1 How much can you borrow and at what age?
The amount of these loans varies, depending on the network, between 35,000 and 120,000 euros. Once the global envelope has been accepted by the bank, split releases (by month, quarter, semester, or year) of this sum are possible. “It’s even preferable because it costs less in interest than disbursing the sum all at once,” said Solène Le Her, consumer credit product manager, specializing in student loans at Société Générale. This funding is available to students and apprentices between the ages of 18 and 28.
“Nevertheless, some signs open this loan to 16-year-olds who begin higher education one or two years ahead of a ‘normal’ schooling,” says Maxime Chipoy, president of the MoneyVox site. “In this case, the loan is taken out by the parents”, specifies Fabien Descraque, responsible for the daily banking offer at the Caisse d’Epargne Ile-de-France, which offers this loan to underage students.
On the other hand, other establishments (La Banque Postale, BNP Paribas, CIC, Crédit Mutuel, Société Générale) grant these loans to people aged 28 and over. This makes it possible to finance “those who wish to follow training within the framework of professional retraining, for example”, indicates Monique Kretz, in charge of the youth segment in the personal market team at Crédit Mutuel Alliance Fédérale.
2 Are the rates charged high?
Unlike other credits (consumption, real estate) whose rates are regularly revised to “stick” to the cost of money on the financial markets, student loan rates have not increased for a year. The current offer is evolving in a pocket-handkerchief with rates between 0.8% and 1.5%. For institutions that have established partnerships with major schools, preferential rates (0.7% or 0.5%) are sometimes offered.
These fixed-rate loans are the cheapest on the market. For lending institutions, it is a loss leader to attract young customers who are not rolling in gold. Moreover, banks do not charge fees.
3 Since Covid-19, is it more difficult to obtain credit?
No, it would seem that the health crisis has not made access to student loans more difficult, on the contrary. As every year during this period of admission to training, the need for financing for students and apprentices is becoming clearer and many need funds to prepare for their next start of the school year. Following the confinement period, some banks exceptionally made “small” additional loans available to students.
4 What are the expenses financed by this loan?
This credit makes it possible to finance not only tuition fees but also all other ancillary expenses related to student life (housing, transport costs, computer, stay abroad). This loan being “unrestricted”, there is no expense to justify to the bank. The latter will be vigilant “on the consistency between the amount requested and the level and duration of the training”, specifies Nicolas Balerna, director of the Caisse d’Epargne retail market.
5 How long can I borrow?
With a total duration of between 10 and 12 years, this loan offers a special mechanism adapted to a person who does not yet have an income. This credit is divided into two distinct phases. The first is that known as “deferred or deductible”. During this period of a maximum duration of 4 to 5 years (ie the time of a standard training), the young person reimburses almost nothing. He can choose between starting to pay the interest and the optional insurance (partial deductible) or paying only the optional insurance (full deductible). “The first solution is the most used,” says Julie Sales, credit marketing manager at LCL.
Once the studies have been completed plus a few months to get the first job, the second phase of the credit begins. This amortization period does not exceed 4 to 5 years depending on the establishment. The second phase “often coincides with their entry into working life”, points out Monique Kretz. Like any unallocated credit, the student loan is repayable at any time in advance (total or partial) free of charge.
6 How to guarantee this loan when the holder receives little or no income?
For lack of regular resources, the subscriber of such a loan will always need to present his file to the bank with a solid “guarantee”. It is a question of designating a person capable of assuming the repayments of the loan if the young person were to default. This role is often assumed by the parents, but the support of a relative or a person outside the family circle is accepted by the lender. Before giving its answer, the bank will analyze the file, and in particular the financial situation and the solvency of the “surety”.
Since 2014, bpi France has had a fund that helps students who do not have a deposit. This boost from the state is only accessible under certain conditions. First, the amount of the loan must not exceed 15,000 euros with a guarantee from bpi france limited to 70% of the amount borrowed. Then, this device is only accessible to French students under the age of 28. Finally, only five banking brands have so far signed an agreement with bpifrance, namely: Banques Populaires, Caisse d’Epargne, Crédit Mutuel, CIC and Société Générale. Each year, an envelope is allocated by bpi france to each of these networks. “It is quickly exhausted, generally in a few weeks”, recognizes a banker. This year, the envelopes are more generous.“Our quota has been multiplied by two,” says Thomas Vassel, director of the Banque Populaire retail market. “The use of this guarantee requires the payment by the borrower of a commission invoiced between 0.90% and 3.30% depending on the duration of the loan”, underlines Solène Le Her. Following the health crisis, the Caisse d’Epargne Ile-de-France decided, at the beginning of June, to cover this expense for students who will opt for this solution in the coming months.
