At the start of the 2013 academic year, 2430100 students were enrolled in higher education streams. With a 1.8% increase in students compared to 2012, the number of students in France has never been greater. More and more young people want to pursue post-baccalaureate studies so that they can later access a stable and well-paid job.
Let’s see below in detail what the student loan is, who it is for, the amounts proposed, the factors to consider before taking out such a loan, its advantages and disadvantages, as well as other alternatives that are available to you.
What is the student loan?
The student loan is a consumer loan that must allow you to finance your studies and all the needs that you will have during your student life: tuition, housing, computer, food, travel abroad or anything else because No proof of expense is required to apply for it. The student loan is considered a personal loan and therefore you can use the money as you see fit. This is called an unallocated loan. It is the student who subscribes on his behalf this loan.
The student loan is divided into two parts:
- Student Loan Franchise
This is the period during which the repayment of your student loan is deferred. Generally, the student loan exemption period covers those of your studies, so that the repayment of your student loan begins at the beginning of active life, the purpose of your student loan, being to finance your university studies.
This deferred credit phase is spread over 2 to 6 years. During this period, you can opt for a “partial” student loan franchise or a “total” franchise.
If you choose a Total Student Loan Franchise, you have nothing to pay during the Franchise Phase, except for any insurance premiums (disability / death). In other words, the first money you pay to pay off your student loan comes after a few years. With this option, you are free of credit costs for the duration of your studies.
Conversely, the partial student loan franchise means that you will only repay the interest on your student loan with possibly the insurance premiums. If, it seems compelling, since it charges you fees even before the end of your studies, it will ultimately be less expensive than the total deductible because the more the refund of interest is deferred, the higher the interest is high . If your financial means allow you so, it is wiser to choose a partial franchise.
What are the terms of the student loan and who is the student loan for?
To access a student loan, you must be enrolled in a graduate program: university, IUT, BTS or grandes écoles and most of the time under 28 years or 30 years but more and more banks offer these credits without age limit. Thus, an employee returning to studies can take out a student loan at a more interesting rate than a personal loan. On the other hand, it is necessary to be at least major.
According to a 2010 survey showing the proportion of borrowers among students according to their industry, it is the students of business schools that have most contracted student loan. A need that is justified by much higher fees than at the university.
The file to be constituted to obtain a student loan varies according to the banks but it must include obligatorily the following parts:
- Estimated amount needed. Even if you do not have to justify the expenses made with the student loan, the bank still wants to make sure that it is necessary to you and the proof of your capacity to establish a budget is seen as a guarantee of seriousness as to future repayment. So, everyone to determine precisely its needs for the duration of his studies but rest assured, there are specialized sites that provide Internet users a calculator to easily establish its budget.
- Proof of student status. As this type of loan is reserved for students, this request for proof is self-explanatory.
- Deposit of a person of the entourage (generally the parents). It is also at the level of repayment capacity because if you are unable to repay your student loan, it is the guarantor who will be required to do it for you. It will therefore take into account its revenues, current expenses as well as its schedule of loans already in progress.
How much to borrow from a student loan?
To succeed and above all to finance one’s studies and one of the best ways to secure one’s future and future choices. Students are potentially wealthy, in higher education they will earn on average a lot more than those who do not. They therefore offer a strong potential for the banks: they are likely to domicile their future income within the bank, to take a savings product, to subscribe a real estate or automobile loan or even insurance etc … That’s why, many competitive offers are offered by banks and as a result, borrowing has never been so cheap.
Several banks offer rates of between 1% and 2% for the student loan. Or, 2 to 3 points less than a conventional consumer credit. Some banks segment their rates according to the profile of the student for their student loan: future graduates of high schools like HEC or Polytechnic are often entitled to a better offer of student loan than those enrolled in a short course. The rating of the course followed is also an element taken into account by banking institutions. And in this same logic, a larger sum will be allocated if you are in master rather than if you are in first year of license. In other words, do not delude yourself, you will be lent more on a student loan if you are enrolled in a large school rather than university. This is explained by the fact that the degree determines the level of income at the end of studies and the students of the grandes écoles represent future customers with high purchasing power and are therefore very attractive to the banks. Thus, for example, a management student will be granted an average of € 17,000 for his student loan against € 7,000 for a student loan for a young student enrolled at the university.
This inequality is denounced by the Fage, the second student union in France: “Student loans can not guarantee equity between a student of modern literature and a medical student. They must remain complementary and not substitute for scholarships and social assistance, ” said Philippe Loup, president of the organization between 2010 and 2012.
Namely also that the higher the borrower’s own income and those of his surety, the higher the amount of the proposed student loan will be.
In general, the amount of a student loan can vary from 800 € to 450000 € and its total duration can run from 2 to 10 years. However, some banks offer more, like BNP Paribas, which grants up to € 200,000.
Beyond the maximum amount you can borrow, it is primarily up to you to assess the amount to borrow and the common sense premium: you should only borrow the essentials when you take out a student loan, so as not to to put yourself in difficulty at the beginning of your professional life. It should not be forgotten that with the first job come the first expenses, like the purchase of a car to go to work or the installation in his new home …
Moreover, in order to limit the over-indebtedness, the banks can decide to refuse the student loan if the total monthly amount of the repayments is higher than 33%. This basic rule applies to all credits.