A fresh start: Professionals are going back to university with a career change in mind

But will it mean baked beans and penury? Samantha Downes investigates.

It is not just teenagers who will be heading to college in the coming few weeks. Redundancy, the recession and the search for a better work/life balance have inspired many professionals to go back to school.

John Salt, director of the recruitment website totaljobs.com, said age was proving no barrier to the 30, 40 and even 50-somethings expected to head back to the classroom this autumn.

He said: "It's important to remember that you can change career whatever age you are and whatever financial circumstances you are in. There are a myriad of courses available for those committed to retraining for a new career path that are designed to fit around busy adult lives."

Of course the reality for those wanting to ditch their current job is that, unless they have a large redundancy cheque or years of savings stashed away, retraining is an expensive business.

A loan is the most obvious way to fund a course. Students studying for an undergraduate degree are entitled to take out a student loan to cover their tuition and living costs; however graduates needing to top up their qualifications may need to consider a Professional and Career Development Loan (PCDL).

These are government-subsidised personal loans which do not charge interest while you are studying. The Skills Funding Agency pays the interest during this time and for one month after your course finishes.

Students can borrow between £300 and £10,000 from a participating bank – the Co-Operative Bank and Barclays offer them – after which you'll pay interest at a rate fixed when you took out the loan.

Interest rates on the loans are set so they're competitive with other unsecured personal loans that are commercially available.

At the moment banks are offering Professional and Career Development Loans at a reduced customer rate of 9.9 per cent per annum, equivalent to a typical APR of between 5 and 6 per cent over the lifetime of the loan. You can use the loan for most postgraduate courses and professional qualifications, but not for a first degree or to do the Graduate Diploma in Law.

There are other grants and bursaries available to help with learning costs. For example, if you train to teach a certain subject in which there is a teacher shortage – such as modern languages or science – you may be entitled to a bursary which does not have to be paid back. Other options include on-the-job training, such as an apprenticeship, or a part-time course which allows you to work while you are studying. The Open University, for example, offers distance learning degrees in subjects ranging from fitness and nutrition through to MBAs.

Managing your mortgage

For many retraining professionals this will be the largest financial commitment they make while retraining. Selling your home to fund retraining is an option, but there are ways you can keep your mortgage costs down. Chris Smith, of Yorkshire Building Society, said offset mortgages were being used by borrowers who had a lump sum, such as a redundancy package, to reduce their mortgage interest payments.

Offset mortgages allow you to sacrifice a higher rate of savings in order to pay less interest on a mortgage. Some lenders, such as Yorkshire Building Society, let you use the savings of friends or family members as well as your own.

Rebecca Hirst of First Direct said offset borrowers also have the facility to redraw up to the value of the original mortgage borrowing, allowing them to fund their retraining and time out of work. Howerver, she said: "This should only be reconsidered if you are prepared to increase the time it takes to pay off your mortgage. If someone takes advantage of the redraw facility, they must review their repayment plan regularly to make sure they are still on track to repay any outstanding capital by the end of the mortgage term."

Those lucky enough to get a redundancy payoff should consider paying down their mortgage. Laith Khalaf, a pensions adviser at Hargreaves Lansdown, said: "Consider making your monthly repayments more manageable rather than reducing the term of the mortgage."

What about my pension?

Those lucky enough to be in a final salary scheme should be able to keep their pension, but will have had to have been in the scheme for at least two years. Mr Khalaf said: "A final salary scheme will be protected unless your ex-employer goes bust, and even then it is to some extent protected by the Pension Protection Fund."

He said most people were in money purchase schemes where employers match contributions. "These pensions are portable, but bear in mind that you may pay the pension company running the scheme more in charges."

He added: "If you have various pensions with different employers, now may be a good time to seek professional pensions advice. It may be that the career you are retraining for, teaching for example, will have some kind of pension scheme in place."

Must I live on baked beans?

Once you are a student you can benefit from discounts such as those run by the National Union of Students (NUS) Extra card. The card is recognised nationally, offering discounts on a range of products and service. Living like a student just means better budgeting.

National Debtline has a personal budget section which might be useful, and a My Money Steps tool (www.mymoneysteps.org) could also be helpful, depending on the circumstances.

Case study

Strict budgeting and part-time work will ease the strain of teacher training

Jane Howard, 38, is going back to college this September to train as a teacher. She was an accountant for 17 years. She lives with her husband and two young children in Hertfordshire.

I knew that I wanted to retrain as soon as we were financially stable enough as a family. I only took short periods of maternity leave, six months each time, and I continued to make pension contributions while on maternity leave.

I was on a high salary but we have lived on a strict budget since my three-year-old was born. I saved up £48,000 to cover childcare, the mortgage, tuition fees, general spending, travel and course materials. Even before I knew I was going to retrain we'd been careful about paying off our mortgage. Rather than have expensive holidays and cars we used most of our spare money to pay down the mortgage, so our monthly repayments are really low.

I got a bursary from the Government, which is £5,000, to reflect my degree result and because I am going into teaching, which is supposed to cover a significant amount of my £9,000 tuition fees.

It looks like my teacher training college are going to top this up and award me a discretionary bursary to reflect my 'exceptional achievements' during my professional career.

I am still going to be working part-time as an accountant while I retrain, and probably beyond since the starting salary for teachers is so low, and also in case I can't get a teaching job straightaway.

We switched childcare from a nanny to a nursery. Retraining means at least I'll be able to put the children to bed and have breakfast and weekends with them. Not having a nanny means we save a lot, and after children are three they get 15 hours free childcare a week.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

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