New contracts for student loans at a historic low
Between 2022 and 2023, there were over 30 percent fewer new contracts. In 2020, the number of new contracts jumped significantly to 52,000, which was due to the coronavirus emergency measures of the German government. However, this was only a short-term special effect - the downward trend continued in 2021.
"The market for study loans is losing significance more and more, study loans are developing into a niche product," explained Ulrich Müller from CHE. A significant factor in this was the state study loan from KfW. For decades, it had dominated the market, but now it was on its own.
In comparison to the previous year, the number of new contracts for the KfW study loan almost halved. In 2023, it was at 8,900. Müller named the discouraging effect of the interest rate as the reason. With an interest rate of 7.51 percent in the repayment phase, the KfW study loan had the highest interest rate of all providers. Apart from interest-free offers from student services, there was no offer below 4.87 percent in the repayment phase.
This development is fatal for those who have no other financing options for their studies. Currently, around 1.5 percent of all students receive money from an educational fund or a study loan. On average, each student receives €535. Around 213,000 people are still repaying their loan.
"It's not surprising that the number of new KfW study loan contracts has halved," explained the chairman of the German Students' Union, Matthias Anbuhl. Students should be clearly advised against a loan as the only financing instrument. Anbuhl criticized the lack of political will to change the situation. The KfW study loan is eliminating itself.
- The Federal Government, through the KfW Banking Group, offers study loans to students, which have seen a significant decrease in new contracts over the past year.
- The Center for Higher Education Development (CHE) has noted that the market for study loans is shrinking, with study loans becoming a niche product.
- Ulrich Müller from CHE attributes this trend to the state study loan from KfW, which has dominated the market but is now declining in popularity.
- In 2023, the number of new KfW study loan contracts almost halved compared to the previous year, with only 8,900 contracts signed.
- Müller believes that the high interest rate of 7.51 percent in the repayment phase is a significant factor in the decline of KfW study loans.
- Matthias Anbuhl, the chairman of the German Students' Union, believes that this development is problematic for students who have no other financing options for their studies, as they are the ones who may be most affected by the decline in KfW study loans. He also criticizes the lack of political will to address this issue.
