Student Loan: Requirements, Opportunities and Loan Calculator
Many loans in the market is liable to a somewhat difficult image. The fact that student loans are often accompanied by this warning is mainly due to the fact that the prospective academics take on some of their finances. Young men seem to be the most prone to such momentous mistakes. However, let’s just say that anyone who plans student loans in line with their needs and plans smartly is on the safe side – both in terms of long-term planning of repayments and the terms of the loans.
So for a typical student loan, the same requirements apply as with any other loan application: you should know exactly what you are getting into and what kind of burdens you can expect in the long term.
Small loans can only help with bridging
The speed with which a mini-loan or small loan can be processed is in some ways misleading. Financing with a maximum volume of € 1,000 or € 5,000 may not be an economic problem for ordinary working people. However, those who register no or only a small additional income in addition to their studies are also faced with small four-digit loan sums. Those who are not aware of this, accepting failures approvingly.
If there are complications, the young borrowers start already with money worries after active completion of the training and are burdened also by negative entries in the register of the Schufa or another credit agency, because loan rates were repeated not paid or too late. The reference to the low loan amounts is anyway only to be understood as an example.
Spending on education should not be underestimated
Because many student loans and student loans, the funding sums move in a five-digit framework. Some borrowers apply for sums beyond 20,000 euros to cover all costs. In short: Student loans, but also education loans in general should not be taken lightly. It is also true that the number of students with credit needs has risen steadily in recent years. Education loans are in high demand. One reason is undoubtedly the study programs, which have long been adapted to the school system, which mean increasing pressure. The time for part-time jobs is missing many students. Educational loans, educational loans and similar products are therefore popular.
An advantage of student loans is the fact that many banks in this area advertise particularly favorable lending rates. Usually not out of self-interest or social responsibility, but because today’s students may be the regular high-income customers of tomorrow. As a trigger for the search for a student loan call respondents many points.
These include, among others
- the financing of a holiday in the semester break
- the financing of a compulsory or voluntary semester abroad
- Expenditure on cars and rent
- Acquisition costs for study materials and special courses / events
- general living expenses
There are many other reasons why you may be looking for student loans, depending on the circumstances of your life. Perhaps the cause is the lack of time, which makes it difficult or even impossible to carry out a second job.
Do I really want to take out a loan as a student?
However, at this point, borrowers should be very careful about whether borrowing is the right move. With a bit of luck, there will be a career opportunity without having a university career. Because: No borrowing is always the best solution, even if you come across extremely cheap student loans . Every financing comes with burdens and obligations. Whether you want to expect this, well thought over. If, on the other hand, it is a stay abroad at a university that is as prestigious as it is unfortunately expensive, and the family lacks the financial means, then often only the student loan remains.
In this context, it is first an indispensable insight. Even with a very good degree (perhaps even with honors, scholarship or direct doctorate afterwards) is not guaranteed that you get directly into the ranks of top earners. Many new graduates have to wait a few months for the first job, in case of emergency the first time after graduation will have to be bridged with less well-paid jobs or unpaid internships. If you are aware of this risk, you should include it in your credit planning. In individual cases, a higher amount of funding is advisable to bridge possible transitional phases.
Student financing with state support?
Luckily, students can appreciate the fact that their parents not only pay the rent, plus ancillary costs and any semester fees and costs of living. If the parents can not help out, BAföG is often eligible. However, a repayment usually requires the state within the framework of the promotion of vocational training. Depending on the place of study, the subsidy is not enough to cover all fixed costs anyway. Student loans must therefore be applied for in many cases in addition. Fortunately, the number of contact points has risen in recent years. The state itself knows the need and has created special support programs. Whether a state-owned or a purely private loan is the best choice, decides the individual situation.
