Many students who want to pursue postgraduate studies face a major obstacle: funding. These days, research council funding no longer extends to taught master’s degrees, leaving many students to fund their studies with a combination of scholarships, sponsorships, and/or bank loans. Specifically, career development loans (CDLs) offered by the Cooperative Bank and Barclays have become increasingly popular for postgraduate students.
Since CDLs began in 1988 with government support, over 304,000 individuals have taken advantage of the scheme. Banks have consequently provided loans worth more than £1.34bn over 25 years, with the Cooperative Bank noting it has seen steady growth in CDL applications, with nearly 5,000 students taking out the loans in 2013.
CDLs are available for full or part-time studies in professional and vocational fields. The government pays the interest on the loans for the duration of the courses, and students only need to begin repayment after completing their studies. This has become increasingly important as the number of postgraduate students has fallen due to a rise in tuition fees, especially for part-time students, who have declined by over 27% in recent years.
Although CDLs are designed to help fund postgraduate study, they have come under fire for their high interest rates, non-income-contingent payback terms and a requirement for a good credit history, potentially limiting their applicability and access to students from disadvantaged backgrounds. Additionally, banks may reject applications or offer limited sums depending on credit ratings and years of residency.
Despite these criticisms, applicants can apply for loans ranging from £300 to £10,000 at an interest rate of 9.9%. Recipients have a repayment period lasting between one and five years, with the average being five years, and they can settle early or defer repayments if they have yet to find a job after the end of their course.
Straying from the agreed-upon plan can result in enduring harm to your credit record and have an impact on your future capacity to obtain credit. As with any bank loan, some level of financial risk is involved.
In the event that recipients fail to meet payments, both The Co-operative and Barclays transfer the loan to a debt collection agency. The Co-op has stated that they are unable to disclose how frequently they transfer loans to a third-party debt agency as such data is commercially sensitive.
The Co-op has said: "If a customer experiences financial difficulties and is unable to repay their loan, we would encourage them to contact us as soon as possible. We always strive to support customers facing financial difficulties and would only turn to a collection firm as a last resort."
BIS says: "CDLs are commercial bank loans, and the banks aim to recover costs if someone misses repayments and defaults."
The CDL may not be an ideal solution for funding postgraduate studies, but it remains one of the few options available.
If applicants believe that the course will enhance their vocational skills and career prospects, then CDLs may provide a good option. However, it is less suitable for individuals wishing to pursue a career in academia or any other profession without a secure salary.
For advice and an application package, please call the information line on 0800 585 505 or visit direct.gov.uk/pcdl for additional details. The information line is open seven days a week, from 8 am to 10 pm.