Scholar mortgage: comparability of rates of interest
Important to student loan
- Ideal if there are no other sources of money
A study loan can make sense if, for example, the Federal financial aid rate is insufficient or if there is no entitlement to state support and sufficient support from the parents is not to be expected.
- Prefer flexible repayment modalities
Postponing the repayment start is rarely possible. Therefore, it should be ensured that the rate can be made as flexible as possible – it is best to plan many different scenarios.
- First degree as a prerequisite
As a rule, a student loan is required to complete full-time first-year studies at the age of 19 to 26, at a recognized university.
A degree program involves costs that students with no financial support from parents, the state, or scholarships can easily bear alone. Students who spend much of their time making a living, rather than focusing on their education, often receive the receipt for it – in the form of lower grades or a longer study period. A student loan can help to maintain balance and to study more successfully.
To ensure that starting a career after graduation does not start with tackling a debt mountain, the study funding should be well selected and planned. Different student loan types offer different possibilities.
In order to choose an individually fitting financing for your studies, you should therefore know which types of financing and possible applications there are. Here you will learn what to consider when planning and selecting.
Student Loan, Student Loan, Educational Loan and Co.
Student loans are also referred to as student loans or student loans and have become increasingly popular since the introduction of tuition fees in some states. Due to the steadily rising cost of living, however, this financing is also interesting for students if there are no tuition fees. To get an overview of this type of loan, a no credit check comparison is recommended.
Basically, the term summarizes four different forms of student finance offered by banks, as well as savings banks and cooperative banks:
|Classic student loan||Should assist in financing the cost of living and any tuition|
|Bridging, interim or final loan||Educational loans with usually very favorable interest rate, which are especially intended to help students who are about to graduate|
|Education Fund||Investors contribute to the fund, thereby promoting selected students who later repay a percentage of their income for a limited period of time|
|Tuition Fee Loan||Should cover only the tuition fees|
Differences of education credit
An educational loan is fundamentally different from the forms of financing mentioned above. It is a financing from the education credit program of the Federal Government, which can be applied for under certain conditions. Find out more about this topic in the last section of this article or in our guide to the education loan.
In principle, all forms of student credit have a similar purpose: they offer students the financial flexibility to cover the costs incurred during their studies. These include, for example: living expenses, tuition fees, stays abroad or study-related special purchases.
The repayment of loans usually begins after graduation – ideally with the money from a regular professional income. Good offers can be adapted to the later income situation and offer the possibility of a deferral, if the monthly installments overwhelm the regularly available budget.
However, the similarities of the various credit offers already stop. The details of borrowing costs, terms, or borrowing conditions vary by provider and type of loan.
The classic student loan…
… is a financing in which the loan amount, similar to the Federal financial aid, is distributed in monthly partial payments over the duration of the study. Therefore, before borrowing, it must be calculated exactly how high the monthly borrowing needs of the student borrower, and how many semesters the study is expected to take.
When calculating, you should take into account expenses for food, clothing, learning materials and other expenses, as well as rent, ancillary costs, insurance premiums, tuition fees, semester fees as well as any one-off expenses incurred for purchases. As a rule, students can receive monthly payments of between € 500 and € 1,000.
On the basis of the monthly financial need and the expected duration of the study plus interest and any fees, the loan amount, which is to be paid after graduation. The first repayment installment, depending on the loan agreement, must be made after a grace period of 6 to 24 months after the agreed end of the payout period.
Standard period of study plus two semesters as maximum duration
As a rule, a student loan is only granted for the period of the regular study period plus two semesters. For a long time, such a loan can usually not be agreed in advance.
Interest rates and possible additional fees for student loans from different providers should be compared with particular care. Perhaps the best benchmark here is the effective interest rate per annum, which represents all interest and additional costs and whose disclosure is mandatory. In conjunction with the duration and the expected duration of the full repayment of the student loan, you can estimate the total cost of funding. In many cases, however, the actual interest rate is variable and can change during the term of the student loan.
Such a variable interest rate is adjusted semi-annually to the development of EURIBOR. The EURIBOR represents the average interest rate at which European banks lend money to each other. Because the exact planning and calculation of the student loan with a flexible interest rate is hardly possible, the lenders usually call a maximum interest rate, which is not exceeded. Based on this maximum interest rate, a worst-case scenario can also be calculated.
Repayment duration, grace period and performance period play a crucial role in calculating the total cost of a student loan, along with interest and fees. Basically, the longer money is borrowed, the higher the interest will be.
