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Welcome to first-year students at the University of Cologne (2019): Around 260,000 people in Germany use KfW's student loan

Photo: Christoph Hardt / Future Image / IMAGO

The interest rates on a student loan from the state-owned development bank KfW are to fall significantly - at least that's what the CDU/CSU parliamentary group in the Bundestag is calling for in a motion to the federal government. Specifically, the Union requires that the interest rates on existing student loans be reduced to the value at the time of conclusion of the contract and fixed for the entire term. In addition, emergency mechanisms must be created to prevent personal insolvencies.

Shortly before, KfW had reported that it had generated an above-average profit for the first nine months of 2023. At 1.2 billion euros, consolidated net income was above the average of the past five years of around 1.1 billion euros and above the result of the same period of the previous year of 993 million euros, the bank announced.

In response to a written question from CSU MP Katrin Staffler, Federal Education Minister Bettina Stark-Watzinger (FDP) said that the federal government was "exchanging views with KfW on current developments."

APR of 9.01 percent

KfW's student loans have recently risen sharply. KfW had increased the APR from 1.7 to 82.9 per cent as of 01 October. Two years earlier, the APR was 3.76 percent. This development is particularly students with existing contracts and variable interest rates. Those students who took out a KfW student loan during the low-interest phase could now face existential financial hardship due to enormous interest rate increases, according to the Union application. During the corona pandemic, students had to pay no interest at all at times.

The Left Party also demanded a reaction from the federal government: "If KfW cannot or does not want to offer the loans at a lower price, the traffic light must intervene and subsidize the loans," said Christian Görke, a member of the Bundestag.

Currently, more than 260,000 people in Germany use a student loan from KfW. According to the Federal Statistical Office, just under 2021 percent of students were considered to be at risk of poverty in 38.

"It is a scandal that KfW is reporting record profits, while many students are having to take on massive debts," says Katrin Staffler, rapporteur for higher education policy for the CDU/CSU parliamentary group. "The federal government must finally put a stop to this." If Federal Minister Stark-Watzinger does not succeed in convincing KfW or her own FDP party colleague and Federal Finance Minister of the existential plight of affected students, the Chancellor must take over, said Staffler.

KfW is 80 per cent owned by the Federal Government and 20 per cent by the federal states. This year it celebrates its 75th anniversary.