Student loans in need: High costs and falling demand are alarming!

Student loans in need: High costs and falling demand are alarming!

Financial support for students in Germany is under pressure. The rising cost of living in university cities, particularly in Munich, Münster and Mainz, has led to a noticeable decline in demand for student loans. According to the current survey by the Center for University Development (CHE), only 12,965 new contracts for student loans or education funds were concluded in 2024. This represents a decrease of 3,600 contracts compared to the previous year and corresponds to an almost 80 percent decline since 2014. Around 29,000 students currently receive support through a KfW student loan, which is considered one of the least attractive state financing instruments, alongside offers such as BAföG or the Deutschlandstipendium.

The KfW student loan, whose interest rate is 6.31 percent, is according to information from daily news one of the highest among 25 compared offers. CHE expert Ulrich Müller warns that the government urgently needs to take action to increase the attractiveness of this loan and, above all, to help students who are increasingly having to take on part-time jobs due to financial bottlenecks. This could lead to extended study times or even dropouts.

Inadequate funding conditions

A major criticism concerns the maximum funding amount of 650 euros per month, which has remained unchanged for almost 20 years. In view of the rising cost of living, experts are calling for an adjustment to 1,000 euros. In total, around 36,000 students receive funding from education funds or student loans, which only accounts for around 1.3 percent of all students. These students receive a total of around 20 million euros per month, which corresponds to an average of 547 euros per person. In addition, around 210,000 people are currently in the repayment phase of their student loans.

KfW now offers various programs to support students, such as a funding program that is independent of parents' income or other security. The aim is to reduce social inequality and make higher education more accessible to young people from low-income families. Since the KfW student loan was introduced in 2006, over 330,000 students have been supported.

Optimization of application procedures

To improve accessibility, KfW plans to submit and process applications digitally in the future and to offer additional funding for semesters abroad. However, these measures should only be implemented in the long term as they are made more difficult by regulatory and legal requirements as well as existing IT systems. Despite these challenges, the KfW program remains an important source of financing for many students during their studies.

Developments in the area of ​​student financing clearly show that politicians are required to find effective solutions to support the broad masses of students in Germany and at the same time counteract the shortage of skilled workers. Without appropriate measures, the situation for future generations of students could become even worse.