If for some students summer is synonymous with holidays, for others, it’s time to prepare for the start of the school year. School fees, accommodation, supplies…the bill can balloon quickly. For adult students, banks can offer loans on concessional terms.
For 91% of the 709,000 baccalaureate candidates in 2022, now is the time to prepare for what’s to come. Many graduates will go on to higher education: faculty, school, vocational training … but building their future has a cost: Education, housing and suppliesand sometimes a car … in January, France information It is estimated that a student spends an average of €7,118 annually on his higher education.
While parents can help their children financially, other young people have no choice but to do so Switch to Student Loan. But how do you choose?
No control over the use of money
A student loan is an unearmarked consumer credit, which means it can be used for all financing needs, except for real estate projects, SocGen recalls. Thus, the student, without the right to inspect the bank, can finance school fees, buy furniture to furnish an apartment, finance a car or give him money for a trip abroad.
However, there is no doubt about getting into too much debt: We recommend correctly sizing your needs, confirms Sebastian Kotti, director of credit marketing development at LCL. The upstream student is advised to help him budget for his loan, even if he has the last word.
The money can then be paid out all at once, or every year on a specific date, for example in September, when school fees have to be paid. A solution that prevents the student from finding himself With a lot of money in his checking account. Regarding reimbursement, it is possible Establishing a difference on the repayment of the capital, details Imad Tabet, Director of Retail Market at Crédit Coopératif. In this case, the interest is deducted every month, but the outstanding principal is repaid after the study, when the student is most likely to get a job and thus receive a salary. In 2021, 61% of Credit Coopratif customers chose this option.
18 years old and a student
Please note that not all applications are accepted. First of all, the student must prove that he is studying, By presenting a student card or school certificate. Then, we’ll make sure we’re dealing with someone managing their accounts properly, without over-authorizing overdrafts for example. Imad Tabet explains, that we are checking that there are no excessive indebtedness actions against him or a check book ban.
another requirement, Be at least 18 years old: The loan can only be entered into with an adult. For others, parents will have to take out traditional consumer credit to fund their children’s education. However, some banks, such as BNP Paribas, allow parents to obtain consumer credit before transferring it to the child of adulthood.
Student loan: How can I borrow if I am under 18?
Is there a period to take out a student loan? Funding requests are concentrated From May to mid-July, then from mid-August to the end of October. These are the two periods in which there are funding needs, either to prepare for the start of the school year, or to prepare for school entry, believes Sebastian Kotti. Despite this, it is It is possible to apply for a student loan at any time of the year: If a student does not anticipate all his needs at the beginning of the school year, he can, for example, borrow after three or four months.
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However, some banks offer preferential rates during the summer period. And with this Crédit Coopratif decided, until the end of September, To offer a flat APR of 0.50% for all profiles, for a loan between 1,500 and 60,000 euros. Tempting offer to bring back students who neglected to create this product last year: In 2021, we did not offer a promotion. However, other banks had promotional rates of 0.90% when we stayed at 1%, Emad Tabet recalls. This year, the first weeks are much better and we should have more files for 2022. At Credit Coopratif, in 2021, the average student loan amount was 17,230 euros for an average of 60 months.
At LCL, a summer promotion is not offered but several solutions are offered to students: the premiere is Avance Etudes, a 0% loan of 1000 EUR Payment is made within 12 months. They are mainly used to pay for supplies or small tuition fees, such as between university, Sbastien Kotecki points out. Credit Lyonnais Offers Second offer 0% max. €5,000, which can be combined with prior studies. 5,000 euros can be awarded All students, for any kind of curriculumwith no discrimination.
Moreover, the offer is spread over several levels at an interest rate of 0.60% for the best profiles and 1.50% for others. There’s Comfort Class, Premium Class and Lite Class, we detail at LCL. These three offers make it possible to borrow Up to €50,000 over periods of up to 120 months (10 years). The Convenience Offer, which applies to all courses, is now at a rate of 1.50%, with no application fee. The light show, for its part, is reserved for Grandes Ecoles students, with an average of 0.60%.
Example of student loan cost
To fund a master’s degree at the university, Clement needs 10,000 euros. LCL offers him a student loan with an APR of 1.51%, with no application fee. If Clément wants to pay off this amount in 60 months, his monthly payment will be €173.10 for The total cost of the loan is 10,386 euros, except for optional insurance. So the amount of interest is up to 386 euros. On the other hand, if Clement decided to pay off this amount in 36 months, his monthly payment would be €284.25. On the other hand, the total cost His balance will drop to 10,233 euros.
Martin, who enters business school, wishes Borrow 30,000 Euro. It takes advantage of the best rate offered by LCL, i.e. 0.60%. If Martin committed to working for 72 months, he would have to pay €424.32 per month for the total cost (excluding optional insurance) of 30551.04 EUR, that is 551.04 euros in interest. If he decides to take as long as possible, 120 months, his monthly wage drops to €257.64. On the other hand, the total cost of his loan increases 30,916.80 EUR.
Examples made using the LCL Student Loan Simulator.
Most banking institutions also have partnerships with schools and offer promotions to their students. At LCL, this so-called premium offer is offered at a rate of 1%. Our clients’ children also benefit from this 1% rate, regardless of their education, explains Sebastian Kotti. La Banque Postale, with more than 200 partnerships, offers students from its partner institutions an average of 0.60%. For others, the APR is fixed, 0.80%. A very interesting offer, when the regular prices of Societe Generale or LCL are currently quoted at 1.50%.
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If the Crdit Coopratif continues until the end of September, it is difficult to say what the rest will look like. Like all other credit rates, student loan rates are a victim of the extremely rapid rise in the 10-year OAT (1.86% as of July 7, 2022)French government debt securities, which are the main benchmark for banks when setting their prices.
In the meantime, students can finance their studies on beneficial terms, but not without vigilance. Reminder: Like any credit, a student loan is binding on the borrower and must be repaid. In the event of default, the bank Will turn to the guarantor, often the parents Or someone close to the student.
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