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News vom 27.05.2010

Government loans to students dominate the market

Student loans are currently being offered at extremely favourable conditions with many providers reducing their interest rates from last year’s levels. This is the conclusion of the fifth CHE student loan check that compared 36 offers and assessed them from the customer’s point of view. For the first time, the study also covers several student fee loans offered by private higher education institutions, such as the “reversed intergenerational contract” provided by the Universität Witten/Herdecke or the similar offer by the WHU – Otto Beisheim School of Management in Vallendar.

A wide range of student loans, study funds and loans to cover tuition fees are available in Germany. These generally supplement traditional forms of financing (student jobs, parental support, bursaries and the BAföG student financial aid). Some offers such as the “FlexiStudienkredit” (flexible student loan) provided by the Dresdner Bank and smaller regional offers have already disappeared from the market. Clearly the greatest demand is for student loans offered by the government: in 2009 there were more than 17,000 new contracts for the student loan offered by the KfW bank, more than 14,000 new contracts for the “Bildungskredit” (educational loan) of the Federal Administration Office and 11,000 new contracts for the NRW bank’s “Studienbeitragsdarlehen” (loans to cover tuition fees). CHE head of project Ulrich Müller said: “No private credit institution reaches the same take-up figures as the public sector achieves with its offers. Surprisingly, no bank is making the most of the attractive holes in the market left by public student loan offers, for example with a specific offer for further training programmes and on-the-job-programmes.”

The (partly) public student loan offers in particular have again adjusted their interest rates downwards in comparison with the year before and are therefore now even more attractive than in previous years. The interest rate for the KfW student loan is just 3.34 per cent while the educational loan (Bildungskredit) of the Federal Administration Office’s “Bildungskredit” (educational loan) offers an interest rate of only 1.99 per cent. The loan models of some regional providers (savings banks such as the Sparkasse or Volksbank and Raiffeisenbank) are – with respect to the costs – more attractive than they ever were. However, some banks, such as the Deutsche Bank and the Deutsche Kreditbank, are countering the trend and keeping interest rates at a high level. Mr Müller said: “Students who need a loan should proceed carefully and insist that the attractive conditions are cemented by a fixed interest rate, or they should at least try to minimise the risk of possible interest rate increases via an interest rate ceiling.”

In addition to the costs that arise from a loan, students should also have a close look at the conditions of the offers as the purposes and possible designs of the loans are very different. Ulrich Müller recommends that students focus not only on the costs: “A loan that has low interest rates but exclusion clauses related to any changes is no use to students who plan to spend a semester abroad or to change their HEI.”

The CHE student loan test 2010 presents the range of offers in detail and highlights the hidden traps. In terms of the heterogeneous models, there is no such thing as “the best loan” as the advantages and disadvantages of the models differ depending on the different target groups. Nevertheless, there are six institutions that get top marks in four of the five assessment criteria (access, independence from parental income, cost, risk minimisation and flexibility), namely the educational fund (Bildungsfonds) offered by CareerConcept, the educational fund (Bildungskredit) offered by the Federal Administration Office, the degree loan (Studienabschlussdarlehen) offered by the Studentische Darlehnskasse Berlin, the educational fund (Bildungskredit) offered by the Stadtsparkasse Augsburg, the educational financing (Bildungsfinanzierung) offered by the Raiffeisenbanken Main-Spessart and the student loan (Studentenkredit) offered by the Sparkasse Herford.

The Financial Times Deutschland, media partner of the CHE, presented the key results of the CHE student loan test 2010 in its edition on 28 May 2010.

You will find more information in the below-mentioned publication (in German).

Further Information can be found in the publication stated below.


Further Information can be found in the publication stated below.

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