The simple guide to Career Development Loans

Everything you ever wanted to know but were afraid to ask abut funding your postgraduate degree

(flickr (ptmoney.com))

It will suffice for me to say that much of the readily available information covering Career Development Loans (also known as Professional and Career Development Loans) is not always as lucid as it could be.

The CDL is the loan you’ll need if you’re thinking of applying for a post-graduate course, so it’s worth getting your head around - and quickly, as you should apply presently.

Where do I get it from?

There are only two banks offering the CDL, the Co-Operative bank and Barclays. Be wary of others dressing up their ordinary loans as a supposedly student tailored outfit; however they weave and spin figures, they don’t operate in the same way and should be avoided. Whereas all traditional loans insist a borrower accrues interest from the moment the bank hands over the cash, with a CDL you won’t be charged interest until your course ends.

This is because a CDL from either establishment is backed by the government, who cover your interest while you’re studying. Consequently, the offerings from Barclays and the Co-Op are largely very similar, meaning your choice may be most easily decided by who you currently bank with – if you’re already cosy with one, it may be simpler to apply with who you know.

How do I get all the details?

Make your initial enquiries through the National Careers Service who, though occasionally foggy on the details if you call, will send you a comprehensive application pack with all the terms and conditions from both banks; the application form itself comes with no strings so should you be undecided about post grad study, it’ll at least give you a firm idea of what financial straits you’re headed toward. There’s no pressure to apply.

This pack will prove invaluable as the online offerings are – as perhaps I made clear – paltry and unhelpful. Use the phone instead; Barclays advertise their customer services number online, and while they’re based a few continents over (should this bother you), every operator I’ve dealt with has been extremely knowledgeable, helpful and most importantly, contactable between 9am – 7pm.

Co-Op’s page offers a number which rings through to startled National Career Service employees who aren’t expecting an interrogation on the particulars of the Co-Op terms and conditions. The number you actually need is 0845 602 3862 – and choose option 2. They are an extremely helpful bunch but bear in mind that they are disagreeably only available between 9am – 4pm and it’s best to call early to avoid hold-music induced insanity.

Any restrictions on applying?

To apply for a CDL, you’ll need to be over 18, be ordinarily resident in the UK for at least three years and have unlimited right to remain in the UK. The ‘resident for three years’ may be the only hiccup for some as anyone who’s been living abroad for over six months prior to applying for the loan may find the bank rejecting them out of hand.

Though the banks say they’ll ‘automatically reject’ anyone who’s spent too long away from UK shores, they also say it’s worth applying anyway. Avoid trouble by making clear you had no intention to permanently domicile abroad. The easiest way to do this is to put your most recent address as your most recent permanent address, rather than the various beach shacks you slept in while travelling.

Alternatively, if you have spent some time away – say, teaching abroad – to secure a loan, write a covering letter. This should explain your situation and your intent. Supporting evidence from a university is helpful here, though not strictly necessary. The application form itself is a series of tick boxes spiced with the occasional one word answer so any extra info should be put separately, rather than squeezed into the margins.

How much can I get?

The money available is between £300 and £10,000, and the process of applying takes around six weeks, though it’s emphatically recommended you leave at least three months for everything to clear. Hence, apply at least three months before your course begins. You can also apply anytime during your course, up to three months before its conclusion. This is helpful if after a few weeks you find money tighter than expected.

Despite what the websites say, you can apply for any amount necessary and it doesn’t have to be in particular increments; the Co-Op specify £50 increases but in actuality, aren’t strict on it. A CDL can be used to cover living costs as well as tuition fees; if you’ve not been working three months prior to application, you’ll be eligible for 100 per cent of your tuition (if you have worked, only 80 per cent). This sum will be paid directly to your institution, meaning you won’t have the hassle of dealing with it.

The money for living costs will be paid into your bank account in one lump sum at the beginning of the course – though if you work for more than thirty hours each week, Barclays won’t provide any loan for living costs.

What’s the interest like? Any hidden fees?

The interest on a loan from either bank is 9.9 per cent. Barclays make the most of a 5.7 per cent APR rate online, which represents the overall interest a borrower will pay during the full lifetime of the loan. The interest will begin accruing one month after the conclusion of your course and repayment one month after that: if your course finishes at the end of September, the government covers your interest until the end of October (whereon you being accruing the interest) and you won’t begin repaying until the end of November.

Gladly, these loans come without arrangement fees. They also both come without early settlement charges (should you want to repay your loan in full as soon as possible), despite how the Co-Op website can be read. If you reach the end of your course and want to settle immediately, you’ll only pay back exactly the amount borrowed. If you begin repayments and then want to settle up early, there is no fee but the process will in effect officially take 28 days to clear, so you’ll have to pay an additional months interest. That means if you tell your bank you want to clear the loan on the 30 of January, you’re liable for February’s interest too.

Talk me through the repayments

Repaying a CDR isn’t like repaying your undergraduate student loan. You’ll have between one and five years to make repayments. Banks are flexible on this and it can be decided with them as you wish. The longer you take to repay, the lower the monthly repayments but the greater amount you repay overall, and vice versa.

Should you be on a three-year plan and wish to repay sooner, you can without additional charges. As mentioned, repayments with either bank will start two months after graduating your course, during which time you’re expected to use your qualification to land a job which can afford the hefty repayments (typically around £200, if you borrow near the top end and pay back over the longest time).

If the job market is pitiless as ever, making repayments tough or impossible, you’ll need to head into the local branch for a chat. This isn’t like the undergraduate loan, which waits until you’re earning enough to pay your debts comfortably – the CDL is a student loan all grown up and curiously enough, banks are pretty keen to get their money back. If an immediate repayment is unmanageable, you can talk over an adjusted repayment plan but do not defer your repayment at the last minute. Once you begin repayments, it will be difficult to pause them or put them off; don’t risk it. No matter your situation, if you’ve started paying a bank will almost always expect you to continue so arrange things well in advance.

Though there are no deferment fees and the interest should stay as agreed, going off-plan can detrimentally affect your credit history. This matters because it’ll show up on checks a future lender makes into your past, when they’re deciding whether to trust you with their money (whether it be a credit card company or a bank arranging your mortage…) Bear this in mind as you apply for it; despite being one of the only accessible supports for post graduate studies, CDLs do not always have happy endings. It’s enough to make one think the system is clearly inadequate… well, quite.

David Ellis is editor of student finance website studentmoneysaver.co.uk