This type of loan is commonly used by young people. Some options weigh down the bill
Between the registration fees – 200 to 600 euros a year at the university and up to 10 000 euros a year for a big school – the cost of housing, transportation … there is a good chance that you have to give a financial boost to your child if he decides to continue his studies. According to the Observatory for Student Life (OVE, 2013), the average monthly student budget is 681 euros, of which one third is provided by the family, a quarter by public aid. To fill the balance, the student loan, intended to finance studies, is commonly used by young people.
Since the latter are often high-potential customers, the institutions roll out the red carpet for them to buy a loan at home. Firstly, the rates are particularly competitive: they are around 2%, which is three times less than a conventional consumer credit. Among the beneficial business practices, note also that no bank charges a fee and all of them allow to repay the credit balance in advance, without penalty. They also grant an extension in course of course, which can be useful in case of a gap year abroad for example, without applying additional costs.
DO NOT LEAVE RUNNING INTERESTS
The conditions of the grant are quite variable according to the establishment and especially the curriculum followed. In general, the students of the grandes écoles obtain loans on terms much more interesting than those of a general university: the rate can then go to the triple. Some vocational degrees (BTS and DUT) are also favored by banks. In the case of a loan of fewer than 20,000 euros, most institutions do not ask for a deposit. Beyond this amount, parents will have to make a commitment to reimburse the bank if their child fails. If their financial situation prevents them from vouching, there is the Bpifrance student loan, guaranteed by the State and available from five networks (People’s Bank, Savings Bank, CIC, Crédit Mutuel and Société Générale). It can borrow up to 15,000 euros, but the rates are less interesting.
“Before taking out a credit, students have an interest in going to the student’s office or the school administration to find out if there is a partnership with a bank, which provides preferential terms on credit and banking services, ” advises Christophe Pierre, head of credit marketing at LCL. Also, check that your bank does not grant specific rebates: some offer more interesting terms to the children of their customers.
To limit the cost of credit, it is better to ask your advisor to unblock the funds in several times. Thus, the interest runs only on the fraction of the sums used with each return, which makes it possible to save in case of long studies. Similarly, it is often proposed to pay interest only at maturity. A bad idea, because in this case, they capitalize on the amount to be repaid and the overall cost of the operation is much higher. It is therefore wise to pay them back every month.
Once graduated, the student must start repaying the loan. It is then recommended to use the deductible (this period during which the credit does not have to be repaid and which can reach five years on average) for the shortest possible duration because this option is expensive in interest.