Student loans, education loans and education funds – terms you will encounter in numerous information brochures and on the Internet. What distinguishes the individual offers from each other? What are the advantages and risks? How to try to shed some light on the thicket…
Student loans
These are loans offered both by the state and by private banks. In contrast to a normal loan, monthly instalments are paid instead of a one-off payment. With a student loan it is possible to finance your studies right from the start. While Bafög requires only half of the amount to be repaid, Studienkredits repay the entire amount borrowed plus interest. See the article about bad credit rv loans by RV Loan Providers for prior details.
The flagship provider of student loans is still the Kreditanstalt für Wiederaufbau (KfW). Private banks, such as Deutsche Bank or Commerzbank, do not offer a model of their own, but merely broker a loan with KfW. The savings banks and Volksbanks are different: they not only act as intermediaries but also have their own model for student loans with different repayment periods than KfW.
Educational loans
It is easy to confuse the student loan with the educational loan, but the latter is intended more for financial relief in the final phase of your studies, so that you can concentrate fully on your theses and examinations.
The educational loan is also available for students in advanced stages of their education. It is also offered by KfW, and applications are submitted by interested parties via the Federal Administration Office.
Education fund
This is a relatively new, purely private-sector offer, originally from the USA. Education funds are a student loan that is not financed by banks but predominantly by companies and private investors.
It is repaid on the basis of income: For this purpose, a percentage of the later monthly income is determined in advance, which is repaid over a certain period after starting a career.
For this reason, it is often the case that students of MINT subjects are more likely to receive support, as their earning potential is estimated to be correspondingly high. Education funds are offered, for example, by CareerConcept or Brain Capital.
Demand for student loans declines
Many prospective students see no other possibility than to finance their studies with a student loan. If the parents cannot help with the monthly costs, the money quickly becomes a problem. There are therefore always prospective students for student loans and presumably providers do not need to worry seriously in the next few years.
Nevertheless, the current trend shows that the demand for student loans is falling. Current information from the Centre for Higher Education Development shows that 60,000 student loans were concluded in 2014, compared with only 40,000 last year. Instead, students are looking for alternatives and are trying to finance their studies through student jobs instead of burdening the future with a loan.
The maximum possible credit limit for student loans is not exhausted either. Instead of the 650 euros per month possible with KfW, students use an average of only 527 euros.
All in all, prospective students seem to want to be more careful with money. For many, this means more effort and stress, it is no child’s play to work alongside full-time studies, but it can make it easier to start a career. For many it is a great challenge to pay off the first salary in instalments – and mentally it is also a burden to know that the first 5, 10 or even 15 years of professional life are accompanied by a student loan.
Checklist for taking out a student loan
Before you take out a loan, you should also compare possible providers carefully. Just because KfW is the most common provider, it doesn’t have to offer you the right loan. Student loans often differ in small details that may be relevant to you.
Mixed financing is also conceivable. There are different possibilities here, for example taking out a loan to supplement a low Bafög rate or a part-time job.
The following checklist can help you to find the right provider:
Requirements
Also consider the requirements for the loan. Important questions in this context are: How old may you be? How long do you expect to continue studying? What citizenship do you need? What is supported, first or second degree?
Financial requirements
Think about the minimum monthly amount you will need. Depending on this, certain models or providers may already be eliminated – you may have to go to work despite financial support because the subsidy is too small. Your calculations should also take into account the place of study, possible fees when changing universities, expensive working materials or studying abroad.
Time
Start planning in good time. A while will pass before the loan is approved. Rule of thumb: Make your application at least three months before the start of your studies so that you can access the money at the start of the semester.
Student Loan for German Education: Financing plus coaching
German education is taking a somewhat different approach to student financing. This is a study fund in which private and institutional investors support young academics from various disciplines.
Like others, this student loan is also tied to certain conditions; for example, German education currently only supports courses at state-recognised universities in Germany and abroad, but not vocational training.