2024-07-23 04:47:10
Examining higher education should not be a source of stress or a criterion for choosing your future education. Here are tips to learn everything about student loans.
What is a student loan?
A student loan is a sum of money lent by a financial institution to a student, in order to finance their studies. This is a consumer loan dedicated only to students, and even more importantly a personal loan. A student loan is basically offered under special repayment conditions (lower interest rate than a traditional loan, lower monthly payments, etc.) to suit your target audience. Like most loans, this type of loan is characterized by its amount, its rate, and its repayment period.
Like a personal loan, a student loan is undivided consumer credit, that is to say the student is able to use the borrowed money as he wants. In addition, unassigned credit does not require proof to be provided (like, for example, a car loan, assigned credit, which requires presenting a quote for the vehicle to the bank).
Student loans are rarely offered in France. According to Unef (National of Students of France), only 300,000 bank loans are taken out by students each year, affecting around 10% of the total student population. This number can be explained by the lack of information given on the provision of this loan, by the reluctance of certain financial institutions to grant a loan, and by the current difficult economic situation which is particularly dangerous vis-à- vis of compensation.
Why a student loan?
During the period of inflation, student safety is a reality in France. Some students do not have enough to eat, others give up on the pursuit of higher education.
To be able to make ends meet and continue your studiesThere are a few options for you: find a student job, ask your loved ones for help (not all loved ones can or want to help), or get outside help. Among the financial aid available to students, some of which are reserved for vocational training programs, you can mainly access study grants, housing assistance, and therefore student loans.
Unlike other financial aid, student loans must be repaid. However, it has two important advantages:
- You can ask for several thousand euros, and some loans even provide a cash envelope that can exceed 100,000 euros.
- Student loans can be used to help you pay for any expense.
In fact, you can use your student loan to pay for your school fees, rent, food, living expenses, etc.without being accountable for the use of borrowed money.
Who can get a student loan?
In principle, Student loans are open to all students. Regardless of the studies you have done (at the university, IUT, Grandes Ecoles, etc.) and regardless of your age, you can request to benefit from it. Even children – for example a 17-year-old who has just finished high school and wants to start higher education at the beginning of the school year – can get a student loan. The loan agreement will also need to be signed by the parents.
In practice, Financial institutions may be reluctant to offer a student loan. First, a bank confirms your age and student status, and asks you for proof of address. Living with your parents is a good place for your file, because it removes the rent burden from you. A banking advisor can also find out about your training and professional plans, and eliminate the possibility that you will have to find a job.
The loan company will also request financial guarantees from you and/or one or more guarantors. Guarantors are relatives, usually parents, who assure the financial institution that they are capable and will repay (alone or jointly) your student loan.
Banks generally refuse to grant any loan to applicants whose debt ratio is higher than 33%. For a student, the bank will calculate the debt ratio while also taking into account the status of your creditors. So you look at both your financial resources (including the aid you receive), and those of your sponsors.
Whether or not you get your loan, and the possible characteristics (interest rate, payment period, amount) depends on:
- Your loan request: Longer payback and greater value are fundamental factors in high interest rates;
- Personal Status: the presence or absence of a sponsor and their income, the number of years of training planned, your future job, etc. ;
- Your credit score is calculated according to the following formula: (fixed expenses of student and sponsor(s)/public monthly fee) x 100.
Since students are not the most suitable borrowers, and not all of them have a relationship that can act as guarantors, the State has been offering guaranteed student loans since 2008 .
What are the different student loans available?
Traditional student loans
Some financial institutions provide a dedicated loan offer to students. This is especially the case for many traditional establishments, online and physical on the French territory, among which we find historical French banks, such as LCL (Le Crédit Lyonnais), Société Générale, Caisse d’Épargne, etc. . It is simply a A consumer loan that is not allocated, but with conditions that are suitable for students.
Examples of rates offered by major French banks as of July 14, 2024. Fairly stable interest rates compared to last year.
State-guaranteed student loans
A state-guaranteed student loan (PEGE) is A loan dedicated to students who do not have a person to act as a guarantor for their loan. During PEGE, in fact it is the State that acts as a guarantor with the bank, so you do not have to provide a guarantee of a loved one or proof of income. However, this is not a zero-interest loan. A guaranteed state student loan provides for specific situations:
- The maximum amount is €20,000;
- No borrower guarantee is required (which reduces the cost of the loan);
- Compensation is only at the end of your studies;
- You must be at least 18 years old and under 28 years;
- If you are not French, you must be a national of the European Union or a member state of the European Economic Area (EEA) with five years of uninterrupted legal residence in France at the time of signing the contract ;
- You must study in a higher education establishment that is approved by the Ministry of Education and Research (university, business school, technical school, high school for BTS, etc.). French degrees not recognized by the French higher education system, such as specialized Masters, Masters of Science, Bachelors, etc., do not offer the opportunity to obtain a PEGE.
The state-guaranteed student loan is offered by Bpifrance partner banking establishments. It is the latter that freely sets the interest rate of your loan, as well as its duration (basically between 2 and 10 years).
Local student loans
Certain regions of France sometimes offer personal loans or personal microcredits.
How to find a student loan?
Traditional student loans
You can consult the online advice of all traditional banks and other financial institutions as well as online credit institutions. To find the best deal, you need to compare the different interest rates available to you. For many years, all financial institutions were required to accompany their loan offer with an APR disclosure. The average annual effective rate includes all loan costs (including borrower insurance, application costs) in order to have the same reference between the offers and to be able to compare them.
You can use comparators or do your research. Knowing that some online comparisons are not independent and show partner financial establishments, sometimes it will be more interesting to spend time to go to different sites of banks that offer such an offer. With most of them, you can also exercise a student loan directly online, and thus find the characteristics of the loan.
State-guaranteed student loans
A state student loan is guaranteed only issued Bpifrance banking partner. You must both contact one of these banks (it is also recommended to compare the offers) and request a proof of identity from Bpifrance.
Local student loans
Find out more from your local council to find out if you are considering a student loan. This will also be an opportunity to learn about different financial aid in your area, often unknown aid, from which you can benefit.
Also remember to contact the institution where you are studying, as some have partnerships with banks for student loans with attractive conditions.
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