New determination as of April 1st
KFW lowers interest rates on student loans
April 1, 2024, 11:29 a.m
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KFW loans are intended to contribute to student financing. However, interest is due, which has recently risen sharply. There is better news for students with the new interest rate setting.
The KFW loan for students is becoming cheaper. The interest rate for newly concluded contracts will drop from 9.01 percent effective to 7.51 percent on April 1, as a KFW spokeswoman said upon request. The reasons are a decline in the reference interest rate and lower processing costs at the development bank due to the introduction of digital processing and application processes. “KFW passes this advantage on to customers because it does not want to make any money with the KFW student loan,” it said.
How high the interest is on student loans that are already in progress depends on the individual case and when they were taken out. According to the information, all borrowers benefit from the decline in the reference interest rate.
The interest rate for the student loan is reset every six months on April 1st and October 1st. The reference interest rate – the so-called six-month Euribor – reportedly rose significantly after Russia’s war of aggression on Ukraine, which made student loans more expensive.
Cost coverage as an approach
The background is primarily the interest rate increases by the European Central Bank (ECB) in the fight against inflation, which has temporarily risen significantly. Inflation is now on the decline. Economists expect the central bank to cut interest rates in the summer.
The KFW has been offering student loans, for which it does not require any collateral from borrowers, since 2006 using its own resources without federal budget funds. According to its own statements, the development bank does not want to make any profits from this, but it has to cover its own costs. The student loan is intended to cover the part of living costs that cannot be covered by BAFÖG, support from families or a part-time job.
There is a maximum of 650 euros per month for a maximum of 14 semesters. The maximum amount is therefore 54,600 euros. After the last payment, an 18-month waiting period begins, followed by the repayment phase. There is a maximum of 25 years for repayment.