Are you a career changer looking for an alternative to the recently-scrapped Professional and Career Development Loans? This guide offers some tangible advice on what your funding options are.
Let’s start by exploring what career development loans are and how the terms of repayment have changed since they were scrapped.
What Is a Career Development Loan?
A career development loan was an interest-free loan of up to £10,000 for people undertaking a professional qualification, postgraduate study, or training course. A Professional Development loan was different from a Personal Loan because, while the person was still studying, they didn’t pay any interest on the loan. The government’s Education and Skills Funding Agency paid the interest on the loan during this time.
Borrowers were expected to start repaying the loan (plus a reduced-rate interest fee) a month after leaving their course. These loans had to be repaid regardless of whether the borrower completed the course or not.
Professional and Career Development loans were particularly valuable funding options for career changers looking to retrain for a new industry.
Unfortunately, the government-run scheme was scrapped in 2019 and this type of professional development loan is no longer available. Many people who had already taken out a career development loan before this date were worried about what would happen. However, these loans were not affected. The gov.uk website has up-to-date information and contact details for those who are still replaying their career development loan.
The idea behind career development loans was to empower people in the UK to progress their careers, make a career switch, or get back into the workforce.
Alternatives to the Career Development Loan
The end of career development loans doesn’t mean the end of your dreams of changing careers. While the UK government no longer offers these loans, there are other options to consider.
So, what’s the alternative for career changers looking for career development funding in 2022? Let’s take a look.
1. Look Into Other Types of Student Loans and Funding
The UK boasts a number of funding options for students of any age and background. For instance, you may qualify for a part-time Student Loan, a Postgraduate Loan, or a Doctoral loan. Alternatively, there is a wide array of student bursaries available as well as financial support from charities and non-profit organisations. In short, it’s key to explore all your funding options before taking out a personal loan. You never know what you could be eligible for.
2. Find an Employer That Will Cover Training Costs
Over half of UK companies are experiencing skills shortages. As a result, more employers than ever are having to plug these gaps with training. If you are already an employee, try talking to your employer about the possibility of receiving sponsorship or financial support for the cost of the training course. After all, if you can prove that the training will benefit the company, it could be a win-win for you both.
3. Study Part-Time While You Work
Not everyone is in the financial position to study for their new career full-time. Fortunately, there is a broad range of part-time study options that allow you to work as you retrain. For example, you could consider going to university part-time or taking a night course. In addition, the Open University offers numerous flexible study options to fit your work schedule and other commitments.
Taking out loans to fund your career change can be daunting. The best advice we can give is to do your research thoroughly and speak to a professional career consultant.
It’s also a good idea to look for retraining courses for in-demand industries. That way, you increase your chances of landing a new career path after you complete your studies.
If possible, we recommend speaking to a financial expert who can break down the costs and interest rates associated with each type of loan.
Repaying a Career Development Loan
Do you already have a Professional and Career Development loan? If the answer is yes, you have most likely already established your repayment terms and conditions. This refers to how much you pay back and over how long. For instance, you can choose to repay the loan as a lump sum, over a year, or over five years.
Like most loans, paying back the loan over a longer period of time will rack up more interest. As such, you will end up paying more. On the other hand, paying the total back in a short space of time could leave you short at the end of the month. Missing payments will impact your credit score, so make sure you can comfortably handle the monthly payments. We suggest paying back your Career Development Loan as quickly as possible to avoid interest fees.
While it’s possible to repay your Professional Development Loan early, bear in mind that you may incur some fees. The exact amount you will have to pay depends on the time period in which you originally agreed to repay the loan. As a general rule, it ranges from 28 to 58 days of interest.
The government may have scrapped career development loans, but that doesn’t mean you have to scrap your dream of going back to school. While it may require a bit more research, there are other funding options available for career changers looking to retrain in a new field. With skills shortages at an all-time high in the UK, now is a great time to expand your skill set. What’s more, your employer may even offer sponsorship if you can prove how the training will benefit the business.
At Refreshing a Career, we believe everyone should have access to the necessary tools to change careers. That’s why our website is packed with valuable resources to empower and support career changers. You’ll find everything from career change guides to CV writing tips, all designed with you in mind.
For further advice, check out our resources on changing careers or browse our live job board for career change opportunities near you.