On average, borrowers pay almost three times as much interest on a KfW student loan as they did five years ago. The average monthly charge is currently around 80 euros.
The monthly burden on student loans is now almost three times as high as it was five years ago. This is shown by data from the state development bank KfW, which the Federal Ministry of Education released at the request of the “Die Linke” party. In 2018, the average monthly interest payment was around 32 euros, now it is around 80 euros.
On average, borrowers paid a total of 1,300 euros in interest when their student loans were fully repaid in 2013; now it is 2,700 euros. The ministry pointed out that the amount also depends on the term chosen and the amount of the loan. Until 2021 there were rather short-term loans.
Over nine percent interest
However, the KfW student loans themselves have also become significantly more expensive. The interest rate was still 3.76 percent in October 2021. Most recently, KfW raised it to 9.01 percent on October 1st and justified this with the increase in the European reference interest rate Euribor. The Euribor is the average interest rate at which banks in Europe lend money to each other.
A KfW student loan is not paid out in one lump sum, but rather monthly. 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. Interest is usually due over the entire period from the payout phase to the repayment phase.
According to the government response, as of November 8th, almost 40,000 people were in the payment phase and 40,000 in the waiting phase, and 176,000 were paying off their loans.
The number of loan applications is falling
The number of loans applied for fell significantly. In the current year, around 8,800 applications for a KfW student loan were submitted by the beginning of November, last year there were 16,600 and the year before that there were even 24,800 applications. However, during the Corona period between May 2020 and September 2022, the federal government also covered part of the interest as a relief measure.
The left-wing parliamentary group’s education policy spokeswoman Nicole Gohlke criticized the development: “Stop the interest rate madness and give us an instrument that works: Bafög must be designed to ensure a living wage as quickly as possible,” she said in view of the numbers. The KfW student loan has not only become unattractive for many, but has also become obsolete as an instrument and is now just a rip-off.