Career Development Loan

A specialist loan for vocational training

The career development loan scheme is a government-initiated lending system of convenient loans for vocational training. During the period of the loan, you will only pay off the interest; the plan being that afterwards, once you are qualified and get a job, you can pay off the rest. A good option, but specialised, and smells rather of putting all your eggs in one basket: without a job, you will be in some difficulty.

This is a slightly complicated area, because there are two types of career development loan.

The "official" one is a government sanctioned loan system to encourage people to participate in vocational training. The loan itself is a deferred payment. You can borrow up to £8,000 to fund your vocational training, and during your training the government will pay the interest on the loan. Only afterwards do you start to pay, (and of course, you're only paying the loan amount, not the interest), and you will pay a fixed amount over a pre-arranged term. The exact nature of the loan depends on the length of your training, but it's fundamentally a good deal, and a concession by the government, so take advantage of it if you wish.

There are officially four banks providing the government's career development loan scheme; Barclays, the Clydesdale, the Royal Bank of Scotland, and for the ethically-minded student, the Co-Operative. Note that to apply for this, the course you are on must relate to a career. There is also a downside- repayments no the loan begin one month after the end of the course (without fail!) so you'd better be sure of an income immediately after your course, because the money needs to be paid back fast! In today's economy, that's a big issue.

However, most banks also offer some form of vocational benefits package- and we don't just mean student accounts. Career development loan, vocational training loan and career support loan are all terms to look out for. Deferral schemes are not uncommon because banks are only too aware that student customers tend to become customers for life. So don't just look for the government-supported scheme (although it's a good deal) - there may be other products suited to you.