What is a student loan with government guarantee?
Student loan granted without test or deposit facility To help young people under the age of 28 to finance their studies. Distributed by banks in the period from May to September, in view of the upcoming school year, it allows you to borrow money without having to provide a guarantee from a relative or proof of income.
The state acts as a guarantor for each contracting party in the amount of 70% of the total loan amount, excluding interest. The remaining 30% is paid by the banks.
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Who can benefit from a student loan?
To benefit from a student loan with a state guarantee, you must meet all of the following conditions:
- You must be over 18 and under 28 years old. Minors over the age of 16 can apply for this loan provided that they are emancipated.
- Be French or a member of a country included in the European Economic Area.
- Be registered at an institution in France to prepare a French higher education diploma issued by a university, business or engineering school, or in a BTS high school, etc.
There is no maximum resource limit.
Loan amount and method of operation
Legally speaking, this student loan is similar to consumer credit. Thus the student has prior information and the right to withdraw, and the loan contract is only valid once this withdrawal period (14 days) expires.
This loan does not require a guarantee or the presence of a relative as a guarantor, since it is the state that provides its guarantee to the partner banks through the Public Investment Bank (Bpifrance): Banque Postale, Banque Populaire, Caisses d’Épargne, CIC, Crédit Agricole, Crédit Mutuel and Société Générale.
Good to know: Banks can refuse to grant a loan if they consider that the contractor will not be able to pay the obligations, even with a state guarantee.
The amount of the loan depends on the bank granting it, but it has a ceiling of 20,000 euros. The interest rate on the loan is freely determined by the partner banks. Its term is determined by the lending institution.
How is the student loan paid off?
The loan contract gives the possibility of early repayment and specifies the financial terms. Repayment cannot be deferred for more than 10 years after taking the loan. The term of the loan cannot be less than two years.
Deferred payment may be provided: may relate to a full or partial discount:
- if it was for total discountThe principal and interest are repaid on the date stipulated in the loan contract. It generally corresponds to the student’s entry into working life, at the end of the study.
- if it was for partial discountthe student pays interest on the borrowed capital and any insurance premiums (subscription is not mandatory), but the principal is repaid only at the end of studies.
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