Many prospective academics rely on a student loan, even though they work and earn money while studying. Studying takes a long time and eating a lot of money: at least three years until the Bachelor. During this time not only semester fees and work equipment, but also rent and living expenses have to be paid, while little or no money comes in. But despite the hardships, it pays to study! According to the Institute for Employment Research, a graduate earns more than € 2.3 million in gross pensions, while someone with training earns only € 1.3 million. An investment in one’s own education pays off in the long term.
However, those who do not receive a Federal financial aid or have little time to earn a little extra while studying have to resort to other ways to finance their studies: There are special student loans for students that offer better conditions than ordinary personal loans. So you can focus on learning without having to worry about funding the study.
Different types of study funding
There is a diverse range of student loans and education funds. The Charitable Center for Higher Education Development (CHE) lists 39 foundations or banks in its annual study that awarded more than 50,000 loans in 2015.
In general, four forms of student loans can be distinguished:
1.) Education funds are not traditional loans. Here, investors can invest their money in funds. These sums are used to sponsor students who, after graduation, repay a percentage of their salary to the Fund.
2.) Graduation loans and bridging loans are – as the name implies – intended for a short period of time. They are aimed specifically at students who are about to finish their studies and have no time for part-time jobs. This type of student loan pays off through particularly favorable interest rates.
3.) Tuition fees are only for tuition fees. The amounts borrowed are usually repaid as soon as the students have arrived at work.
4.) Loans for study financing are subdivided into state offers such as the Intrasavings Bank Student Loan and financing options via banks and savings banks. Here, too, the repayment including interest begins after the end of the study.
The Intrasavings Bank also offers student loans
The offer of the Intrasavings Bank is particularly in demand with students, although the interest rate with 4,71 per cent is quite more expensive than other offers. A major advantage of Intrasavings Bank’s credit is that all students can apply for it. It is paid regardless of income or existing collateral. The payout amounts to between 100 and 650 euros, depending on the needs of the student. It should be noted, however, that the amount paid out will be reduced by interest, which will be retained immediately. The payout period is graded according to the age of the student: maximum of three to seven years.
With the repayment you have to start 6 to 23 months after the student loan expires. The payment must end after a maximum of 25 years or at the age of 67. The monthly minimum rate is only 20 euros. However, if the maximum amount per month is exhausted, a repayment amount of over 290 euros per month over 25 years will be needed. With a badly paid job, this rate can only be badly paid off. Hardship clauses do not exist for such cases.
Educational fund instead of student loan
While in a regular student loan, the borrowed amount plus interest must be repaid, students who benefit from an educational fund are required to pay a percentage of their gross salary to the fund. Four to ten percent are usual over four to eight years. Either you pay a high percentage over a short period of time or a low rate over a longer payment period.
In case of unemployment or pregnancy payments can be suspended and later resumed at a higher percentage. This regulation reduces the risk of being unable to meet payments and thus become over-indebted. On the other hand, there is the risk that you would have to pay more to the fund because of a high income than you would have done with a regular student loan.
Thanks to this method of repayment, education funds are also known as the “reverse generation contract” and go back to Nobel laureate Milton Friedman. But not all students can hope for support from an education fund. In order to get chances to get a loan, you have to undergo an elaborate selection process including interview and assessment center.
This kind of study funding also has a special focus on the field of study: It primarily promotes students of MINT subjects, who can finally expect the highest salary after graduation and later have to pay more into the fund again.
Student loans – pay attention to special offers
Most of the offers to finance the study are limited in some way. For example, there are loans from Studentyerk that represent a regional offer. Still other student loans are limited to special colleges or degree programs. Examples are education funds especially for the MBA or the offers of the Corte Bank.
Even a short-term cash injection before the end of the study or due to an unpaid internship is basically possible and in many cases even less complicated than other student loans. Bridging loans have lower interest rates and better terms than regular student loans. For example, the Federal Administra- tion Office grants a so-called education loan of up to 7,200 euros, with interest rates only 0.87 percent. If, on the other hand, you lack only the final thesis, the interest-free loan from the Decko Foundation can help.
Check offers for student financing
Regardless of which type of financing you choose, you should always keep an eye on the terms of the loan. For example, a loan may not support the semester abroad or internship. Here a close examination of the individual terms of the loan agreement is worth gold.
Student Loans – FAQ
Is there an age limit for taking a student loan?
The age restrictions vary from offer to offer. Student loans are aimed primarily at young high school graduates who want to complete full-time studies directly after school.
Can I apply for a student loan even though I get Federal financial aid?
In principle, a student loan and Federal financial aid can be obtained at the same time. It must not be forgotten, however, that after the end of the studies, possibly half of the Federal financial aid and the rates of the loan have to be repaid in parallel. This can be a significant additional burden for the career start.
Can I use student loans to finance a part-time or distance study?
Student loans are, for the most part, linked to full-time study at a state-recognized university. However, it may be that there are institute-specific cooperations with local banks.