The student loan guaranteed by the state: A solution to finance his studies for the success of all
Once a bachelor’s degree is in your pocket, a student faces many expenses for his studies, and it is sometimes difficult to fund them in their entirety. The state-guaranteed student loan is one of the financing solutions for studying peace of mind. Here are the specifics of this advantageous loan.
Purpose of the student loan guaranteed by the state:
Student spending is becoming increasingly important, and often parents’ help and student jobs are not enough to deal with it. The student loan guaranteed by the state is a consumer credit that banks grant to students to finance their studies, and ancillary costs such as registration fees, housing, food, school equipment etc … without guarantee of a loved one, neither of conditions of resources. There is no proof to provide regarding the use of the funds of this student loan. The repayment can be postponed after graduation, that is to say that the borrowed capital begins to be reimbursed at the end of the defined period, which usually corresponds to the end of studies.
Who can benefit?
In order to be able to access the student loan guaranteed by the state, the student must meet a few criteria:
- The student must be enrolled in an institution in France to prepare a diploma of French higher education, be it a university a business school, an engineering school or a high school as part of the preparation of a BTS. The bank will ask for a proof of registration.
- The student must be over 18 years of age and under 28 years of age at the date of conclusion of the loan
- The student must be of French nationality, or possess the nationality of one of the member states of the European Union or the EEA (European Economic Area). For the citizens of member states of the European Union, it is necessary to justify a residence without interruption in France since at least 5 years.
There are no qualifying criteria for subscribing to the state guaranteed student loan.
The state as guarantor:
To take out this loan, a third party guarantee is not necessary, it is the State which guarantees itself to the partner banks and thus takes care of part of the risks, up to 70% in case of default. of the borrower. The remaining 30% is taken over by the banks. The management of this guarantee fund was entrusted to Oséo, which was renamed BPI France in 2013, the public investment bank. A partnership agreement was signed on 23 July 2008 by the Ministry of Higher Education and Research and Oséo to encourage financial organizations to finance student life. The duration of this guarantee is 10 years from the date of the first payment of funds by the borrower.
Features of the student loan secured by the state:
The state-guaranteed student loan is not a zero rate loan, the interest rate is set freely by each partner bank and may vary depending on the type of studies pursued and the type of repayment chosen. The bank therefore takes into account the professional project of the student, his level of education but also his sector before granting the loan. The interest rate is included according to the banks between 1.5% and 4%. The amount of the loan depends, of course, on the amount of training, but also on the amount of the expected remuneration on the labor market. With this student loan, banks are banking on the future. A student in business school or engineering school can therefore hope to obtain a student loan with a larger amount than a university student. However, there are limits, since the maximum amount of the loan is 15,000 euros per student. The bank can offer its own insurance to insure your loan, but the student can choose himself the organization that will insure it. There are several insurance comparators that will help you compare the best deals. The bank can apply for death and disability insurance to the student in order to grant the loan. Like all consumer loans, there are procedures to respect the prior information of the borrower, the establishment of the contract and the right of withdrawal.
The right of withdrawal allows for a reflection period of 7 days from the signing of the student loan agreement. During these 7 days, it is possible to cancel the loan without explanation and without charge. All you have to do is send a registered letter with acknowledgment of receipt to the bank.
How to benefit from the student loan guaranteed by the state?
In 2010, these 5 banks agreed to be partners in the state-guaranteed student loan scheme.
Just file a loan application form with one of these partner banks. It is the bank that will then decide whether or not to grant the loan and who will define the conditions. The loan will be repaid in a deferred manner, meaning that the student will start repaying the loan upon entering the workforce. Be careful though, the bank may refuse to grant the student loan if it considers that it can not be refunded, even with the guarantee of the state.
Repayment Terms :
As for the amount borrowed and the Global Effective Rate of the credit, the duration of the student loan guaranteed by the state can also vary. The minimum duration of the credit is 2 years and can be up to 10 years, particularly for long courses and for larger amounts borrowed.
The repayment of the student loan can be done in two different ways:
- Partial deductible: the student will pay during the course of his studies the interest corresponding to the amount borrowed, on a monthly basis, as well as the insurance premium if a credit insurance has been taken out. The repayment schedule is defined in advance, and repayment of the capital begins at the end of the borrower’s studies.
- Total Free: Interest payments calculated on the loan amount are also deferred at the end of the borrower’s studies. The student will only pay the insurance premium during his / her course. It is important to remember that the deferral of interest generates additional interest, and therefore the total cost of the credit will be higher than partial deductible.
The total amount of the monthly repayment must not exceed 33%, which corresponds to the debt ratio. It is the bank that will calculate the total amount of reimbursement not to exceed, including fees and insurance.
The student loan agreement must provide for the terms of early repayment of the loan. When finances permit, it is possible to repay all or part of the student loan in advance. It should be noted that under the terms of the contract, the early repayment of a consumer credit may be accompanied by penalties, better known as ARI or IFRA. Do not hesitate to carry out simulations to check whether the operation is profitable or not.
Before embarking on a student loan, it is important to compare offers. Here are some tips to help you compare different loan offers:
- Global Annual Effective Rate (APR): it gives a vision of the total cost of the credit, taking into account the interests, the fees of the file as well as the insurance.
- Bank charges: They vary from bank to bank, some banks will charge fees, and other banks will offer you.
Some banks are organized into independent regional funds, so there may be disparities between institutions. It may be useful to compare the offers of the agencies of the place of residence and those of the place of study.
Banks may also have some benefits such as a free credit card, or preferential rates in some stores or on certain services.
Some banks allow a total or partial release of funds, which can be paid quarterly, semi-annually or even annually, this is the case for example of Gen Society.
According to the latest statistics from the Ministry dated 24 August 2016, since 2008, 51,543 state-guaranteed student loans have been granted, for a total amount of 430 million euros. On average, students borrow 8300 euros over a period of 72 months, or 6 years, including a deferral of 2 years between the end of studies and the start of repayment.
The student loan guaranteed by the state remains a credit, so you agree to repay it. It is therefore necessary to check your repayment capabilities before you commit. top