A student’s budget is often high depending on the cost of studying in some schools. Thus, despite the support of parents and any public aid (housing allowance, study grants, etc.), it is sometimes necessary to resort to a loan to be able to make ends meet. Most banks offer specific loans for students.
Student loan: the conditions for obtaining
Student loans offered by banks are aimed particularly at young people between the ages of 18 and 25. To be able to benefit from it, the student must be enrolled in a higher education institution. Regardless of the nature and duration of the studies pursued: BTS, university, grandes écoles ... The student will also have to provide a parental guarantee or a third party and possibly take out death and disability insurance in order to obtain his loan (most of the banks require it).
How to choose the right student loan and at what price?
Student loans are granted at a particularly attractive interest rate, on average 2 to 3 points lower than that of conventional loans. The amount of the loan depends on the student's needs, the length of their studies and their repayment possibilities once they enter working life. This amount can vary from € 800 to € 30,000.
A loan to finance your studies or to use freely
The borrower is not required to justify its use of the borrowed amounts. They can also be used to finance one's studies, to cover everyday expenses (rent, deposit, transport, etc.) or to finance the acquisition of capital goods.
Some banks also offer gradual release, meaning that funds can be released a little bit each year, instead of being released all at once. This formula is interesting because the funds are paid at the rate of the real needs of the student. The total cost of credit is then lower, because interest only accrues from each release of funds.
A student loan is repaid after studies
The method of repaying student loans is particular. Repayment will only begin after a period called a "deferred repayment" or "franchise period". This deferral allows the student to repay their loan only after completing their studies and finding a stable job. The duration of this period therefore corresponds to that of his studies with a small margin for more flexibility. Two deferral formulas exist: the partial deferral and the total deferral. With a partial deferral, the borrower only pays the interest and the insurance premium. With a total deferral, he only pays the insurance.
At the end of his studies, the borrower repays the entire loan. This second solution seems more attractive but it is also more expensive because during the deferral period, the interest due each year is added to the amount of the borrowed capital and in turn generates interest. Banks generally limit the total loan term to nine years, so the longer the deferral period, the shorter the repayment term.
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