Kate O’Raghallaigh studies the options for graduates looking to kickstart their finances
Leaving university may mark the end on an era, but it also marks the beginning of something else – the battle to clear debt. The road to debt recovery is rarely easy. There’s the student overdraft, the student loan, and any credit card debt you may have racked up over the course of your partying – sorry, ‘studying’ – years.
But what if you decide that you just haven’t got the student lifestyle out of your system – what if you want to put yourself under financial strain all over again, while training for a profession? Funnily enough, depending on your chosen vocation, there are actually loans that will allow you to do this.
Professional studies loans – as they are usually called – are high street loans that allow you to borrow up to a maximum of £25,000 (although this depends on the bank) in order to fund your way through training for professions such as medicine, dentistry, law (both the solicitor and barrister routes), accountancy, pharmacy and chartered surveying. Some loan providers may add on chiropody, banking and finance and optometry.
You don’t have to repay your loan until you finish your course and you may even be able to defer repayments for a few months after you qualify. Beware of taking this approach though – most providers have a set period in which you have to repay the loan, so you might be better off just starting the repayments as soon as you can.
There are currently seven banks offering these loans, with varying amounts available, according to price comparison site Moneyfacts: Bank of Ireland (in Northern Ireland only), Ulster Bank (Northern Ireland also), Natwest, Royal Bank of Scotland, Lloyds TSB and HSBC. All offer a range of loans, some only to medical and legal trainees, others to a larger number of professions.
Candice Durrett, spokesperson for HSBC, explains their offering: “Our graduate loans are available to undergraduates and postgraduates studying for a qualifying course. You don’t have to make any repayments during the course of study and a payment holiday can be agreed for up to six months following completion of the course.”
Many lenders will offer postgraduate students entering the professional stage of legal training a loan for their first year, while those on other courses may have to wait until their second. Michelle Smethurst, spokesperson for Natwest, explains its offering: “Finance is available from year 1 of studies for graduates pursuing the Graduate Diploma in Law, Legal Practice Course (LPC) or Bar Vocational Course (BVC) and MBA (available for schools ratified by the Association of MBAs). For medical students (chiropractor, doctor, dentist, optometrist, osteopath, pharmacist, physiotherapist, veterinary surgeon), finance is available from year two.”
Professional studies loans will usually require you to have been living in the UK for at least three years and, although most of them require your chosen course of study to be in the UK, some many consider you if your course is elsewhere. “These loans are primarily designed for students studying in the UK,” says HSBC’s Durrett. “However, loans can be considered where students are undertaking an eligible course abroad. In these instances additional issues need to be considered, such as the country in which the applicant will gain employment. Also, if employment is gained overseas, how will the loan be repaid? Is there any exchange rate risk involved?”
If you’re thinking of doing an MBA, some banks may want to see relevant work experience beforehand. Michelle Smethurst, spokesperson for Natwest, says: “For MBA loans, we are aiming at students who have already been in employment and are looking for progression through the MBA. We base the amount of lending on the student’s previous pre-course annual gross salary (two thirds thereof).”
When you apply, you will have to demonstrate proof of acceptance onto a course, as well as your degree certificate. The rest of the procedure is comparable to the application process on other loans – proof of address, income assessment etc.
If you don’t fancy the idea of taking out a high street loan, then you could be eligible for the Government’s Career Development Loan. This loan is currently offered through Barclays, the Co-operative Bank and Royal Bank of Scotland. You can borrow a maximum of £8,000 to cover a variety of training courses at a wide range of institutions. The SLC pays the interest while you’re learning and for one month afterwards. Then you make the repayments at a fixed rate of interest. There is no exhaustive list of eligible courses for the loan, although according to www.direct.gov.uk, those not eligible include foundation courses and careers counselling courses.
Deciding to embark on further study is not something that should be taken lightly – particularly when it comes to the financial implications. These loans could potentially make the path to qualification a little easier from a financial perspective, but before you get in line at the bank, make sure you think about your ability to repay your debts.