Launched in September 2008, the 70% government guaranteed student loan (excluding interest) is managed by BPI France.
As a consumer credit, the state-guaranteed student credit must meet certain rules:
Prior information of the borrower during an interview,
14 day cancellation period from the signature of the contract.
Who is he talking to?
This type of loan is intended for students under 28, French or European Union or European Economic Area (under certain conditions of residence in France), preparing a competition or a diploma of education French superior.
Borrowing without means or parents’ guarantee
The student does not need to justify special resources or parental guarantee or a third party. He also has the possibility of making a deferred refund (partial or total, as desired), allowing him to repay the loan when he finishes his studies. This form of loan is very advantageous for the student because part of the risk of default is borne by the state.
We can borrow up to 15,000 USD
The loan amount can not exceed 15,000 USD. For all the rest, borrowing terms are broadly the same as for conventional loans. The rate of the loan is freely determined by each financial institution. It may vary according to the type of study pursued and the type of reimbursement chosen. This means that the bank takes into account the student’s career plan, stream and level of study before granting the loan.
The student will receive a larger amount if he or she is enrolled in a major school rather than at the University and if he / she is in a master’s degree rather than a first year’s degree. But it also means that the student must analyze and compare the offers made by several banks and choose the one that is best suited to his situation.
On the one hand, it is important to compare the Total Annual Effective Rates (APRR) of each credit offer and, on the other hand, to analyze the benefits granted by the bank with which you are planning to contract.
The loan term may vary. It is generally between 2 and 10 years old.
How to repay a student loan?
The repayment of the student loan is done in two stages.
The first stage, from 2 to 6 years, corresponds to the duration of your studies. You can choose a partial or full deductible ie choose to repay only the interest during the studies or not to refund anything at all. With the first solution, the cost of credit will be lower at the end.
The second stage, which corresponds to the phase of repayment of the loan itself, usually begins at the end of the studies. The duration of this period varies according to the first. Refunds can not be deferred beyond 10 years after the date of contraction of the loan. In case of difficulty, the State guarantees for each contractor up to 70% of the total amount of the loan, excluding interest. The remaining 30% is taken care of by the banks.
For a loan of $ 5,000 over 60 months with 24 months of total deferral and 3 years of monthly payments of $ 158.2, at a fixed overall effective rate of 3.76%, the total cost of the loan will be $ 695.92 without fees and optional insurance.
The overall effective rate takes into account the possible costs of files. Sometimes these are offered by the bank.