If the cost of higher education is mostly borne by the State in the public sectors, the bill for private schools reaches between 3,000 and 10,000 € per year. To allow the course of their dream that will give them a maximum chance of professional integration, many students have no choice but to take a loan, even before entering the working life. Better to choose well…
A dedicated offer
Most banks offer one or more student loan offers. Make no mistake, these are classic consumer credits, with the difference that they are “assigned”. In other words, the amount granted must be used only to finance the purpose mentioned in the contract, i.e. your course.
But do not panic, most formulas also provide the possibility to pay for everything related to studies, such as the purchase of computer equipment or why not a car to get to school class, but also your accommodation or food expenses. Banks are in practice not very attentive to the expenses to be financed, as long as they justify the registration in a higher education establishment.
An advantageous loan rate
The interest rate applied to student loans is generally attractive since the goal is to keep young people to encourage them to take other products and services later. According to the National Consumer Institute (INC), it is currently necessary to rely on an annual percentage charge (APR), which therefore includes all costs, including insurance, which varies between 1 and 2% on this type of credit.
Even better, some establishments do not hesitate to offer 0% APR. If a price comparison is obviously necessary, cost is not the only criterion to take into account!
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 depending on the market offers. That said, the larger the amount, the stricter the required guarantees. Banks often require the presence of a parental guarantor and the subscription of mortgage insurance that covers 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 a gradual release of funds according to your financing needs. The advantage? Interest will also be applied progressively!
The issue of repayment is also central since students have little or no income. That is why this type of credit is usually spread over 2 to 10 years. So check that it includes a deductible period, also called “deferred repayment” that will allow you to limit your monthly payments to the only cost of interest and insurance during your studies, before you start repaying the capital once you graduate. , even better, when you get your first job!
Finally, to end this financial burden as quickly as possible, make sure the contract allows for early repayment with little, if any, penalty.
Focus: A loan guaranteed by the State
If 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 from 18 to 28 years old has been successfully updated in 2021 as part of the France Relance plan. Its amount has therefore increased from €15,000 to a maximum of €20,000, while the grant quotas have been multiplied by five. To qualify, you must contact a partner bank (Societe Generale, 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. But be careful to inquire in advance with the ACPR, the police of the sector. Indeed, some sites crowdlending (credits between individuals) such as StudyLink and Edukys, which became known a few years ago for their student loans, have since ceased their activity.