A well-known address for the granting of student loans: KfW Bankengruppe. The former Kreditanstalt für Wiederaufbau offers special student loans. But many branch and direct banks also have student loans in their portfolio. Here and there young borrowers sometimes encounter special conditions. We also learn some important details that students should look for when choosing credit. Important questions regarding student loans include the following questions:
- Are loans granted at fixed or variable annual interest rates?
- Which study can be supported? → Also second degree, doctorate, etc.?
- Is the payout complete or monthly totals?
- Is borrowing eligible without collateral and income?
- How are the repayment options?
- How old can applicants be at most?
- Until what age can loans run?
Many credit providers that provide education to students with funding are not just for students who complete their full-time education.
Student loans also for part-time students
In fact, there are also products that are suitable for part-time study or extra-occupational training. A first degree can always be funded. In contrast, you should compare exactly which loan is available for advanced and additional degree programs. Most KfW student loans (and similar funding models): Your university must be recognized by the state and resident in Germany. Of course, this can also apply to a distance learning college. If there is still a matriculation from a German university or college, temporary stays abroad are usually no problem. Ideally, you know your planned stay at the university and the various training periods. Because this way, the financing can be adjusted very precisely to your studies. If you deviate from this plan, premature recoveries can occur.
→ Important BAföG receivers should pay attention to combinability!
Not every loan offer from the student loan sector can be applied for in conjunction with benefits under the Vocational Training Act. Anyone who receives BAföG should therefore clarify this in good time with the customer service of the potentially lending bank. Normally, in credit descriptions are appropriate notes when it comes to the requirements of borrowers. By the way, courses of study which are to be completed entirely at foreign universities are often excluded in the case of funded student loans as well as courses offered by Berufsakademien. Also important is a German citizenship, but at least a German residence or a domestic registration.
For some funding programs it is sufficient if borrowers are registered in Germany and are German citizens. EU citizens must – in the case of the KfW models – have been in Germany for three years or more or are registered here. Several other alternatives also exist, which once again speaks for the accurate reading of educational loan conditions.
Maximum age for student loans
The clear lower limit for independent borrowing in Germany is 18 years by law. This information is important, among other things, because the so-called “turbo-Abi” increasingly gives students who start their university life as a minor. Parents would then have to act as borrowers, so that loans would ultimately only be a training loan in the figurative sense – even if the funds are used for the training of junior staff.
Full-time borrowers can apply for financing alone. Depending on the bank, the maximum age for student loans is quite different. For some banks, first-degree or continuation loans are only possible up to the age of 30 years. Other banks and credit institutes are also expressly aimed at working people under the age of 45 who want to work alongside their job on their professional qualifications.
How is the payment of student loans made?
At this point, the differences between bank loans and promotional programs become particularly clear. While regular loans from a training finance bank are often credited to the bank account as classic installment credits as a one-off payment, promotional loans usually provide monthly payouts. Depending on the duration of the payout phase, the amounts in the KfW example can be between € 100 and € 650 per month for a maximum of 14 semesters . This results in a maximum loan amount of 54,650 euros. The age at the beginning of the study is decisive for the maximum duration of funding. Similarly, the maximum sums also fall for many student loans from private banks.
→ KfW subsidies can apply for the normal house bank!
There is some evidence for the gradual disbursement of student loans. This ensures that borrowers do not live beyond their means. This is tempting when sums of up to 50,000 euros are paid in one go. Therefore, Deutsche Bank and other banks are also geared towards the gradual payment of installments. Applicants are advised to pay attention to this precautionary measure.
Variable loan interest or fixed interest?
There are some student loans in the market, whose providers generally work with a variable effective annual lending rate. This is not ideal if you want to know the total costs right from the start. A fixed interest rate, but at least an optional multi-year fixed interest period as in the case of KfW funding, usually proves to be more useful. Otherwise, the annual cost of your funding may eventually rise during the term. Falling lending rates are unlikely in the current period of low interest rates.
How do I refund my credit for studies?
