The number of students choosing to take on a postgraduate degree has shot up during the recession, with Ucas reporting a 12.9 per cent increase in university applications from students aged 21-24, and a 12.6 per cent rise in the over-24 age group for the coming academic year.

Leigh Rawlins is one such graduate. She has struggled to find work since completing a French degree in 2007 and has decided to embark on a law conversion course to boost her career prospects. The tuition fees alone will set her back £20,000. “I feel it’s the wrong time for me to be looking for work,” she says. “Luckily, my parents have agreed to help me with living expenses, but I still need to secure funding to pay for the course.”

Unlike undergraduate study, loans and grants for postgraduate courses are few and far between. Times Money looks at the funding options available.

Professional and career development loans

The Government has promised to increase the number of bank loans tailored to postgraduates, introducing revamped career development loans (now known as professional and career development loans) for students starting courses this year. The maximum amount that students can borrow has risen by £2,000 to £10,000, to encourage people to gain further qualifications in the recession. The minimum you can borrow is £300.

Two banks, the Co-operative Bank and Barclays, offer these to students who can demonstrate that further study will contribute to their present or future trade, occupation or profession. A course may be part-time or full-time and distance-learning courses are included. Before applying, the student must ensure that his or her chosen college or university is registered, or willing to be registered, with the programme.

The Learning and Skills Council will pay the interest on the loan for the duration of your course, up to a maximum of two years and for one month after the course finishes. If your course includes a year of practical work experience, you are entitled to an additional year interest-free.

Professional and career development loans are open to anyone over 18 who is settled in the UK and intending to work in the EU on graduation. You cannot use the loan to fund a first undergraduate degree but may receive funding if you are embarking on a second undergraduate degree for vocational reasons. On application you must specify what you need the money for; a maximum of 80 per cent of the loan can go towards tuition fees. The rest may be used for expenses such as childcare, travel and living costs if you are a full-time student, as well as books and other study aids.

Both Barclays and the Co-operative Bank have a typical fixed interest rate of 9.9 per cent. Applicants may negotiate over length of repayment, up to a maximum of five years, though the longer you take to repay the loan, the more your interest will rack up. A penalty charge equivalent to one month’s interest will apply if you repay your loan before the full term. But as Tim Moss, of Moneysupermarket.com, points out: “If you have the money to pay off your loan in full soon after you graduate, it is advisable. The penalty is likely to be much less than several years of interest charges.”

Other postgraduate loans

NatWest offers its own professional trainee loans, with preferential interest rates. Students studying for eligible professions, including medicine, dentistry, veterinary and law, may borrow up to £25,000. Repayment can be delayed for at least six months after the course is finished and borrowers have up to ten years to pay off the loan. Typical interest rates are 8.9 per cent for a fixed rate, or 7.7 per cent for a variable rate.

Unlike professional and career development loans, interest accrues over the period of study, and to qualify you will be required to open a current account with the bank. There may also be an early repayment fee.

NatWest also has a tailored loan for MBA students. With a typical variable rate of 7.9 per cent, you can borrow up to two thirds of your gross annual pre-MBA salary and can defer repayment for three months after the completion of the course.

HSBC and Lloyds TSB offer loans with lower rates to attract postgraduate students. You must open a current account to qualify. Only those who complete undergraduate studies within three years of their applications are accepted by HSBC, which offers a typical variable rate of 8.9 per cent. Students will need to speak to a bank adviser to discuss how much they can borrow. Lloyds TSB offers a typical rate of 9.9 per cent and the option to delay repayment for three months.

Degrees of support

Many companies, charities and organisations offer bursaries to fund a postgraduate degree, partly or fully.

The UK has seven research councils, all of which offer funding, but competition is fierce and bursaries limited in number. In general it is easier to receive money to study science and engineering than the arts or social sciences. For information, go to www.rcuk.ac.uk. Most universities and colleges operate their own scholarship and award schemes, with some offering full-fee studentships and maintenance grants to pay for a postgraduate student.

Prospects.ac.uk has a full list of institutions offering finance.

Charities and trusts are also a great source of support for postgraduate students. For example, The Wellcome Trust, a medical charity, awards hundreds of studentships each year in the UK, and The Society for Promoting the Training of Women offers an interest-free loan to help women to further their education. A good starting point for information is www.scholarship-search.org.uk.