loan. Hopefully this blog is helpful in getting started!
What is a Career Development Loan / Professional Development Loan?
A Career Development Loan is a type of personal loan that can be used to fund training or education that will help you advance your career. The loan is provided by a few select banks and is supported by the UK government’s Skills Funding Agency.
This type of loan can be used to pay for a wide range of courses, including vocational training, apprenticeships, degree courses, and professional qualifications. You can use it to cover tuition fees, living expenses, course materials, and even travel expenses.
How does a Career Development Loan work?
The first step in getting a Career Development Loan is to find a course that meets the eligibility requirements. You need to check the course is provided by an approved provider, and it must help you progress in your career. You’ll also need to ensure that you meet the lender’s eligibility criteria, which may include age, residency, credit history, and employment status.
Once you’ve done your research and found an eligible course and lender, you’ll need to apply for the loan itself. You will need to provide evidence of your course fees, expenses, and any other costs associated with your training. You will also need to provide proof of your income and employment status.
If your loan application is approved, you can receive the funds directly from the lender. You’ll then be responsible for repaying the loan over a fixed period of time, typically between one and five years.
What are the benefits of a Career Development Loan?
There are some fantastic benefits to taking out a Career Development Loan but of course, it’s always important to do your research. It can help you fund your training or education without having to use your savings or credit cards. This can make it easier to manage your finances and avoid debt.
A Career Development Loan can help you to advance your development at work or in your chosen field through gaining new skills and qualifications. This can often lead to better job opportunities, higher salaries, and more job satisfaction! Hurray!
It can also improve your credit rating, as long as you make your repayments on time. This can make it easier for you to access other forms of credit in the future, such as mortgages or personal loans.
Let’s look at the Pros and Cons
- Much needed funding for your career advancement: A Career Development Loan can provide you with the financial support you need to pursue further education or training to help advance your career.
- Flexible repayment options are available: Depending on the lender you choose, you may have the option to choose a repayment plan that works for you, such as lower monthly payments over a longer period of time.
- You should see improved job prospects: By investing in your skills and education, you may become more qualified for better job opportunities and higher salaries in the long run.
- There are no upfront fees: You don’t need to pay any upfront fees to take out a Career Development Loan, and you may also be able to defer your loan repayments until after you finish your course.
- You can benefit from lower interest rates: Compared to other types of personal loans, Career Development Loans typically have lower interest rates.
- There are limited loan amounts: Career Development Loans are not available in large amounts, so you may need to find additional funding sources to cover the full cost of your education or training depending on what you are looking for.
- There can be limited eligibility: You may not be eligible for a Career Development Loan if you have poor credit history or if you do not meet other requirements – be sure to double check before you apply.
- You could find there are limited course options: Not all courses are eligible for Career Development Loans, so you may need to choose a course that is approved by the lender.
- Never forget the loan repayment responsibilities: As with any loan, you are responsible for repaying the full amount, plus interest, within the specified repayment period.
- Limited lender options: Only a few select banks offer Career Development Loans, which may limit your options when it comes to finding a lender that fits your needs.
Who provides a Career Development Loan and how is it paid back?
Repayment terms for Career Development Loans varied depending on the bank who is providing the loan. Generally, repayments start one month after completing the course or after the final examination for part-time students. It is worth discussing wih your bank what the term s are for the Career Development Loan you are taking out. Monthly repayments are mandatory until the loan was fully repaid. Career Development Loans are likely alos subject to interest. Interest rates for Career Development Loans could vary, but they are typically lower than those of standard personal loans. Moreover, the government may cover the interest during the training period and for an additional month. The participating banks, Barclays and the Co-operative Bank, determined the specific terms and conditions.
Where to find out more about Career Development Loans
Gov.uk – The government’s official website has a comprehensive guide to Career Development Loans, including eligibility criteria, how to apply, and repayment terms.
National Careers Service – The National Careers Service provides free advice and guidance on career development, including information on funding and training opportunities.
The Money Advice Service – This independent service provides free and impartial advice on a wide range of financial topics, including Career Development Loans.
The Association of Learning Providers – The AELP is a membership organisation for training providers, and they provide information and advice on funding options for learners, including Career Development Loans.
High Street Banks – The Career Development Loan scheme is supported by several high street banks in the UK, including Barclays, Co-operative Bank, and Lloyds Bank. You can find more information on their websites, or by speaking to a rep at your local branch.
If you are looking for more infomation to further your professional development and career, reach out to the Women in Agencies community who can put you in contact with members within our network who can assist with the next steps in your development!