In the case of a student loan, a direct start of repayment would logically not be suitable for achieving a smooth debt repayment. Therefore, the repayment phase for educational loans usually begins after the (ideally) successful degree. But even here, there are differences from bank to bank. In the contracts for many loans there are indications of waiting periods. Such modalities provide you as a borrower after training end a buffer. These repayment pauses can in individual cases be up to 24 months. Precisely because the transition from the last examination to the first working day is often no fluent one, these transitional periods are a considerable relief for the borrowers.
Do I have to provide proof of my studies?
Incidentally, deviations, as in the case of the final repayment start, also exist with regard to proof requirements for the progress of studies. In particular, with funded funding, you should be prepared to provide regular proof of performance. Personal loans to a bank may be enough for enrollment certificates. Portals such as auxmoney, which are increasingly helping with the provision of private student loans, advertise loans without having to pass the credits. Not even a certificate of enrollment must be presented here many times. How long have you been studying or staying at university? Often, even this does not matter – important here is only to ensure a gapless and timely installment. In return, users of such student loans may even be eligible for a loan repayment at the end of each semester if demand has increased in the meantime.
This accommodation does not mean that the financing must be the royal road in any case. With any type of student loan, you should assume that you will go through your studies successfully to have good job and salary opportunities later. Otherwise, the risk of default during the term is high. This is especially important for offers that show a difference between interest rates during and after the study period. Initial interest rebates are accommodative, but relevant are the total costs of student loans and that they can be funded over the repayment period.
Are there any purpose bindings for trainee and student loans?
A purpose limitation is not to be expected in student loans, but you should still look carefully. This is the only way to ensure that you have free access to the capital, whether fully or in installments. Because exceptions confirm the rule also on the credit market. The vast majority of student financing lacks guidelines on how to use the funds. This does not mean that money should be spent directly on pure consumption.
How high should the student loan be?
Anyone who receives BAföG from the state and can count on a little additional support from the family does not necessarily have to use the maximum sums. Maybe 200 to 300 euros extra per month are enough to make ends meet. The fact that banks also like to allocate 20,000 to 30,000 euros to student loans does not mean that such sums have to be used over a five-year period of study. A detailed budget calculation of all revenue and running costs helps you to define appropriate funding amounts. Younger customers often have the advantage over fixed costs that they may be covered by their parents or the car is paid for by mum and dad. Always remember that the borrowed euro must be repaid with interest! If you already know that you are temporarily claiming the credit line, it is best to remortgage it through the training loan. In the future, however, he should no longer belong to the fixed monthly budget.
Term loan periods for students
In addition to the age of the applicants, the ” student history ” also influences the financing options. If I have already spent a few semesters behind me due to a change of study, subsidized loans can either no longer be used or can only be used for a shorter period of time. In order to finance a complete, new study, often only student loans without state support can be applied for. Regarding the scope beyond the normal period of study: Read or ask specifically how providers work. Because illness or failed examinations can quickly lead to an extension of one semester or more. Donors should not turn off the money right away in such critical moments, but show a certain amount of goodwill. As for the actual repayment period, these can be at the maximum from the beginning of the amortization, as with normal consumer credit, between 12 and about 120 months.
Can I subsequently make adjustments to the conditions?
Of course, optional adjustments to the eradication are beneficial in every case. It is particularly favorable if you can make corrections in both directions. What is meant: Borrower-friendly are primarily those loans in which you can raise or lower the initially agreed loan installments. Because the forecasts for the later income and career entry date do not necessarily correspond to the facts. Not only for deferred loans are such extras useful. If you use offers from job portals and banks where payoff starts straight away (for in-work students this is quite feasible with a high enough household income), then possible adjustments in credit rates and repayment terms will also have an overall positive effect.
