Financing your ATPL
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Financing your ATPL
I came across this article in a Sunday newspaper that I thought may be of interest/help to some of you wannabes. Although it's capped at £8k, every little helps!
Eighties soft rock and herbaceous borders mightn’t seem a classic combination, but former boys’ teen fantasy, Kim Wilde, ditched the ‘kids in America’ for ‘digs in polyester’ as a TV gardener. Switching careers is possible, but financing the change is tough.
This week’s deal is Career Development loans (CDLs), where the Government pays the interest while you study. By manipulating them cleverly you can make money or save nearly £1,800.
Who’s applicable?
Applicants must be over 18 and intend to work within the EU. The course can be virtually anything that’s vocational - teaching career enhancing skills or a new trade or profession. Examples include NVQ’s, Open University degrees or postgraduate courses.
It can be a full, part time or distance course lasting up to 2 years. The only exclusions are those eligible for other funding like an employer training award or a normal student loan. You may borrow between £300 and £8,000 over one to five years to cover up to 80% of course fees, expenses including childcare, and living costs for full time students.
The key to CDLs is during your studies and for the first month afterwards, the State pays all the interest and no repayments are needed. Quit the course and you still have a 1 month break.
What’s the sneaky trick then?
There are ways to manipulate this system to profit. Repay the loan in full before the repayment should start, meaning within one month of the course finishing, and the account is closed with no interest to pay.
So someone who doesn’t need to borrow the money, may take the maximum loan and invest it in a high interest cash ISA or savings account and repay as the course ends without charge. On an £8,000 loan over two years this makes £600 profit from the interest, a valuable addition to educational finances.
It’s three banks, not the Government, who operate the scheme, so even if you’re eligible there’s no guarantee as they may reject those with a very poor credit history. You may only apply to one bank at once, but if you’re turned down you can go to another, although it takes a few weeks.
Comparing CDLs’ interest rates is difficult, because each incorporates the government free period differently. So ignore the interest rate. The best method is tell them how long the course is, the repayment length and compare the total cost.
What can I save?
Using these loans cannily will really cut your costs. A NatWest standard unsecured personal loan insurance at 12.9% over five years for £8,000 costs is £2,900 in interest over the term, and repayments need to be made while you study.
Taking the same five year term, if the course lasted two years, there’s nothing to pay during that time. The repayments are made during the following three years.
The Royal Bank of Scotland’s CDL is substantially more expensive than the others. Co-Op has historically been most expensive but from tomorrow it cuts it’s rate and the total interest will be £1,680, over 25% cheaper than RBS. Barclays is just the winner though costing £1,610.
There is a cunning way to make it cut this cost further though. Take a CDL and then just as the course ends get the cheapest unsecured personal loan for the £8,000 and pay off the CDL with this so there’s no charge – this works as the standard loan costs less over this period.
Abbey National’s online loans are cheapest at a typical 7.1% APR, for non internet users Northern Rock is 7.6%. Using this method the repayments are even cheaper and the total interest cost is just £1,115 that’s a third cheaper than Barclays CDL and nearly £1,800 cheaper than a standard NatWest loan.
Eighties soft rock and herbaceous borders mightn’t seem a classic combination, but former boys’ teen fantasy, Kim Wilde, ditched the ‘kids in America’ for ‘digs in polyester’ as a TV gardener. Switching careers is possible, but financing the change is tough.
This week’s deal is Career Development loans (CDLs), where the Government pays the interest while you study. By manipulating them cleverly you can make money or save nearly £1,800.
Who’s applicable?
Applicants must be over 18 and intend to work within the EU. The course can be virtually anything that’s vocational - teaching career enhancing skills or a new trade or profession. Examples include NVQ’s, Open University degrees or postgraduate courses.
It can be a full, part time or distance course lasting up to 2 years. The only exclusions are those eligible for other funding like an employer training award or a normal student loan. You may borrow between £300 and £8,000 over one to five years to cover up to 80% of course fees, expenses including childcare, and living costs for full time students.
The key to CDLs is during your studies and for the first month afterwards, the State pays all the interest and no repayments are needed. Quit the course and you still have a 1 month break.
What’s the sneaky trick then?
There are ways to manipulate this system to profit. Repay the loan in full before the repayment should start, meaning within one month of the course finishing, and the account is closed with no interest to pay.
So someone who doesn’t need to borrow the money, may take the maximum loan and invest it in a high interest cash ISA or savings account and repay as the course ends without charge. On an £8,000 loan over two years this makes £600 profit from the interest, a valuable addition to educational finances.
It’s three banks, not the Government, who operate the scheme, so even if you’re eligible there’s no guarantee as they may reject those with a very poor credit history. You may only apply to one bank at once, but if you’re turned down you can go to another, although it takes a few weeks.
Comparing CDLs’ interest rates is difficult, because each incorporates the government free period differently. So ignore the interest rate. The best method is tell them how long the course is, the repayment length and compare the total cost.
What can I save?
Using these loans cannily will really cut your costs. A NatWest standard unsecured personal loan insurance at 12.9% over five years for £8,000 costs is £2,900 in interest over the term, and repayments need to be made while you study.
Taking the same five year term, if the course lasted two years, there’s nothing to pay during that time. The repayments are made during the following three years.
The Royal Bank of Scotland’s CDL is substantially more expensive than the others. Co-Op has historically been most expensive but from tomorrow it cuts it’s rate and the total interest will be £1,680, over 25% cheaper than RBS. Barclays is just the winner though costing £1,610.
There is a cunning way to make it cut this cost further though. Take a CDL and then just as the course ends get the cheapest unsecured personal loan for the £8,000 and pay off the CDL with this so there’s no charge – this works as the standard loan costs less over this period.
Abbey National’s online loans are cheapest at a typical 7.1% APR, for non internet users Northern Rock is 7.6%. Using this method the repayments are even cheaper and the total interest cost is just £1,115 that’s a third cheaper than Barclays CDL and nearly £1,800 cheaper than a standard NatWest loan.
