How to Compare Coding Bootcamp Loan Providers
Those attending coding bootcamps have a variety of payment options at their disposal. One of these options is taking out a loan. Many coding bootcamp loans are specifically designed for bootcamp students. Depending on your financial needs and personal credit score, bootcamp loan providers offer different rates and terms.
It is important to have a clear understanding of each loan provider's offerings to find the best fit for you. Keep in mind: not all loans are created equal. Make sure you read and understand all the loan terms and conditions before you commit to one.
This guide will help you explore bootcamp loan providers, think through the pros and cons of bootcamp loans, and figure out what questions you should ask before you make your loan decision.
Why Use a Coding Bootcamp Loan Provider?
Bootcamps can be great for those wanting to learn a new tech skill or get to the next level in their professional career, but they often come with a steep price tag. BestColleges collected data from about 130 bootcamp providers in 2020 and found the median bootcamp tuition cost was $13,500.
To cover these costs, bootcamp students can often choose from multiple payment options, including coding bootcamp loans. However, students cannot typically use federal student aid or traditional student loans to cover bootcamp costs. Instead, bootcamp students can apply for personal loans to pay for their bootcamp education, or they can apply for a loan specifically tailored for bootcamp students; these types of loans may have better interest rates than a typical private loan.
Bootcamp loan providers partner with coding bootcamps to streamline the loan application process for students. In addition to potentially lower interest rates, many loans designed for bootcamp students also offer more flexible repayment schedules than other private loan options.
Pros and Cons of Bootcamp Lenders
Getting a loan from a bootcamp lender comes with both pros and cons. On the plus side, many bootcamp lenders partner with bootcamps directly, making it easier to communicate with a lender. Bootcamp loan applications may also take very little time to complete.
Additionally, many bootcamp loan lenders provide deferred repayment options. With these, students may only pay the interest on their loan or nothing at all while they are enrolled in their bootcamp and possibly for a short period after they finish their bootcamp, such as a period of three months.
However, be aware that bootcamp loans may come with shorter payback periods than other loans. And while bootcamp loans may have lower interest rates than some other private loans, they still tend to have higher interest rates than traditional student loans.
Coding bootcamp loans also come with limitations. For instance, most cannot be used to cover costs outside of bootcamp tuition, such as living expenses.
Furthermore, since bootcamp lenders usually partner with specific coding bootcamps (often based on performance and success rates), you may not be able to get a loan from a specific bootcamp lender for your coding bootcamp. Make sure your desired lender has a relationship with the bootcamp you're interested in.
How to Evaluate Bootcamp Lenders
When selecting a bootcamp loan provider, consider a few key factors. First, assess your ability to repay the loan. This includes evaluating your salary potential post-bootcamp to determine if you will be in a good position to make timely loan payments.
Investigate whether the lender has a preexisting relationship with your bootcamp, which may make the process of applying for a loan easier. Also determine if the application process seems straightforward and clear. You want to be sure that the lender you work with communicates reliably and transparently.
With that in mind, if you want to understand a loan, you need to know the lingo. Lending terms you should know include:
- Co-Signer: In the event you cannot apply for a loan on your own, a co-signer is someone who has equal responsibility in repaying the loan. If you have bad credit, a co-signer can help you qualify for a loan.
- Debt-to-Income Ratio: This is the amount of debt you have in comparison to your current income. Lenders look at this ratio when determining whether to offer you a loan and what rate to offer.
- Principal: The amount of the original loan.
- Interest: The amount that you will pay the lender as the cost of taking out the loan, in addition to repaying your original loan amount. Interest rates are expressed as a percentage of the total amount that you borrow.
- Annual Percentage Rate (APR): This percentage includes your interest rate and factors in any additional fees you may have to pay the lender. This is a more accurate representation of what a loan truly costs than the interest rate.
- Fixed Interest: An interest rate that does not change over the life of a loan.
- Variable Interest: An interest rate that may change throughout the life of a loan.
- Term: How long you have to repay a loan.
- Deferment: A pause in payment due to financial hardship or an inability to pay. Interest may not accrue on the loan amount during deferment.
