Many students face the question of how to finance their studies before they even start. A student loan is one option.

Without financial support from parents, BAföG (Germany's state student aid) or a scholarship, paying for college is a major challenge.
Students suddenly face the high costs of everyday life such as rent and utilities, plus semester fees and textbooks for their courses. Those who attend a private university can also expect monthly tuition and even exam fees. Without government or parental support, studying is a very expensive undertaking for students and in many cases a considerable challenge. That is why the reasons for taking out a student loan are easy to understand, and the student loan is an increasingly popular way to finance college among students.

Student loans - opportunity or debt trap?

Student loans

However, a student loan often carries binding risks and consequences that the student takes on when borrowing. At first glance, a loan for your studies seems like a quick fix and the ideal solution to the financial problem. After all, when taking out such a loan, the student receives a set amount in their account every month to cover their living costs. As a rule, students even have up to two years after finishing their degree before repayment has to begin. However, if the student graduates much later than planned, drops out, or has trouble finding a job after graduating, the loan quickly becomes a serious burden. Dropping out in particular usually leads to serious problems with lenders. Often the payouts stop immediately after the student is exmatriculated (formally withdrawn from the university) - and repayment usually becomes due right away! Not every lender offers the option of continuing to support the student and continuing the loan if they resume their studies.

Student loans - the fine print

Student loans


If the degree isn't completed on time, meaning the student exceeds the standard period of study, complications can also be expected. If the student doesn't begin repayment on time and thus overruns the repayment period, the lender demands high interest, which turns the student loan into an ever-bigger debt trap. Reduced payments or deferrals are only very rarely possible. In extreme cases, the student faces personal bankruptcy.
Anyone who wants to use a student loan as an opportunity should therefore ask themselves before starting whether they have what it takes to complete their degree on schedule. If you're unmotivated and unsure, you should skip the student loan. It's advisable to take enough time to compare student loans from different lenders and find the best possible provider. Before signing the contract, it's especially worthwhile to examine the fine print thoroughly.