Most German Students Shun State Funding for Education
New research indicates that the majority of students in Germany opt out of utilizing state-funded assistance such as BAföG, student loans, and scholarships. Instead, they rely on financial help from their families or part-time jobs. According to Ulrich Müller, the study's author, this situation signifies a pressing requirement for alterations in the current educational funding system.
The study conducted by the CHE Center for Higher Education Development found that only around one-sixth (approximately 5%) of the nearly 3 million students currently enrolled in Germany avail themselves of state-sponsored education aid. Conversely, parental financial assistance and part-time work have become the principal sources of funding for the majority of students.
Soaring Interest Rates and Delayed Reform of BAföG
As the Government has postponed the reform of BAföG and interest rates soar for KfW student loans, many students are compelled to seek alternative ways to finance their education. Delayed reform and high interest rates on KfW student loans resulted in a significant increase in debt burden for students.
A press release issued by Müller demanded that the future system of student financing in Germany should incorporate a federally-funded study grant to replace the existing fragmented array of instruments. He pointed out that such a change would simplify the process and provide more financial security for students.
Raised BAföG Basic Rate and KfW Loan Repayment
In response to criticisms of the insufficient basic rate (€461 per month for the winter semester 2022/23), the Federal Ministry of Education announced plans to increase BAföG funding by €150 million in 2024. The coalition agreement obligated the government to implement structural reforms aimed at reducing BAföG's dependency on parents' income and expanding eligibility through elevated allowances.
Repayment of a KfW student loan is required within 25 years and amounts to a maximum of 14 semesters. However, KfW figures reveal that borrowers are now experiencing an escalating interest burden.
Enrichment Insights
Several reasons drive the pressing need for reform in Germany's student financing system. The limitations in accessibility and utilization include:
- Low Participation: A minority of students benefit from the BAföG system. The mean monthly grant is €663, while only a quarter of students receive the maximum rate [2].
- Parental Support Dependence: Many students rely on their parents' financial assistance, which can be unstable and inadequate for addressing their financial needs [1].
- Part-Time Jobs: Students must often secure part-time employment to cover living expenses, which can negatively impact their studies. Bergen and Munich, for example, have become especially expensive cities for students [1].
- Inadequate Funding: Universities face funding constraints, and the humanities in particular struggle to secure grants. Inflation and rising energy costs have significantly burdened the educational sector [1].
- B AföG Reform Needs: Comprehensive changes are necessary to tackle issues such as educational equality and fair opportunities. Roughly one-third of students still live in precarious situations, and only one out of nine students receives any BAföG aid [1].
- Adjusting BAföG Funding: The Left, Greens, and SPD have pledged to regularly revise BAföG funding to account for rising living costs, but stronger measures are required to improve the system's effectiveness and accessibility [1].
- Housing and Insurance Concerns: The housing allowance, currently €380 per month, is viewed as unrealistic by most students. Publicly funded university dorms are in short supply, causing market competition for housing. Additionally, students who are not eligible for student health insurance pay higher costs, which can be covered up to €185 per month for health insurance and an additional €48 for long-term care insurance [2].