- Forbearance: A pause in repayments of a loan, but where interest continues to accrue.
- Default: This is what it is called if you do not pay back the loan under the originally agreed-upon terms. Investigate carefully what constitutes default according to your lender, what the consequences are, and how you can avoid it.
Finally, when researching bootcamp loan providers, it also helps to ask the right questions. Here are a few questions you should ask a potential lender:
- Do I qualify for this loan? Some loans come with restrictions based on credit score, income, location, or background. Make sure that you do not fall under one of these restrictions.
- Does the loan allow for a co-signer? If you have a low credit score, a co-signer can help you qualify.
- What type of interest rate will I have? Is it fixed or variable?
- Can I pay my loan off ahead of schedule without a penalty? Some loans do not allow you to pay off your loan ahead of schedule, or they charge a "prepayment penalty" if you pay down your loan amount quicker than the agreed term.
- Does the loan offer any deferment or forbearance options? Some bootcamp loans allow you to wait to start making payments until after you finish your bootcamp program, but you should also check to see what deferment or forbearance options exist for later in the loan's term.
Skills Fund, a popular bootcamp lender, also provides a list of questions to ask before agreeing to a loan. Below, we've listed some details about Skills Fund and other bootcamp lenders to help get your research started.
Comparing Bootcamp Loan Providers
- Climb Credit
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- Starting APR: 10.99%
- Repayment Terms: 3 years
- Cosigner Option: Yes
- Deferment/Forbearance Options: Yes
- Bootcamp Partners: App Academy, Code Fellows, Devmountain, Epicodus, Flatiron School, Galvanize, General Assembly, Hack Reactor, Springboard, and more
Climb Credit prioritizes relationships with high-performing bootcamps. The Climb Credit loan application takes about four minutes to complete and the lender considers a variety of factors (not just credit score) during the loan approval process. Borrowers who set up repayment using autopay receive an interest rate discount.
- Skills Fund
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- Starting APR: 11.08% (for DigitalCrafts)
- Repayment Terms: 3 or 5 years
- Cosigner Option: Yes
- Deferment/Forbearance Options: Yes
- Bootcamp Partners: Bottega, Codeup, Coding Dojo, DigitalCrafts, Flatiron School, Fullstack Academy, Galvanize, Tech Elevator, Thinkful, and more
Skills Fund offers a variety of loan types for coding bootcamp students, including interest-only, immediate repayment, and deferred repayment options. Skills Fund selects bootcamps partners based on a bootcamp's admissions rates, curriculum, instructor experience, and student outcomes. Skills Fund is also a founding member of the Council on Integrity in Results Reporting, an organization that promotes transparent and uniform bootcamp outcome measurement standards.
- Upstart
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- Starting APR: 8.94%
- Repayment Terms: 3 or 5 years
- Cosigner Option: No
- Deferment/Forbearance Options: Yes
- Bootcamp Partners: Coding Dojo, General Assembly, Launch Academy, and more
Upstart offers bootcamp students fixed-interest-rate loans with no prepayment penalties. In addition to credit score, Upstart considers an individual's education and professional experience when approving loan borrowers. To qualify for a loan, applicants must have a minimum credit score of 600 and live in the United States.
Frequently Asked Questions About Bootcamp Loans
- Can you get a student loan for a bootcamp?
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While you cannot get a federal student loan to pay for a bootcamp, many private lenders now offer loans designed specifically for bootcamp students. These loan options may have lower interest rates and more flexible repayment schedules than typical private loans.
- How much do coding bootcamps cost?
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Bootcamps vary in cost. A full-time program typically costs between $10,000 and $15,000. BestColleges collected data from more than 620 bootcamp programs and found that the average bootcamp tuition price in 2020 was $13,580. Part-time programs cost slightly less, with an average tuition of $12,265.
- Are coding bootcamps worth it?
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Depending on your needs, coding bootcamps can be worth it. Bootcamps provide an opportunity to learn a specific, in-demand discipline in a relatively short amount of time. In comparison to typical two- and four-year degrees, their accelerated timeline and flexible schedule may be ideal for those seeking to quickly switch careers or enhance their expertise in their current field.