So, if you make the repayment at a very low rate and start it after a two-year grace period, you’ll end up paying much more than you would with a quick repayment. Therefore, consider as closely as possible the monthly installments when planning your repayment.
Some credit providers allow for special repayments, sometimes even without additional fees. This will allow you to repay more than the agreed installments in the event of an unexpected windfall. This reduces the remaining time and saves interest.
Pay attention to the adaptability of the rates
Few providers make it possible to delay the start of repayment if the student borrower does not have a regular salary at the end of the waiting period. The more flexibly the repayment can be arranged with a lender, the easier it can later be adapted to reality. If, for example, the monthly installments can be adjusted retrospectively, they may also be financed by a temporary side job. Therefore, discuss as many scenarios as possible with your bank in order to evaluate the flexibility of the offer.
The requirements for a student loan are usually fulfilled if you want to complete a first degree as a student and are between 19 and 26 years old. In addition, the study must be completed full-time. However, in some cases individual requirements can be individually adjusted in the context of a conversation with the potential lender.
Where you want to complete your studies is usually irrelevant for the award of classic student loans. It is important that you are enrolled in a recognized university and the bank can assess the repayment probability in your favor. Classical collateral is usually not expected for the granting of a student loan.
Bridging, interim or final financing loans
Loans for bridging, interim or graduate financing differ from traditional student loans in that they are not used for a full degree, but only for part of the student life. Accordingly, such student loans are limited in their amount and the duration of the term, but usually lower interest rates than the classic student loans.
Interest rates and possible additional fees for these special loans should be compared with the APR, just like the classic student loan.
Repayment period, waiting period and performance period often differ significantly for the individual offers. For example, in many cases, a final loan is paid out over a maximum of four to five semesters. Alternatively, one off or shorter periods may be funded.
If a waiting period can be agreed upon, the repayment commences well after the end of the study. However, students should be aware that interest is also due during the waiting period. Bridging and bridging finance are usually based on the terms of a final financing.
The conditions for bridging, interim or final financing loans differ according to the purpose of the respective financing. If you want to take out a graduate loan, you must expect the creditor to ask for a certificate of the intermediate exam, so that the upcoming financial statements are also verified.
For bridging or bridging finance, on the other hand, a reason for the temporary need for financing must be mentioned. For example, anyone who has to move or is still waiting for the Federal financial aid approval usually receives a loan to cover these periods.
Education funds are not classic student loans, but are becoming increasingly popular for student funding. They offer private investors an investment opportunity. With the capital invested, the funds then support selected students with monthly cash injections of up to € 1,000. The exact amount of monthly benefits depends on the recipient’s financial needs.
Interest and possible additional fees do not accrue in general, unlike the other types of student loans. Instead of interest income, the education fund generates its revenue according to another system, which is explained below.
Repayment period, waiting period and service period are set differently by the respective providers. As a rule, the education fund pays the monthly grant as long as the student meets the donor’s conditions. The requirements that are placed on the recipient differ in some cases significantly. However, students wishing to use an educational fund for student finance should be prepared to demonstrate that their credits and, where appropriate, regular attendance at lectures and seminars are controlled by the education fund.
If you drop several times through an exam or attend classes more often, you may lose your support. However, anyone who successfully completes their studies will be supported until graduation. After an agreed grace period, the loan is then usually repaid at an income-based rate. Those who earn below average after their studies have to repay less money accordingly. However, if you earn above-average earnings after completing your studies, the education fund expects you to repay more money than you received. In this way, the fund generates its profits for investors.
As a rule, the prerequisites for money from an education fund are that the student is enrolled. The choice of course of study can also influence lending, as not all faculties are funded by each fund. In addition, a selection process must be performed in which, depending on the provider, the performance of the student is determined in different ways.
Tuition Fee Loan
These loans are earmarked financing and can only be taken up to the extent of tuition fees incurred during a first degree course. Since the now nationwide abolition of tuition fees, these loans have become rare.
Especially students at private universities can take appropriate financing through their universities or cooperating lenders. The service period and the amount depend on the respective tuition fees. Repayments and interest are usually organized in a similar way to educational funds and dependent on future income.
Excursus: This is how young Germans finance their studies
|money source||proportion of|
|Money from the parents||87 percent|
|part-time job||63 percent|
|Federal financial aid||32 percent|
|Student loan||5 percent|
Data source: Deutsches Studentenwerk
Before a student loan is taken, students should exhaust all other possibilities and cover as much of the tuition as possible through Federal financial aid, parents, a side job or a scholarship. For the remaining financial needs a student loan can be taken up to a lesser extent or a targeted final financing. The full financing of study by credit should always be the last resort, even if an investment in your own future is basically a good idea.
