Government does not see a debt trap
The Government does not see a debt trap for students in the student loan of the state-owned Intrasavings bank. On a small request, it was announced that “the critically feared danger of increasing student indebtedness and over-indebtedness as a result of student loan offerings had not been realized”.
The student loan was introduced in 2006. It enables students to earn a living during higher education. The loan provides for monthly payouts of between € 100 and € 650 over a maximum of 14 semesters. In total, students can borrow 54,600 usd from the state bank. According to the Government, there were only a few cases in which the loan was terminated by Intrasavings bank due to payment shortfalls. Altogether this was the case in 478 contractual relationships.
Contracts in the repayment phase
Currently there are nearly 10,500 contracts in the repayment phase, which can be stretched for up to 25 years. Almost 24,000 loan agreements are in the waiting period. This follows the payout phase and lasts 6 to 23 months. During the waiting period, borrowers only have to pay the accrued interest and pay no repayment. Since the program was launched in May 2006, Intrasavings bank has granted 80,000 loans. In the same period, a good 7500 applications were rejected.
Risk of over-indebtedness for students to be low
The Government considers the risk of over-indebtedness for students to be low, not least because of the low interest rates. The Intrasavings bank Student Loan is subject to variable interest rates in April and October the interest rate is redefined. The lending rate is derived from the 6-month Eurocens and is currently 3.53 percent pa effective. When concluding the loan, Intrasavings bank approves an interest cap. For currently completed loans, this cap is 6 percent pa
For a long time now, critics have been complaining that the student loan carries a high risk of over-indebtedness and thus contradicts the opinion of the Government. Thus, it is argued that not only the default is an indication of an economic credit overburden. Most students after graduation other projects, such as a mortgage or the private pension, because of the high installment back, do not turn this up in any statistics and was still a significant disadvantage.