Student Loan Repayment Conditions in the Federal Republic of Germany
Student aid in Germany is awarded as half grant, half loan. The amount of the award
is calculated much as it is in the United States, taking into consideration the income
and assets of the family, number of children in college, the student's income, and
other factors to help target the aid to those with the most financial need.
But there are considerable differences in loan repayment policy, especially in the
length of the grace period and interest rates. These policies are worth noting in
the USA, inasmuch as congressional majorities and the Clinton Administration have
been at odds most of the past year over student loan repayment conditions. The interest-free
policy in Germany, incidentally, will likely change next year and students will have
to pay variable-rate interest on student loans.
Germany includes repayment remission incentives to encourage academic performance
(a merit subsidy component), early completion of a degree (German universities are
overcrowded), and early repayment of loan balances. There are no comparable provisions
in US student loan statutes.
The following information about student loan repayment conditions in Germany was published
by the Bundesministerium für Bildung, Wissenschaft, Forschung und Technologie in
October, 1995, in a student guide entitled "BAföG, Gesetz und Beispiele," ("Federal
Student Financial Aid, Law and Examples"). Parts of the guide are reproduced here
(click one) in the original German and in the author's English translation.
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