While the cost of higher education is largely borne by the state in the public sectors, the bill for private schools fluctuates between € 3,000 and € 10,000 per year. To allow themselves to fulfill their dream that gives them the maximum opportunity for professional integration, many students have no choice but to take a loan, even before entering the world of work. Better choose wisely …
A dedicated offer
Most banks offer one or more student loan offers. Don’t get me wrong, they are the classic consumer credits, with the difference that they are “sold”. In other words, the amount granted must only be used to finance the purpose mentioned in the contract, which is your course.
But don’t panic, most of the formulas also include the possibility of paying for everything related to studies, such as the purchase of computer equipment or why not a car to take you to class, but also the costs of room and board. In practice, banks are not very attentive to the expenses to be financed, as long as they justify enrollment in a higher education institution.
An advantageous borrowing rate
The interest rate on student loans is generally attractive as the goal is to retain young people to encourage them to subscribe for other products and services at a later time. According to the National Institute of Consumers (INC), it is currently necessary to rely on an annual percentage rate of charge (APR), which therefore includes all costs, including insurance, varying between 1 and 2% on this. type of credit.
Better yet, some establishments don’t hesitate to offer 0% APR. If a price comparison is obviously necessary, the cost is not the only criterion to consider!
Conditions under the magnifying glass
Depending on your needs, you can borrow a few hundred or several thousand euros and even up to 50,000 euros depending on the market offers. That said, the higher the amount, the stricter the guarantees required. Banks often require a parental guarantor to be present and borrower insurance to cover death and disability when the amount involved is high.
To avoid paying the high price, the INC also recommends opting for an offer that provides for a gradual release of funds based on your financing needs. The advantage? Interest will also be applied progressively!
The issue of reimbursement is also central as students have little or no income. This is why this type of credit is generally spread over 2 to 10 years. Then check that it provides for a period of deductible, also called “deferred repayment” which will allow you to limit your monthly payments to the cost of interest and insurance only during your studies, before starting to repay the capital once you graduate in your pocket or, even better, when you get your first job!
Finally, to put an end to this financial burden as quickly as possible, make sure the contract allows for early repayment with minimal, if any, penalties.
Focus: A loan guaranteed by the state
If the banks refuse you a loan due to lack of income or guarantor, you can turn to the loan offer guaranteed by the state. This credit reserved for students aged 18 to 28 was rightly updated in 2021 as part of the France Relance plan. Its amount thus increased from € 15,000 to a maximum of € 20,000, while the grant installments were multiplied by five. To qualify, you must contact a partner bank (Société Générale, Banques Populaires, Caisses d’Epargne, Crédit Mutuel, CIC, Crédit Agricole, Banque Postale or BFCOI in overseas France) between the months of May and September. Note that each institution remains free to set the interest rate.
Good to know: An alternative is to use crowdfunding. Be careful, however, to inquire in advance with the ACPR, the sector policeman. Indeed, some sites crowdlending (private loans) such as StudyLink and Edukys, which became known a few years ago for their student loans, have since gone out of business.