"Decline in Student Loans": Over the past few years, there has been a significant decrease in the amount of student loans being issued.
In recent years, Germany has seen a significant decrease in the number of student loan agreements, with the figure dropping from nearly 60,000 a decade ago to around 13,000 in 2024. This worrying trend has been highlighted by Ulrich Müller, the head of the CHE Center for Higher Education Development, who has criticised the "unattractive terms" of KfW's student loan offer, the state-owned provider heavily affected by this decrease.
The lack of student loans is causing financial difficulties for many students. Some may be forced to abandon their studies, take on part-time jobs, or extend their studies due to the insufficient availability of loans. According to Müller, KfW's student loan offer is approaching "zero," potentially leaving students in dire straits.
The reasons behind this decline are complex and multifaceted. While economic conditions and the availability of alternative funding options might play a role, the slight decrease in student enrollment and employment stability could also be contributing factors.
Despite the federal government's aim to promote fair credit terms, concrete implementation plans are yet to be announced. The coalition agreement suggests a student loan product with interest rate fixation, but further details are yet to emerge.
In the meantime, private providers are struggling to fill the gap left by KfW. However, they are unable to fully compensate for the shortfall, leaving many students without the necessary financial support.
Müller's statement underscores the severity of the situation, suggesting that KfW is abandoning students, potentially leading to increased need for part-time jobs, extended studies, or, in extreme cases, dropping out. Without immediate action, the education of many students could be at risk.
[1] Flexible repayment terms and interest rates below market levels can be found at organizations like the Studentische Darlehnskasse e.V. in Berlin. [2] Germany's 10-year Bund yield has fluctuated, recently reaching its lowest level since early May 2025. [3] In the winter semester 2024/25, there were approximately 2.87 million students enrolled in German universities, which is slightly fewer than the previous year but still higher than ten years ago. [4] The Deutschlandstipendium offers non-repayable grants. [5] The stagnation in employment rates in Germany might also influence students' decisions regarding further education and financial commitments.
- As the demand for student loans increases due to KfW's decreasing offers, personal-finance organizations like the Studentische Darlehnskasse e.V. in Berlin offer flexible repayment terms and interest rates below market levels, providing an alternative source of aid for some students.
- In light of the significant decline in student loan agreements and the potential risks to education, it may be essential for the government to focus on efforts for research and development in the field of education-and-self-development, which could lead to innovative financial solutions to mitigate the current financial difficulties faced by students.
