With inflation, student loans are no longer enough

Inflation strangle them students, particularly uncertain. Faced with rising living costs and school fees, they are no longer able to cope prepared student. The amount that many students borrowed at the beginning of their studies is not enough today to complete their studies in good conditions.

The prepared student allows to pay registration or daily fees. With the preferential rate – which however varies depending on the banks and the student’s profile – repayment is often deferred at the end of the studies. Technically open to all subjects enrolled in higher education, the credit “affects less than 10% of students in France, which is relatively few compared to other countries,” said Sébastien Grobon, an economist at Panthéon Sorbonne University.

Young people are increasing among the affected public

The contrast is strong with UNITED STATES where it concerns more than half, or even Germany and Sweden. France presents a “greater aversion to student debt”, a specialist on socio-economic inequalities in education clarifies, mainly due to “a tradition of low registration fees and scholarships”.

Therefore, the student loan “initially referred to more exceptional and expensive training”, “mainly private Grandes Écoles” and “business schools”, the researcher explains. These trainings also promise “high salaries to facilitate repayment”. But recently, “more and more” young people studying in the public sector are being forced into contracts, says Éléonore Schmitt of L’Union universitaire.

Fuzzy data

Despite much lower tuition fees, they have to borrow to finance their daily lives, especially as the “explosion of student insecurity” associated with Covid, explains. Quantifying student debt in France is very difficult. No sectoral organization approached the AFP (FBF, Bank of FranceASF, ACPR) does not have accurate data on the number and outstanding student loans.

In July 2021, an information mission from Senate he regretted that no structure was responsible for “collecting this data on a national scale”, referring to a “poorly understood phenomenon” that “deserves better documentation”.

Banks are very discreet and mainly disclose data on student loans guaranteed by the state, a system that allows people under the age of 28 to borrow up to €20,000 without a deposit or guarantor, as the Public Investment Bank (Bpifrance) plays a role. this role.

The “dynamism” of student loans

Only BPCE was fully transparent with AFP, indicating that it saw “very strong student loan dynamics” at its Banques Populaires and Caisses d’Epargne in 2022, with a jump in the number of loans (70,800 + 9.5%) and the amount borrowed ( 226 million euros for Banques Populaires, +21% and 985 million euros for the whole group, as reported by BPCE on Monday).

Asked by AFP, BNP Paribas and Société Générale said they saw “a slight decrease in the number of student loans” in 2022. However, it specifies that “the total amount provided has increased”. Societe Generale. The increase in borrowed amounts is not only due to the increase in the cost of daily living. It also explains the increase in the already high registration fees for private schools, a favorite haunt of banks.

The vicious circle of loans

At Sciences Po, where five banks are setting up shop during the integration period, tuition fees – set according to parents’ income (up to €19,670/year) – have increased by 7.5% this year due to inflation. If BNP Paribas has not yet seen a “significant increase” in such applications, however this year it has opened up the possibility of “taking out another student loan”, it specified.

“It’s a bit of a vicious circle: we don’t have enough money anymore and we’ll have to borrow at less favorable rates.” Not all students can do it,” warns Geoffroy Brocart.

In fact, student loan interest rates rose from less than 1% on average to more than 2% in a year and a half, said Maël Bernier, a spokesman for brokers Meilleurtaux. A level certainly much more favorable than the current rates of other credits, but synonymous with repayment, which is still difficult to assume for many young workers starting their professional life.

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