Updated on Thursday, September 3, 2020
In truth, there is no such thing as a career development loan. The term typically refers to a personal loan that can be used to pay for educational courses or tools that can help you advance your career.
Read on to learn more about how this kind of loan works, how to get one and other ways to cover expenses that can push your career to a new level.
A career development loan isnâ€™t its own product. Itâ€™s often just a personal loan you use to pay for educational costs, like a coding bootcamp. Personal loans are funds you borrow from a bank, credit union or online lender. Theyâ€™re also unsecured debts, which means you donâ€™t have to put up an asset, like your home or vehicle, as collateral in case you canâ€™t make payments on the loan.
Hereâ€™s how career development loans work: If a lender approves your personal loan application, you can expect to receive your funds in one lump sum that you would then pay down every month. Youâ€™d also be responsible for paying interest and any additional fees incurred during the life of your loan.
Some lenders offer perks, like grace periods, flexible repayment options and unemployment protection. But the specifics ultimately depend on the lender.
However, you might be able to use these loans to cover the cost of the following:
Itâ€™s worth noting that both federal student loans and private student loans may let you cover the cost of certain certificate programs and continuing education sources. But if youâ€™re looking for help covering a very specific training need â€” like paying for an online copywriting course â€” you might be better off turning to a personal loan.
Career development programs cover a vast array of offerings, so costs will vary accordingly. In general, short-term programs like seminars or workshops will be much more affordable than time-intensive ones like bootcamps and trade school programs that often straddle weeks or months.
Hereâ€™s what some popular career development courses now cost:
|Career development program type||2020 Estimated cost|
|Microsoft Office Specialist certification||$100 – $160|
|Coding bootcamp||$4,500 – $48,000|
|Project management certification||$400 – $550|
|Sales training program||$600 – $3,000|
|UX designer course||$4,000 – $17,000|
As you can see from many of the costs above, itâ€™s key to make sure a career development course will actually benefit your career before committing to it.
|3 personal loans to consider|
|APR||Loan amount||Loan terms|
|LightStream||3.49% – 19.99%*||$5,000 – $100,000||24 to 144 months|
|SoFi||5.99% – 18.83%*||$5,000 – $100,000||24 to 84 months|
|Upstart||7.35% – 35.99%*||$1,000 – $50,000||36 or 60 months|
*Rate quoted includes autopay discount
Online lender LightStream says so this might be a worthwhile option if youâ€™re interested in pursuing professional development courses.
This lenderâ€™s low interest rates are attractive and the loans come without fees like origination and prepayment costs â€” but youâ€™ll need great credit to qualify. The lender also offers a Rate Beat program that guarantees a lower rate than any of its competitors. If you are approved for a lower rate elsewhere, it promises to drop that rate by 0.10% points.
Like LightStream, SoFi also offers personal loans that can be used for a wide variety of purposes.
Youâ€™ll find no origination, prepayment or late fees with Sofiâ€™s loan product, and you can expect to receive the funds in your bank account in a matter of days after filling out an online application. The company also offers an unemployment protection program and job placement assistance if you find yourself in between jobs with no means to pay down your debt.
One of the biggest benefits of working with SoFi might well be its complimentary career coaching service. The company also offers free job search assistance, personal branding tips, online workshops, virtual networking events, and customized support from a career coach.
Upstart personal loans generally come with higher APRs than the other options mentioned here for career development use. But the company offers a quick and easy application process that may allow you to receive funds in as little as one business day after signing. It will also consider factors like education and employment history, so it might be a better option if your credit score is less than ideal.
Still, keep in mind potential fees. Upstart doesnâ€™t charge a prepayment penalty if you pay off your loan sooner than expected, but you may find yourself paying up to 8% of your loan amount in origination fees. Also, if you miss a monthly payment by 10 calendar days or more, you can expect a late payment fee that might be up to 5% of what you owe.
Another way to reduce the cost of your continued education is to make use of professional scholarships and grants offered by nonprofits, universities and trade organizations.
For example, if you have strong project management experience â€” but would like to further your skills even more â€” the PMI Educational Foundation offers scholarships that may help you.
To get started, try an internet search by typing in the name of your profession and the term â€śprofessional development scholarships.â€ť In most cases, scholarships and grants require applicants to meet certain criteria in order to be considered. To find out whatâ€™s required, go to each scholarshipâ€™s website.
The following resources may also help you find the career development financial help you need:
Maybe youâ€™ve decided you donâ€™t want to take out a loan for the full amount of your course or certification program. Or perhaps youâ€™re not eligible for a career development loan because of bad credit. If either scenario applies to you, you still have options.
One option, of course, is to save up the money for your course yourself. The amount youâ€™d save in fees and interest payments could then be put to other uses, like buying updated hardware for your new programming career.
Here are a few alternatives to consider as well:
Your employer may be willing to pay for a course or seminar that might boost your career. Take care with this option, though, as some companies have contingencies for this type of deal. For example, you may need to complete your course within a given time frame, receive a satisfactory grade on your coursework, or stay with the company for several years afterward. If you donâ€™t meet these requirements at some employers, you might be on the hook for the entire cost of the course.
If you have good or excellent credit, a credit card with an introductory 0% APR offer can help you pay your way through a career-advancing program without the fees associated with a loan. Just make sure you are able to pay off the entire balance on your card before the introductory period ends, or you may find yourself owing more than you can afford in deferred interest. Also look for cards that have the longest payback period (like a year or more) before the introductory rate ends.
Unlike traditional personal loans, secured personal loans require you to put up assets like a savings account or car as collateral. If youâ€™re having trouble getting a career development loan because of bad credit, you may have better luck with this type of loan.
If you own a home, you may be able to tap into the equity you have in it, which is basically the difference between what your home is worth and the amount owed on your mortgage. Just like a traditional loan, a home equity loan lets you withdraw money in one lump sum and pay it back in monthly installments. Now, however, youâ€™re borrowing against your home rather than from a lender. Take extra care to stay on top of your payments, because if you default, you could lose your home.
Before you borrow money for career purposes â€” whether itâ€™s from a lender or against the value of your home â€” make sure to have a solid repayment plan in place. Know how much you are expected to pay every month and whether you can afford to do so.
With any kind of career development training, itâ€™s easy to assume youâ€™ll be making more money immediately after youâ€™re finished. But thereâ€™s no guarantee youâ€™ll land a new job offer right away. Instead, play it safe and base your repayment plan off your current financial situation. This way, you can rest assured knowing your finances are secure â€” no matter what happens.