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A loan for learning

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A career development loan is one way of funding learning that helps to improve your career prospects

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A PROFESSIONAL and career development loan is a bank loan. The way it works is that you make an agreement with a participating bank to borrow an amount between £300 and £10,000. Then, once you've stopped studying, you pay it back in the normal way.

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The difference is that the Learning and Skills Council (LSC) pays the interest on the loan while you're studying, and for one month afterwards.

After this, you pay interest at the rate that was fixed when you took out the loan. Interest rates on the loans are set so that they are competitive with other commercially available ‘unsecured’ personal loans.

Currently, banks offer these loans at a reduced customer rate of 9.9 per cent per annum, equivalent to a typical APR of 5 to 6 per cent over the lifetime of the loan. However, interest rates may vary from bank to bank. For further information, consult the participating banks.

These loans don't suit everyone, and there are other types of financial help available. Further information is available from www.direct.gov.uk

How you can use a professional and career development loan

A professional and career development loan can help to fund a wide range of courses lasting up to two years (or three years, if the course includes a year of work experience).

The course does not necessarily have to lead to a qualification, but it must be one that will help with your career. Detailed information can be found in the application pack, but in general such loans could be an option for:

■A postgraduate course, like a Masters;

■Technical or management training;

■A professional qualification;

■A course at your local college or learning provider; or

■An additional bachelors degree (if you're already a graduate).

Costs the loan might help with

You can use a professional and career development loan to help with:

■Course fees (up to 80 per cent of the total, or up to 100 per cent if you have been unemployed for three months);

■Other course costs, such as books, travel and childcare; and

■Living expenses, such as rent, food and clothing (if you are unemployed or working less than 30 hours per week).

What the loan can't be used for

These loans are intended to help with costs that are not covered by other sources of public funding. For example, you could not get one if you are planning to study full-time for a first degree (because a separate package of student loans is available).

However, if your costs are only partly covered, you may be able to ‘top up’ the funding this way. For example, if you are getting a grant for your course fees, you could apply for a loan to help with your living costs.

There are other conditions. For example, you can't use a professional and career development loan to help pay for:

■A foundation or access course used as a step towards a degree course (however, a stand alone foundation course that leads to employment in its own right would be eligible);

■Careers advice or help with job hunting; or

■The costs of running or starting up a business.

You are advised to check the details in the application pack, and get advice if you are not sure whether your course qualifies. Advice on making an application is available at www.direct.gov.uk or by telephoning 0800 585505.

To be eligible, you need to be:

■Aged 18, or over;

■‘Settled’ in the UK, and have been ordinarily resident in the UK for at least three years before the start of your learning programme; and

■Intending to work in the UK, the EU or the EEA when the course finishes.

Even if you meet these conditions, the decision on whether your application is successful remains with the bank. The bank's decision will depend on your meeting specific lending criteria. You will need to agree the size of the loan with the bank before you apply. It is essential to be realistic, and not to borrow more than you can afford to repay.

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