development bank
KfW reduces interest rates on student loans
Students at the Ludwig Maximilians University in Munich. The KfW interest rate will drop to 7.51 percent for newly concluded contracts on April 1st. photo
© Peter Kneffel/dpa
Anyone who takes out a KfW loan to finance their studies has to pay interest. After significant increases, the interest burden is now falling slightly.
How high the interest is on student loans that are already in progress depends on the individual case and when they were taken out. According to the information, all borrowers benefit from the decline in the reference interest rate.
Interest rate adjusts twice a year
The interest rate for the student loan is reset every six months on April 1st and October 1st. The reference interest rate – the so-called six-month Euribor – reportedly rose significantly after Russia’s war of aggression on Ukraine, which made student loans more expensive.
The background is primarily the interest rate increases by the European Central Bank (ECB) in the fight against inflation, which has temporarily risen significantly. Inflation is now on the decline. Economists expect the central bank to cut interest rates in the summer.
Loan without collateral
KfW has been offering student loans, for which it does not require any collateral from borrowers, since 2006 using its own resources without federal budget funds. According to its own statements, the development bank does not want to make any profits from this, but it has to cover its own costs. The student loan is intended to cover the part of living costs that cannot be covered by student loans, support from families or a part-time job.
There is a maximum of 650 euros per month for a maximum of 14 semesters. The maximum amount is therefore 54,600 euros. After the last payment, an 18-month waiting period begins, followed by the repayment phase. There is a maximum of 25 years for repayment.