Student loan: how to finance your studies at less than 1%

After taking into account the possible aids, students on average need an additional 840 euros per month to live. In the absence of savings or sufficient income, it is difficult to ignore the student loan to continue his education. What steps does it require? What rates do banks apply? Can the banker control the use of credit?

In a few weeks, the students will be back. If the registration fees for the university remain within the reach of most students – the fees for this year are $ 170 for license registrations, special training Or even access to private establishments are much more expensive, like business schools, which over the entire schooling period can amount to more than 40 $ 000.

Under these conditions and without a financial boost

Under these conditions and without a financial boost

It can be difficult to access the course of your choice. Especially since it is not the only source of expense inherent in student life.

All charges combined – accommodation, food, equipment or the contribution to student life which has replaced social security costs for the past year – and after deduction of the aid received – grants and housing aid in particular -, the remainder to be paid for students averages 838 euros per month, according to the National Union of Students of France (UNEF). An amount that cannot always be taken care of by the family.

According to the latest barometer devoted to family support, the French pay their average adult children 184 euros monthly (1). Similarly, student or seasonal jobs are rarely enough to make up the difference. They report on average less than 200 euros per month, according to the Good Finance Observatory of new consumption published in early July (2).

As a result, many students push the door of their bank branch to make a credit. According to the study carried out in September 2018 by E-Money, 4 young people out of 10 take out a student loan of 10,000,000 euros on average (3). As a loyalty issue, banks in principle welcome this clientele with open arms. Not very profitable at first, the students of today will indeed be those who, tomorrow, will apply for a mortgage or will invest their savings.

A cash credit with no income obligation

A cash credit with no income obligation

In fact, banking establishments are not reluctant to grant loans of several tens of thousands of euros, under very favorable conditions. In this period during which students prepare for their return, the brands are even competing fiercely over the student loan with promotional offers.

As proof, after a review of the main banking establishments, the proposed call rates vary from 0.80% to 1% of fixed APR, excluding optional insurance. These low-interest rates most often go hand in hand with free application fees. Debt conditions, therefore, appear to be really attractive given the profile of borrowers The latter generally do not have a regular income.

However, banks protect themselves from the risk of non-repayment by requesting a parental deposit. In other words, the parents agree to reimburse instead of their child if the child cannot cope with the deadlines. In theory, the guarantor’s role can also be assumed by another close relative (brother, sister, uncle and aunt …) if the bank accepts it.

In addition, the rates proposed to the student clientele also seem very favorable in view of the nature of this loan. The student loan is indeed an unallocated credit, which therefore does not need to justify the use of funds. Young people can use this money as they see fit: pay for university, buy a car, a computer or finance the rental of accommodation. Usually, banks reserve their best offers rather than borrowers proving that the loan will be used for a precise and defined project, like the purchase of a vehicle or the r Realization of works.

Conditions of eligibility for student loans

bank

To obtain a student loan, the young adult must still meet a few conditions. Logically, he must have student status! That is to say being enrolled in a higher education establishment, whatever it is: major schools, BTS, IUT, universities. Besides, the banks will ask the student for documents attesting to his registration: photocopy of the student card or certificate of education.

Another constraint, the candidate for the loan must be of age. However, some banks, such as Good Lender, extend accessibility to minors aged at least 16 years. In addition, although there is no age to start or resume studies, credit institutions generally reserve the student loan for less than 30 years. In principle, after 27 or 28 years, it becomes even rare to be offered this type of financing

If the banks like the students, they can, however, be attentive to the choice of the course and the establishment. Some thus confine funding to pupils enrolled in structures recognized by the French Ministry of Education. Similarly, students of large schools or selective subsidiaries often benefit from more advantageous borrowing conditions. In order to attract the desired profiles to them, banks can also establish partnerships with certain establishments, such as business or engineering schools. So do not be surprised if your banker questions you about your training and your motivations!

If this is not an entirely separate condition, the bank can also encourage the student to open a bank account in addition to his loan. In this case, you must also take into account any associated bank charges. But also concerning them, the banks are generous towards this young clientele, sometimes going so far as to exempt them from bank card contributions and account maintenance fees.

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