Although academics have better opportunities in the labor market and usually earn above-average earnings during their lifetime, starting their careers with debts is rarely optimal. Accordingly, a student loan should be used as little as possible. In 2013, a total of nearly 60,000 students decided to take out a student loan. The majority opted for the student loan from Intrasavings bank.
Usage data of student loan offers in Germany
|Provider / student loan offer||Contracts concluded in 2013|
|Intrasavings bank: Intrasavings bank Student Loan||33227|
|Federal Office of Administration: Education Credit||20615|
|Hamburger Sparkasse: Haspa StudentenKredit||1900|
|Loan Fund of the Bavarian Student Services:
Data source: CHE Study Credit Test 2014
Another provider of explicit student loans with the Student Education Fund.
The Intrasavings bank Student Loan
The Intrasavings bank student loan is one of the most popular student loans. However, this does not mean that the student loan from Intrasavings bank Bank is in any case the optimal and cheapest financing. Despite funding, it is possible that other providers offer cheaper credit terms or more flexible lending. Therefore, before borrowing, all providers should be compared.
According to Intrasavings bank, the development loan can be applied for if:
- An undergraduate degree should be funded
- An undergraduate second degree should be funded
- An additional, supplementary or postgraduate study (postgraduate study) is to be financed
- A master’s degree should be funded after the bachelor’s degree
- The period of a promotion should be secured financially
Further prerequisites are that the borrower is between 18 and 44 years old and enrolled at a German university. Accordingly, the Intrasavings bank student loan can not be applied for to finance a study abroad. The maximum funding is available to students who apply for their student loan until the age of 34. This emerges from the CHE Student Credit Test 2014.
As with the classic student loan, the loan amount is paid monthly in agreed installments. Funding by Intrasavings bank Bank can amount to at least 100 euros per month over six semesters and a maximum of 650 euros per month over 14 semesters.
Further information on funding can be found on Intrasavings bank’s website. After the payout period, there will be a qualifying period of 18 to 23 months before repayment begins. The funding must be paid back with a minimum rate of 20 euros within a maximum of 25 years, or until the age of 67.
Tips for repaying student loans
Repaying a student loan can be a financial challenge. Even if the entry into the profession succeeds immediately after graduation, the expenses for the start of the new phase of life accumulate. The easiest way to repay is to adapt to the current financial situation. However, this point should already be taken into account when making a credit inquiry, because subsequent changes are usually difficult or impossible.
The first point of contact for aspiring students who want to finance their studies by credit should therefore be the counseling center of the Studentenwerk at the respective university. Here, the requirements for a loan offer can be discussed. Above all, it is important that the volume of financing is not unnecessarily inflated.
Therefore, calculate as precisely as possible how high your funding requirements will be during your studies and what additional sources of funding (Federal financial aid, parents, scholarships) can still be used.
In the second step, the actual financing is planned, whereby always the later repayment should be kept in mind. Interest costs can be reduced, for example, by setting the waiting period as short as possible and financing being repaid as quickly as possible. However, because fast eradication involves comparatively high rates, it is advisable to select an offer that allows installment pauses or later rate-of-rate adjustments.
In addition, a comparison with a loan calculator is recommended. Here you can compare the various offers on the market and get an impression of interest rates, which are currently common. The comparison should be made at the latest before the loan application – a previous comparison does not hurt.
Debt rescheduling as repayment variant
If the repayment of the student loan exceeds the budget, it may be considered as an emergency over a rescheduling. The student loan is repaid by the money from a further financing. This financing can then be designed according to the current financial possibilities. For a smooth rescheduling, however, it is important that the student loan can be replaced if possible without prepayment penalty. This point should also be taken into account when borrowing.
Alternatives to the student loan
In addition to the financing options presented, there are several other options to cover the cost of training.
Scholarship can greatly simplify the financing of your studies. As a rule, the levels of scholarships are based on the Federal financial aid rate, but the loan share is no longer required. Although scholarships have the reputation of being granted to only a few, particularly qualified students, anyone can try to get such funding. In part, the entry requirements are not as high as many expected. It may therefore be worthwhile to ask the university for funding offers for the chosen field of study.
The education loan offers students another financing option. It is usually awarded as a final loan and can be applied for at fixed times:
- Bachelor students: From the third semester
- Master students: at any time
- Other students: After passing the intermediate examination (5th semester)
In all cases, when applying for funding, proof of achievement must be provided which shows the current progress in the course of studies.