Professional Studies Loan
Until the credit crunch, three banks offered them, each with a different name i.e.
- Further Education Loan (Lloyds TSB);
- Professional Trainee Loan (NatWest); and
- Professional Studies Loan (HSBC).
Currently (March 2011), these loans are not available. However, if the economy picks up, these and other banks may resume this type of loan, so it is worth checking.
These high street banks offered Professional Studies Loans (PSLs) to Medical, Dentistry and Veterinary Science undergraduate students to help with the additional costs that their courses incur in their clinical years.
Students are advised to shop around to find the most suitable bank for their financial needs. Please note that interest accrues on the loan as soon as the money is withdrawn.
Some postgraduate students studying a vocational taught course were also eligible to apply for a PSL, although traditionally this tends to apply to courses in Medicine and Law only. Again, students are advised to discuss their financial and study needs with their preferred bank.
Before taking a loan it’s important to shop around as interest rates, fees and eligibility for study loans can vary between banks. The advice below is likely to be helpful if you are seeking any type of loan.
What should I check when comparing different loans?
- The annual percentage interest rate (APR) – this may be fixed or variable (e.g. ‘floats’ 5% above the Bank of England base rate). Remember that a variable rate will currently be lower than the fixed rate but is more risky as interest rates can rise
- Is the loan given in instalment or as one payment? Interest is charged from when you receive the money so you should immediately transfer the loan to a high-interest savings account or an ISA. Only keep the minimum you currently need in your current account
- Is there an arrangement fee? Check if it is paid up front or added to the loan (where you will also be paying interest on it)
- How many years do I have to repay the loan? Make sure that repayments seem affordable (remember you will be paying off student loans as well). The longer the repayment period, the more interest you will end up paying in total
- Is there a redemption (early repayment) fee? You can save a lot of money in interest by repaying the loan early but the bank may hit you with a fee for doing so
- Do I need to hold my main account with the bank offering the loan?
- Are there any other fees or requirements (eg life insurance)?
- How long will it take to arrange the loan? You may be able to apply before you begin your studies if you already have a place but always allow plenty of time
- Can I take a loan from my first year of study? The rules vary between banks.