Financing your studies with loans? If parents can’t support you, this may be necessary. But demand has been falling for years. According to experts, the reasons are obvious.
Students are increasingly turning to student loans to finance their education. This is the result of an evaluation by the Center for University Development (CHE), which was presented in Gütersloh on Wednesday. According to the study, only 16,564 customers signed a new contract for a student loan or education fund in 2023. According to the “CHE Student Loan Test 2024”, this is more than 7,000 fewer contracts than in the previous year and a decrease of more than 30 percent. Compared to the past ten years, the number of newly concluded loans has fallen by almost 72 percent. Study author Ulrich Müller speaks of a real slump after a brief high during the corona pandemic. “The market for student loans continues to lose importance dramatically, student loans are developing into a niche product,” says Müller, according to the statement.
The CHE expert sees the high interest rates on the market leader KfW student loan as the main reason. The number of new contracts here, at 8,900, has almost halved in 2023 compared to 2022. “I cannot see in the design of the conditions or in the setting of the interest rates that federal policy makers want to offer an attractive offer for student financing with the KfW student loan. With an interest rate that has meanwhile reached more than 9 percent, you will not win new customers,” says Müller.
The state-owned development bank said that the KfW student loan is not a classic development product, but an offer financed by KfW itself. “KfW does not make a profit with the student loan, but covers exactly the costs, including the default risks and processing costs.” The interest rate is set every six months, at the beginning of April and the beginning of October. As of April 1, 2024, the interest on the KfW student loan will have been slightly reduced. It is currently 7.51 percent for newly concluded contracts.
According to the market comparison, no offer has an effective interest rate of less than 4.87 percent in the repayment phase. According to CHE, 213,000 people are currently paying off their student loans in Germany, and 45,000 students are currently recipients. They receive an average of 535 euros per person. They make up 1.5 percent of all students.
The CHE is a joint subsidiary of the Bertelsmann Foundation and the German Rectors’ Conference (HRK).
Source: Stern
