The renewed increase in the interest rate for student loans from the development bank KfW is met with criticism from politicians. The Union speaks of an “interest rate trap” for young people. The SPD parliamentary group is calling for the increase to be withdrawn.
The development bank KfW recently significantly increased interest rates on student loans – to 9.8 percent. The SPD parliamentary group is now calling for the interest rate increase to be reversed. “We call on the KfW to examine alternative solutions so that students do not get into financial difficulties,” said the SPD parliamentary group’s education policy spokesman, Oliver Kaczmarek, to the “Augsburger Allgemeine”.
In addition, Federal Education Minister Bettina Stark-Watzinger (FDP) must push forward the BAföG reform quickly. “This is the only way many students can be helped not to get into unnecessary debt,” emphasized the SPD politician.
Union criticizes the lack of fixed interest rates
The Union accused the federal government of abandoning many of the 85,000 students who had taken out a state KfW student loan in the past four years. “This is a huge problem for a number of students who are currently being hit with a hammer of interest rates,” said the education policy spokesman for the Union parliamentary group, Thomas Jarzombek, to the “Augsburger Allgemeine”. “Young people have fallen into an interest rate trap without their knowledge,” criticized the CDU politician.
The interest usually also increases the monthly repayment rate. “Every time you buy a property, a car and even an electrical appliance, there is a fixed interest rate – but not with student loans,” Jarzombek criticized the construction of student loans.
The interest rate has more than doubled in two years
The German Student Union (DSW) criticized that the interest rate is currently twice as high as for a real estate loan. The chairman, Matthias Anbuhl, described the increase from 7.82 to 9.01 percent as a “socio-political scandal”.
For new contracts, the interest rate on student loans has more than doubled in the past two years. In October 2021 it was still 3.76 percent. “It’s quite adventurous: the interest rate on student loans from a public development bank is rising to dizzying heights,” said Anbuhl. “Students can currently only be advised to be extremely careful when it comes to KfW student loans. There is a risk of a debt trap,” said Anbuhl.
KfW refers to increases in the European reference interest rate Euribor. “The social counseling services of the student unions already have a lot to do with young people who are financially overwhelmed by the loan,” explained Anbuhl. “This situation will continue to worsen.” There is an urgent need for a “full increase in BAföG”. “The KfW loan as supplementary student financing has been reduced to absurdity with the current interest rate.”