Career Development Loans : The Advantages and Disadvantages

Some students fwho und their own postgraduate qualification do so by taking out a Professional Career Development Loan from a bank such as Barclays or The Co-operative.  This can be an amazing opportunity for students to pursue the career of their dreams but, as with all things, it has its advantages and disadvantages. Some of these will be more or less applicable to you depending upon your own personal circumstances.

What are the advantages?

The main advantage to a Career Development Loan is that it actually provides you with the finance to pursue a postgraduate qualification that will have a positive impact upon your future career.  Best of all, the loan doesn’t need to be paid back immediately!

For the duration of your postgraduate training – and for a month after you graduate – the interest on your loan will be frozen, so you don’t have to worry too much about money while studying your course.  If you’re stuck for funding  but need an extra qualification to further your career, then borrowing may be your only option.

You will agree in advance with the bank how much you will have to pay back and how long it will take. Upon graduation you will know exactly how much money will be leaving your account, allowing you to budget accordingly.

What are the disadvantages?

One of the main disadvantages to a Professional Career Development Loan is that unlike an undergraduate loan, you are actually in debt to the bank rather than Student Finance. Banks are essentially businesses and they expect to be paid on time – irrespective of your personal circumstances. Even if you fail the course, or you struggle to find a job upon graduation, you will still be expected to pay the loan back at the agreed time.

The bank may show some leniency towards your repayment plan in extreme mitigating circumstances.

Not everyone is eligible for a career development loan, and when considering your application, the bank will run credit checks on you. If you have a poor credit history, then you will not be given the finance. Similarly, if you struggle to pay the loan back, this will have an impact upon your future credit rating.

What should I do?

Before you take out a Professional Career Development Loan, you should carefully examine your personal situation.

In general the Career Development Loan opens up the possibility of postgraduate study to many students who otherwise would not be able to afford it. While there certainly are some disadvantages to taking out the loan, many of these can be combated by simple financial planning strategies.

Many students look for part-time work while studying, and put some of their wages aside to contribute towards paying off their loan upon graduation – just in case they struggle to find work.

Some students in a financially stable situation improve their credit prior to their loan application by opening store cards and paying these off via direct debit at the end of the month. This helps to demonstrate their current financial reliability. However, if you are currently in debt or struggling with money, then this isn’t a good option for you.

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Lucinda  Borrell