It is particularly difficult for students to get a loan because they are usually not in a permanent employment relationship and therefore cannot prove a regular income. But what to do if you do not receive a commany as a student and do not find the time to earn some money on the side with a part-time job. Parents cannot always help out either. However, there are credit institutions that offer student loans.
Student Loan: Idea and How It Works
The student loan differs significantly from a conventional annuity loan. A certain loan amount is requested for the usual loans. If the loan amount has been approved by the bank, the borrower is paid this amount. He then pays a fixed credit installment over a contractually agreed term, usually monthly, until the loan amount has been repaid. The way it works for a student loan is different. Here a monthly payment is agreed over a certain period, for example $ 400 per month over a period of 3 years , which corresponds to the standard period of study of 6 semesters for a bachelor’s degree.
After the expiry of this term, most providers give a pause for repayment. Depending on the provider, this can be up to four years. After that, the loan repayment begins over a longer term (up to 20 years). Optionally, the repayment phase of the loan can be shortened at any time with extraordinary repayments of any amount. The basic idea of this model is not to assess the current financial situation, but rather the future one that the borrower is likely to have after successfully completing his studies.
Credit for students
The question may now arise, why a student should opt for a loan model instead of the training subsidy, which only has to be repaid in part, where the entire amount plus interest is to be repaid. Quite simply: Not everyone who wants to study receives commany. On the one hand, training funding depends on the parents ‘salary (only in very few exceptional cases can a commany application be made that is treated independently of the parents’ income).
There is also an upper age limit. If someone decides to start studying after the age of 30, he is no longer eligible for funding from commany, with a few exceptional cases. In these cases, the student loan is not an alternative, but the only way to finance your own studies. For some commany recipients, the amount of the funding is not sufficient to support themselves.
Conditions of student loans
The conditions differ depending on the provider. This affects both the interest rate, terms and special financing options. Due to the long terms up to 20 years, a difference of one percent in the long term results in considerable additional costs. Therefore, a comparison is very important. You should also pay attention to whether one-time payments for special occasions, such as a semester abroad, are included in the offer or whether the respective bank offers a break in payment before the loan repayment begins, so that you can gain a foothold in the working world. The advantage is that the interest rate remains the same over the entire term, which allows optimal financial planning.
The education loan of the Federal Republic
This student loan is particularly low-interest and is designed for the last two years of study. A monthly amount of 100, 200 or 300 USD can be requested over 24 months, whereby a one-time payment of up to 3,600 USD is also possible. After four years, the repayment phase begins with installments of 120 USD per month.