Student Loans – how they want to finance their studies
Nowadays, students are increasingly facing financial problems. In many big cities, rent and living costs are high. The growing number of students causes housing shortages, which increases rents even more. But even those who have found an affordable apartment often have to spend a lot of money on teaching materials and tuition fees. Not all parents can support their children financially, and this support is rarely sufficient to fully finance their studies. Most students have to deal with the question of how they want to finance their studies at the beginning of their studies.
A student loan as a solution
A student loan is a loan that banks give to students at a low interest rate. It differs from other loans in that the student is paid the loan in monthly installments for the duration of their studies. Furthermore, the repayment does not begin immediately after the contract is concluded, but only after the last installment has been paid out. Some credit institutions also grant a so-called job-finding phase. This means that the start of the first repayment rate is delayed by up to two years after graduation.
So the student loan is a great way to fund your studies over the long term. The advantages are obvious: the degree often suffers from a part-time job. Stress, daily time pressure, lack of concentration and the associated poor grades and an extension of your studies are the consequences. A student loan, on the other hand, ensures that the student can really take care of his studies full-time and has his head clear for the learning material. The result is good grades and a quick degree.
Here’s how it works:
Even before the start of the course, the prospective student learns about the different options for student loans. Depending on the bank, the loans differ in terms of the amount and flexibility of the monthly payment, the interest rate charged, the maximum payment duration, the repayment period and the criteria for granting a student loan. Depending on the wishes and individual needs, the student decides on a suitable offer.
The formalities are laid down in the loan agreement. These include, among other things, what the maximum interest is when repaying, how long the loan is paid out and when the repayment begins. Afterwards, the student receives the monthly payments directly into his account at the start of the course. Depending on the loan, these vary between USD 100 and 850 per month, whereby, depending on the bank, higher one-off payments, for example for a semester abroad, are also possible.
The maximum payment duration is either measured over the standard period of study plus one year, or over a period of up to 7 years. The repayment period also varies greatly depending on the offer. There are different offers between the guarantee of complete flexibility and a period of 10 to 25 years.
Due to government funding for student loans, the overall interest rate is low compared to other loans. Depending on the offer, you can expect an effective interest rate of 3.5% to 9.1% per year. In order to receive a student loan, you have to be of legal age and have to be enrolled at a state-recognized university or university of applied sciences in Germany. Further award criteria depend on the respective credit institutions.