How to finance your studies

Are you wondering how to finance your studies in times of the Coronavirus? Are BAföG, student loans or scholarships an option for you?

Especially now in times of the corona crisis you may ask yourself what possibilities there are to finance your studies. Our semester at XU Exponential University starts on April 6th, we are ready to start with online lectures and virtual classrooms and want to show you different possibilities of financing your studies:   

  • Scholarships: There are two scholarship initiatives for our Bachelor’s program in Coding and Software Engineering that you can apply for. Learn more here.
  • Intergenerational contract: With this financing model, you start your studies without any financial burden and commit yourself to paying back your tuition fees only once you have finished your studies and started working. Find out more here.
  • BAföG: The German Government also wants to support students in their education and therefore created BAföG funding many years ago.  

Especially with the last option, BAföG, there are important changes this year that could be advantageous for you. We describe in detail what is new.   

What’s new in terms of BAföG in 2020?   

Have you heard of BAföG? This acronym stands for Bundesausbildungsförderungsgesetz which you might not be able to understand in German yet. It is a state financial support for your studies that has existed for a long time and helped many bright students succeed in Germany. This law is constantly being updated to adapt to the rising costs of living. This is also the case this year. In the following we will outline the most important changes for the upcoming semester:  

This year, among other things, the maximum monthly allowance and repayment modalities have changed. If you are new to the topic and are wondering what exactly BAföG means, how to apply for it and how the repayment works, we advise you to visit this blog article first: All you need to know about BAföG!

These changes bring good news, as the new BAföG is designed with the aim in mind to support more students in their university or college careers. 

Increase of the monthly allowance  

After the allowance for eligible students was already increased by 5% last autumn, a further increase of 2% has been promised for 2020. Previously, the BAföG maximum monthly allowance was 735 Euro and this has been increased to 861 Euro per month. Childcare allowances will also increase from the previous 130 to 140 Euro and the ages of the students’ own children that are taken into account for the allowance has been raised from previous 10 years to 14 years old.   

Parents – Income exemption limit   

To ensure that parents of students who are in need of support do not have to bear the financial burden of a college degree alone, the income allowances have also been adjusted. They will increase by 16% overall, a first adjustment of 7% was made in 2019, 3% will follow this spring and a further 6% will be added in 2021.    

However, the allowances for students themselves will also be increased. From 2020, students pursuing a vocational training will be entitled to allowances of €8200 (previously €7500) on their own assets. If these trainees have financial obligations to spouses, partners or children, the allowance will be raised from €2100 to €2300.  

Housing allowance  

As rental costs continue to rise in almost all German cities, but especially in university towns, the housing supplement for BAföG beneficiaries not living with their parents was raised by 30% to 325 euros.   

Repayment modalities  

As before, 50% of your total BAföG funding is a state subsidy for your future, for your studies. The other 50% is an interest-free loan that you have to pay back up to the limit of €10.000.  

The new monthly standard rate for repayment is €130. However, adjustments for lower-income and possible debt relief will remain in place. If students continuously repay the future monthly regular installments, they will be debt-free after a maximum of 77 monthly installments (i.e. after a maximum of €10,010 paid), even though it is possible that the original BAföG grant received was higher. Students who apply for lower repayment rates than €130 per month due to low income will also be debt-free after 77 monthly installments – even if less than €10,010 was paid back in total.  

At a glance, the changes in repayments now look like this:  

Until autumn 2019:  

Students who received the maximum of e735 AföG per month over a period of 5 years (Bachelor’s + Master’s studies) received a total of €44,100 and paid back €10,000. This corresponds to a quarter of the total funding.  

From autumn 2019:  

Half of the individual BAföG grants will continue to be interest-free loans, which must be repaid after a maximum of 77 months with a monthly repayment of €130 depending on income (up to the maximum rate of €10,010). Students who received the new maximum monthly rate of €861 over a period of 5 years received a total of €51,660 BAföG and will repay €10,010. That is less than a fifth of the total funding!  

Alternatives to BAföG   

BAföG is of course not the only way to finance your studies. The XU Exponential University awards scholarships every year and this year our partner adesso SE has also launched a scholarship initiative for the Bachelor degree in Coding and Software Engineering. In addition to scholarships, there is also a third possibility, the so-called intergenerational contract, which you can find more information about here on our financing page.  

Calculating and applying for BAföG is not that easy! In case you are looking for support, we have partnered up with deinerStudienfinanzierung who will be sure to take this worry off your plate.