Some other ways you can take advantage of an optimal student loan are:
- Withholding of repayment at no extra cost
- overdue loan releases
When charging credit institutions and intermediaries for these pecuniary charges, this should definitely be noted in the General Terms and Conditions. Especially the prepayment fee can quickly cause additional costs that borrowers need to know for the cost-benefit calculation. In Germany, a fee of up to 1.00% of the remaining debt is customary. Special repayments, on the other hand, can be carried out free of charge for most loans at least once a year. In some cases, however, there are annual upper limits or grace periods for such unscheduled repayments. Only after expiry of an initial period can special payments be made for some student loans. An unexpected legacy or a much better starting salary may allow a faster or complete eradication.
Avoid loans with agency fees and incidental expenses
An important tip from credit professionals is always that borrowers should avoid giving up on offers where they have to pay fees for bid brokerage. Taking such mediation services and consultations, recommendations should be made in an independent, non-binding and objective way. Finally, without exception, all aspects of fees will affect the cost of student loans. The good news: the list of free-to-borrow loans is so long that you can easily avoid costly offers from dubious service providers.
Loan rates for student loans
The estimation of financeable credit installments should always be in the focus, in addition to the APR. The Challenge: Rates should not be set too high or too low. In the case of too low rates, the repayment takes a correspondingly long time, which unnecessarily increases the costs. In the opposite case, borrowers can overburden themselves economically with their student loan. A failure can have serious consequences, including personal bankruptcy and negative entries in the Schufa Register. The long-term “financeability” has thus the highest priority. Even the occasional delay in the repayment leads to extra costs due to chargebacks and reminders. A meaningful financing plan is important in order to design suitable framework conditions that guarantee a consistent and timely repayment. Determining the current fixed costs is also relevant for student loans in this context.
Rate budget calculations should include these costs in addition to income:
- Rental expenses incl. Additional costs
- Expenditure on insurance
- Cost of living (food and much more)
- Cost of car or regular bus and train tickets
- further individual regular issues (club memberships, etc.)
Do not overcharge the start of the eradication. It is best to consult customer service and use loan calculators provided on the websites to help calculate the exact student loan installments. Budget planner from the Internet and the bank statements and statements of the past months against certainty about all running costs, which also have to be paid during the repayment.
Personal situation is the basis for student loans
So you see, how extensive a checklist for the preparation of your student loans should be. The type of study and the desired degree is a criterion for the selection process. The claims to monthly budgets also play a role. Can I possibly call in addition to the monthly payment amount a certain one-off payment, this is just to the start helpful. In that case, the financial burdens of acquiring expensive specialized literature or new furnishings for shared flats are often particularly high.
Special case scholarship: Application may be worthwhile
Last but not least, borrowers who have access to scholarship programs can be very fortunate. Worth knowing at this point is that a scholarship is awarded by different institutions. Not all programs are aimed exclusively at the best students in a year. Of course, the benefits should be appropriate. In particular, one’s own commitment has an influence on the chances of granting scholarships; in some cases, even a social exceptional situation can lead to a subsidy through partial or full scholarships. Applications can be submitted to various church sponsors, foundations, government agencies and various other institutions. Repayments of such special student loans are not provided here . Even if students do not expect success on the basis of their self-assessment, it is well worth the effort.
Private loans from relatives vs. Obligation to pay maintenance
Those who thanks to the family can do without BAföG, subsidized loans and student loans are usually on the safe side. However, such personal loans also want to be properly organized. Regardless of whether the sums come from the parents or grandparents, a loan agreement should be set up by a bank on such a loan as the normal loan for training. Of course, this information only concerns actual lending. For a donation over the duration of the study, there is no need for a contract. With higher parental incomes there is often no alternative anyway, because until the successful completion during the standard period of study of the first degree course (if not before an education was completed) exists in Germany anyway a maintenance obligation. Child benefits up to the age of 25 compensate for the expenditure at least partially.
Whichever student loan should always be the clear favorite: All the details mentioned should be taken into account in a long-term financing project. Thus, no significant aspect is overlooked, which could result in unpleasant extra costs or, in the worst case, even failures.