Careers

Is a Career Development Loan Worth Getting?

A career development loan is specially designed for anyone that wants to study a course that will improve their career. This means that when you apply for the loan, you will need to provide details of the course so that it can be considered to see whether it is felt to be the right sort of course to fund. Examples of courses that would be funded are MSc courses or professional qualifications. The loan covers the cost of the course and a little extra for rent but it would not normally be enough to cover all living expenses for the time that you are studying. During the time that you are studying, you will not have to pay any interest or repayments, but once the course ends the interest will start accumulating and you will be expected to make monthly repayments. The repayment terms will be made clear to you when you sign up.
It is worth noting that this is not the same as a student loan. This does not cover an undergraduate degree and you have to start paying it back regardless of whether you find a job or not, at the end of the course. The interest rate can also be very high, this is not protected in the same way as a student loan and you will always be expected to pay it all back. It also counts as a loan repayment, rather than being taken out of your tax code in the way that a student loan is. This means that it can affect your credit rating, so if you want to borrow more money when you finish the course, you may struggle.

If you have the money to pay for the course then it is probably far more sensible to just do this rather than getting a loan. An exception to this would be if you get it interest free for the time you are studying and can then pay it all back before the interest period starts and not pay an early redemption fee for doing so. You would need to make sure that you checked the terms and conditions of the loan carefully and that you were extremely confident that you would have the money available to pay it back before you started being charged interest. A wise move would be to put the sum of money needed to repay it in a separate savings account so that you could more easily remember not to spend it.

Another thing to think about is whether you will get good value for money form the loan. Think about the course that you will be doing and whether you think that it will give you the knowledge that you need to improve your career. Consider whether there are the opportunities available for you to be able to use that training in getting a better paid job. You may feel that this would just naturally follow on, but that could depend. You may have to travel to find a job like this or you may need even more qualifications to be able to get a job. These options may be completely suited to you but they may not be. If you have local ties and do not want to move, then make sure that there will be local jobs available for you to do. It is also wise to check that the qualification will lead to a job. For example, when you get an MSc you may find that you actually will need a PhD in order to get a job.

It is worth thinking about how you will manage to make the repayments once you have completed the course. Find out how much they will be and how long you will need to be paying them for. Consider what other expenses you have, how much you will be able to earn after you qualify and whether this is something that you will be able to afford. Consider what might change in the future too. You may want to buy a home or start a family and having loan repayments to make could mean that these will more difficult to achieve. If you cannot find a job, you could struggle too, so make sure that you bear this in mind.

Leave a Reply