Students increasingly seeking hardship bridging aid

Student service organisations in Germany are receiving more and more applications for bridging aid from students facing financial hardship through the coronavirus crisis. Meanwhile, a new survey suggests that a loan scheme to back students – favoured by the education ministry – bears weaknesses.

Paying out of bridging aid to students running into financial difficulty started in late June, two months after the measure had originally been announced by the government. Federal Education and Research Minister Anja Karliczek made it clear from the start that she favoured loans to support students who had lost their jobs or otherwise lacked financial support during the coronavirus crisis.

Bridging aid of up to €500 (US$564) a month is now being provided for students who are able to supply sufficient proof of economic hardship. According to Achim Meyer auf der Heyde, secretary general of the Deutsches Studentenwerk (the German National Association for Student Affairs), which is responsible for paying out the support, 72,178 students had already submitted applications by 30 June.

By that date, €631,900 had been transferred out of the total €100 million provided by the Federal Ministry of Education and Research (BMBF).

“Whether the BMBF funds will be sufficient depends on the number of applications we receive in July and August,” Meyer auf der Heyde says.

In parallel to the bridging aid measure, Minister Karliczek announced that students were being offered an interest-free loan of up to €650 a month for one year via the government KfW bank. Students were able to apply as of the beginning of May.

Germany’s Centre for Higher Education (CHE) has now published a survey on student loans indicating that they have generally become somewhat unpopular. According to the CHE, the number of student loans taken out fell from around 60,000 in 2014 to 33,000 in 2019.

Ulrich Müller, director of political analyses at CHE, says that external funding sources such as banks and even the federal government’s BAFöG combined grant and loan scheme have seen a drop in significance in recent years.

“Part-time jobs and family support are now the true pillars of financing studies in Germany,” Müller maintains. “That’s why the economic slump caused by the corona pandemic is hitting students doubly hard, for both part-time jobs and parental support threaten to collapse.”

In all, 75,000 students were receiving support via loans (excluding the BAFöG-supported students) in June 2020. Almost half of these loans had already been agreed with banks in 2019. Average monthly payments amounted to €530.

Among the bank loans available for students, the KfW Student Loan is still the most popular option, with 81% of students who take out bank loans having opted for it. Nevertheless, Müller points out that unlike other loans on offer, the KfW Student loan does not provide for study abroad, tuition fees or once-off spending, such as on a new laptop.

“Furthermore, the KfW interest rate of 4.36% payable after the first interest-free year is the highest rate among all the loan schemes we tested,” Müller says.

Michael Gardner, E-mail: michael.gardner@uw-news.com