Student loans – comparison of financing options
Education is expensive: Financing your studies today requires an effective concept
Those who want to improve their personal chances in the job market in a targeted manner, rely above all on a sound education today. Without a successfully completed university degree, the path to lucrative positions in the modern professional world is usually permanently blocked. However, discipline, ambition and good performance alone are no longer a guarantee of successful training. Students are increasingly facing financial problems today. High rent and living costs at the locations of renowned universities and colleges make an effective financing concept for the time of study just as necessary as high tuition fees and expensive teaching materials. If you cannot access financial contributions from your parents or your own assets, you have to rely on alternative funding for your studies.
Limited-time grants – usually the German State Funding or student loans from private banks – solve the financial bottleneck during your studies, but must be paid back after you have finished your studies. The coveted entry into professional life often begins with a high level of debt, the consequences of which should be taken into account when planning to finance your studies. Whatever concept you choose to finance your studies as a student: Each model has its individual advantages and disadvantages, which should be carefully considered in advance.
The financing concept of the course: Beware of the late consequences
Ideally, the opportunity for qualified training at a university or college should depend solely on the willingness to perform, the talent, the interests and the discipline of the student. Unfortunately, the reality is different in Germany. Those who cannot afford the high costs of living, teaching aids and tuition fees out of their own resources, have to rely on alternative financing for their studies.
You can choose between the state German State Funding model, the financing of your studies through regular part-time jobs and taking out student loans from a bank. Practical experience shows here that there is no generally valid royal route to finance studies. The decision for the optimal path can only be made in close coordination with the personal situation, individual needs and the respective life and career planning of the student.
Family allowances or personal assets: The most convenient way to qualify for a job
Without a doubt, students have a clear advantage if the costs of their studies can be borne from their family background or from their own assets. It should be borne in mind, however, that in some cases this “home-made” funding is at the expense of student independence. This begins with the choice of subject and university, goes through the resentment of the family about an upcoming change of subject and extends to controversial opinions about the semester abroad, duration of study or desired degrees. Anyone who believes in independence as a student should also consider possible external financing of the course if the parents are willing to finance the training.
Regular support during the years of training: German State Funding as state education funding
With the Federal Education Promotion Act (German State Funding), the state takes into account the political and social demands that young adults in Germany, regardless of the family’s economic status, should be given the opportunity to complete an apprenticeship or study. German State Funding can apply for a German who is not older than 30 and who decides on an eligible education or study. As a rule, however, only initial training or first degree is financed here. The maximum amount of support, calculated on the income of the student and his parents, is 585.00 USD per month.
Half of the total funding is declared as a grant and the other half as an interest-free loan. The repayment of the loan amount begins around five years after the end of the applicable maximum funding period. The amount of the repayments is at least USD 105.00 per month, whereby the installments must be transferred together for three months. Funding from the German State Funding provides for regular evidence of the services provided so far. For students, this means that after four funded semesters, proof of the academic achievements completed so far must be submitted.
Side jobs during your studies: Financial security against the ability to concentrate and the duration of your studies
Students who have neither their own nor family funding and who do not want to or cannot finance their studies through German State Funding are faced with the situation of funding the cost of the training period through regular part-time jobs. Even if it can make sense in individual cases to gain practical experience in the professional world during the course of your studies, the corresponding jobs usually put a strain on the time management and the ability of the student to concentrate.
In particular, problems arise with regard to the required regularity of employment. If the student has sufficient time reserves in some phases of his education and is therefore able to make a financial contribution, problems often arise in exam-intensive semesters or in the case of special stresses during the course. The result is in many cases an extension of the planned study time and thus a later entry into professional life. Even if the student has sufficient time resources for part-time work, it is still questionable whether he will be offered a suitable job at the time.
The student loans of the banks: Through extensive comparisons on individual financing
In view of the high costs associated with studying today (living expenses, registration fees, student union fees, teaching aids, travel expenses, communication costs and, in five federal states, tuition fees), many banks offer young adults special student loans. The structure of these loans is comparable in most cases: the financial institution provides monthly funds as part of a loan agreement, from which the student can cover his costs. The maximum monthly payment varies between the different institutes. Few institutes also offer their customers the opportunity to take one-off, higher amounts to finance, for example, a semester abroad. The loan will be repaid after completing your studies. The installments due are to be financed by the subsequent entry into professional life. The main differences between the various offers on the market arise with regard to the interest rate charged, the point in time at which repayment must take place at the latest, and the period available for repayment.
Some banks define additional terms and conditions for the granting of student loans. This can be the definition of the type of university, the age of the borrower, required proof of performance, the creditworthiness check of the borrower or the obligation to take out residual credit insurance. Basically, the decision for a loan offer can only be made on the basis of a detailed balance between individual needs and wishes on the one hand and the specific conditions of a student loan on the other.
- Assessment of needs to answer the question of whether external financing of the course is required
- Determination of individual requirements, such as a semester abroad or flexibility in repayment
- Comprehensive comparison of loan offers on the market
- Contacting the providers of student loans to access individual offers