A student loan is a special form of loan that is basically open to all students and doctoral students. It can help finance the entire course or just a certain phase of the course.
What should I look for in a student loan?
Age: There is an age limit for many student loans. For example, 18 to 44-year-olds can apply for a student loan.
Study duration: Most providers stipulate a maximum study duration. You should realistically check whether you will be able to complete your studies during this time.
Subject: Anyone interested in funding an education fund must find out whether their subject is supported.
Type of study: Most banks supports both first and second degree, postgraduate studies, and doctorates. It is usually not possible to take out a student loan for study programs at distance learning colleges, vocational academies, and other continuing education institutions that run part-time.
When choosing a loan provider, keep the following criteria in mind:
Flexibility: Does the loan provider allow a change of subject or a vacation semester? Clarify whether the conditions of the providers leave room for this.
Interest rates: variable or fixed interest rates? Many government providers have variable interest rates, so they increase during the term. Private financial institutions also agree to fixed interest rates, but they are usually higher.
Repayment: Your loan repayment term is the number of years you have to pay it back. This is the greatest risk for students. You should also check whether or not special repayments are possible or whether you can agree on a fixed interest rate for the repayment.
How much does a student loan cost?
The total cost of a student loan depends on several factors. For example, if you only need a loan for a study-intensive exam phase, you can apply for a final interest-free loan from many student unions. Then you just have to pay back the borrowed amount, and the loan costs are zero. However, the loan amount is often limited. If they need money for a longer period of time, interest is usually due, and the cost of credit increases.
You can influence the credit costs with the following adjustment screws:
Loan amount: how much money do you need? The higher the monthly payments and the longer you use them, the higher the loan amount. Because it usually takes longer for the repayment, the interest costs increase.
Repayment rate: In the repayment phase, you determine the amount you want to repay monthly. The lower the repayment, the longer you have to pay – and as a result, you also pay more interest.
Interest rate: Look for a provider with the lowest possible interest rate—the lower the effective interest rate, the cheaper the borrowing costs.
Waiting period: Many providers offer a break of up to 23 months between the payment and repayment phases, during which you can, for example, find a job in peace. During this time, you only pay the interest on the borrowed amount – but these also add up in the end and make the borrowing costs more expensive. The sooner you start repaying, the better.
How can I apply for a student loan?
You should note the following points when applying for a student loan:
Plan in time: it can take a few weeks from the application to the first payment. Just before the semester begins, the number of applications increases, which takes a long time to process. If you need the money in time for the start of the semester, you should consider this.
Determine demand: Calculate how much money you need per month. As a rough rule of thumb for student loans: As little as possible, as much as necessary. This is the basis for further research.
Independent advice: As a student, in particular, you usually don’t have a lot of experience with loans and financial products. Many student unions offer independent financial advice to help them make their decision.
Get offers: Ask several institutions to make you offers and compare them.
Important: Be sure to read the print: what is there about the loan term, waiting period, repayment period, or special repayment?
Decide with certainty: Take control of your choice of degree. If you drop out of your studies, you will no longer receive any payments and, in most cases, will have to start paying off immediately.