Student loans in Germany and the USA.
Introduction.
With fully financed state education systems no longer affordable by national governments; countries which once fully financed college and university students have introduced tuition fee payment schemes and have, by and large withdrawn, ‘grant’ systems to finance students living expenses. Subsequently, students in Germany now, like their counter-parts in the USA, need to look for great kredit offers (credit offers) and take out student loans to finance their studies. The following looks at what is on offer for student loans in Germany and the USA.
Government loans to German students.
Up until recently German universities did not charge students for their tuition fees. This meant that students only needed to finance their living expenses through their student years. As far as the German state was concerned this could be done by a students parents, either giving or lending the money to the student; or if that were not possible due to the parents financial situation the student could apply for a federal German student loan called a - Bundesausbildungsförderungsgesetz, or BAföG for short. Anyone eligible for a BAföG loan will take it; but they might still need to apply for a further Studentendarlehen (student loan) from a commercial finance company.
Anyone awarded a BAföG loan can reasonably expect to only have to pay half of the amount back to the government and at a low percentage rate of interest. Even better, the repayment period will only begin after the student has graduated and reached a certain level of annual remuneration. As if that’s not good enough; in most cases the government will also ‘write-off’ the other half of the loan on graduation, in effect turning half of the loan into a grant. Eligibility for a BAföG loan is dependant on parental income and applications are ‘means tested’. That is to say the size of a BAföG loan can vary from a 100% loan - downwards; according to the parents’ capability to contribute to the student’s education. Even being awarded a 1% BAföG loan is useful to a German student, as the award of any BAföG loan also gives them access to reduced costs in some other services.
Government loans to USA students.
Whilst the different states in the USA can have their own systems for supporting students financially through college or university, there is also a national Federal Student Aid (FSA) program for USA student loans. The FSA can award student loans and grants according to the individual circumstances of an application. However, the basic tradition in the USA is that student financing is very much seen as the responsibility of the family that the student comes from, or even entirely the students own responsibility. Many parents in the USA start a savings account at the birth of a son or daughter, solely to finance them through college or university. Whilst any student can apply to the FSA program most awards are in the form of a loan. Whilst the loans carry a low interest rate comparable to that of a German BAföG loan; the repayment period will, in anything other than highly exceptional circumstances, begin within 12 months of graduating -whether the person owing the money is in work or not.
Commercial loans to German and USA students.
Whilst students in the USA have always been used to taking out commercial loans to cover expenses that either an FSA award or their parents can’t afford; the phenomena is a relatively new one to German students. However, this ‘new reality’ is now accepted and German students are becoming quite adept at finding the best deals on a Studentenkredit offers (student credit offers). Reputable and established German finance companies offering student loans appreciate that they are lending money to the countries future ‘high earners’. Subsequently, they are keen to establish a long term relationship with their customers and will off student loans at highly favorable rates.