Figuring out how to grow your career is sometimes as simple as taking a few career-specific courses, getting a relevant certification or earning a degree. While there are a few free resources you may be able to use to further your career, most professional development opportunities cost money to gain the skills or certifications you desire.
- When Does it Make Sense to Use a Personal Loan for Career Development?
- Other Financing Strategies You Should Consider
When Does it Make Sense to Use a Personal Loan for Career Development?
Personal loans are an option you may want to consider to help pay for the costs of career development. Personal loans are an unsecured form of debt, which means the bank can't repossess your car or foreclose on your home if you default on the loan. Personal loans are generally repaid over a one- to seven-year period, and interest rates range from 5% to 36%, depending on your credit.
Due to the interest rates and repayment terms of personal loans, you'll want to make sure you have a plan in place to make the payments on your loan. If you want to play it safe, plan to repay the loan using your current income without factoring in the benefits that your new skills, degree or certification may bring—just in case things don't go as planned. This will be easier if you're only borrowing a small amount, but larger loans can come with hefty monthly payments.
You may also want to consider educational loans to pay for your career development needs. Like personal loans, these types of debt are usually unsecured but they can only be used to finance specific educational needs. Check with your professional development provider, such as your software coding bootcamp, to see if they offer any of these types of financing.
While a new degree, certification or course could increase your income potential, you may not reap the benefits right away. Some employers won't recognize your additional education when it comes time for raises or bonuses, and others may not even have a program to reimburse you for your expenses. That said, the additional professional development you've taken on could affect your starting salary when you search for your next job, giving you the income boost you were looking for.
Ideally, you'd only take on debt for professional development if it will help you increase your income, move into a new field or help you land a job. Taking courses or obtaining certifications and degrees may not help you if the professional development has nothing to do with your field of work. If you're simply taking professional development courses to satisfy a personal desire and it won't help you financially or in your career, you should wait until you can afford to pay cash before moving forward.
Other Financing Strategies to Consider
While a personal loan could be the best choice to pay for your professional development needs, you should always consider all of your options before making a decision. Here are a few other ways to pay for your professional development costs that could help you save money.
Saving in advance: Saving cash for your professional development costs will lower your overall cost by reducing the amount of interest you would have otherwise paid if you took out a loan. Try setting aside money each paycheck for your career development needs, and eventually you could have enough to pay for the degree, certification or course in cash. Even if you save up cash for only part of the course, you'll still save versus taking out a loan for the full amount.
Reimbursement from your employer: Your employer may offer to reimburse you for your professional development costs as long as you and the course, degree or certification meet your employer's requirements. You may need to complete the program within a certain time frame or get a certain grade to be reimbursed for your expenses. Using a personal loan to cover the costs until you qualify for reimbursement could be a smart move. But it could also be a disaster if you end up not meeting the minimum requirements for reimbursement and have to repay the loan out of your pocket instead.
Scholarships and grants: Scholarships and grants are essentially free money to help you pay for your professional development needs. You'll have to search for these opportunities, as they can often be hard to find. You may want to check with the course, degree or certification provider to see if they're aware of any scholarships or grants you can apply for. Search online for scholarships or grants that may not be directly associated with your chosen professional development option.
Other types of debt: Personal loans aren't the only type of debt you can use to pay for career development. You may qualify for traditional student loans if you're obtaining a traditional undergraduate or graduate degree at a college or university. Credit cards that offer a 0% introductory annual percentage rate (APR) on purchases, which are sometimes as long as 18 months, are another financing option for professional development costs. You should aim to pay off the credit card in full before the introductory period expires, or you'll have to pay the full APR on the course cost.