Student loan repayment in Germany can be a daunting prospect, but there are ways to make it manageable. Repaying the loan is determined by the loan type (public or private) and the terms of the contract. We have strategies — and in some cases, we get our tips from others — to help you as you navigate the repayment process.
Understanding Repayment Terms
Packaged for students (BAFOG)
Repayment Amount:
It is partially granted in the form of a loan, with 50% being forgiven when certain conditions are fulfilled (e.g., if you graduate on time).
Payback begins five years after the completion of the funding period (generally after graduation).
It is income-contingent: the amount you have to repay depends on what you earn after graduation.
Repayments are typically from €105 to €950 per month, over a maximum of 20 years.
Income-Dependent Repayment:
Since we are currently not talking about significant amounts, people with incomes at a really low level (think about €1,200/month) may be dispensed with repayments of have them considerably reduced.
The government employs a repayment model that is progressive; the more you earn, the more you must repay per month.
KfW Student Loan
Repayment Period:
Depending on how much you borrow and which repayment plan you choose, the repayment period is generally 6 to 25 years.
You will repay the loan within 18 months after you graduate.
During the grace period (after graduation), there is interest that accrues, but this can be paid monthly or deferred until entering repayment.
Method of Repayment: Fixed or Flexible
Repayment Terms — You can either make fixed repayments (so you know what your payments will be for the term of the loan) or flexible repayments based on your income.
There are no penalties for early repayment which can help to bring down your overall interest cost.
Private Loans
Repayment Schedule:
And, with private loans, repayment schedules vary with each lender and the loan agreement indeed.
Interest rates face are often higher than public loans with fixed terms of repayment, and typically no leeway for income dependent repayment.
Grace Period:
In contrast, most private loans either require you to begin repayment immediately or have a very short grace period (such as 6 months after graduating) before payments are due.
Look for any early repayment penalties or options to prepay on their website.
Ways to Deal with Repayment
Establish and adhere to a budget
Keep A Record of Your Income and Expenses:
Create a budget, outlining your monthly income and living expenses as well as what you must pay back for loans.
Just in case your funds need a little extra supervision, make an use of budgeting tools or apps to help you responsible and avoid missing payments.
Allocate Funds for Repayment:
You might want to reserve some income for loan repayments if it is repayment relative to income based (even during the grace period).
If you miss it, you’ll pay late fees.
If It Is An Option, Think About Early Pay back
For KfW Loans:
If you can afford to repay early, use it to lower debt principal as well. It will save interest fees over the life of a loan.
Some KfW loans feature a possibility to raise the monthly payment at any time — without penalty.
For Private Loans:
Most private loans do not charge penalties for early repayment, and paying it off earlier can save you quite a bit on interest over the long term.
Nonetheless, be sure to check the terms of the loan to make sure there are no pre-payment penalties.
Get a Loan Refinance or Consolidation
Refinancing Options:
If you have multiple loans or are struggling with your current loan payoff terms, consider refinancing options.
Being able to refinance a still-existing capital could lower your interest rate and also offer you possibly better terms.
If you’re refinancing your loan, know about any fees or penalties.
Public Loans With Repayment Based on Income
Income-Driven Repayment Adjustment:
If your income situation changes (because you are starting a new job or changing working hours), you can also ask for an adjustment of your repayment amount in the case of BAföG or KfW loans.
With regard to the BAföG repayment, repayment will be related to your income of the calendar year before you are due to repay the loan.
Deferment Option:
You may be eligible to defer your repayment or reduce payment amounts if you are experiencing financial difficulties, such as long-term unemployment.
Automating Payment Reminders & Payments
Set Up Automatic Payments:
This will ensure your loan repayment is never missed and also help you pay on-time without any hassle of late fee payments.
Lenders and banks permit the setup of auto-repayments through your on-line banking system in most cases.
Payment Reminders:
Set reminders, whether via your phone or by the lender sending you an email reminder, to ensure that you stick and stay up for payment.
Examining the Programs For Help Offered By The Government
BAföG Loan Forgiveness
If you have a low income or if you satisfy other conditions (e.g. because you successfully completed your degree on time), 50 % of the BAföG loan is forgiven.
Find out about and watch for governmental efforts to help make paying back student loans less tricky.
If you need it, seek financial advice
Consult a Financial Advisor:
Reach out to a Financial Advisor if u Have Trouble with Loan Repayment or any kind of Financial Difficulties.
They may work with you on a personalized repayment plan, look into refinancing options, or search for any government assistance programs that you possibly qualify for.
Repayment Strategies Summary
Strategy
Public Loans (e.g., BAföG)
KfW Student Loan
Private Loans
Income-Dependent Repayment
Yes (for BAföG)
Yes (for KfW loans)
Typically not available
Early Repayment
No (BAföG repayment is fixed)
Yes (without penalties)
Frequently permitted (with fees — see below)
Grace Period
5 years (for BAföG repayment)
18 months (for KfW)
Varies, usually shorter
Refinancing
Not possible
Possible
Often possible
Deferment
Yes (for BAföG and KfW if applicable)
Yes (in the event of some financial problems)
Not typically offered
If you take a proactive approach to paying it back — one that includes budgeting, early repayments, and/or refinancing — the process can also be more manageable as well as less of a financial burden overall. Want more information on any particular loan payment method?
What is the difference between BAföG and KfW when it comes to their repayment terms?
Repayment of BAföG (Bundesausbildungsförderungsgesetz) and KfW Student Loan are very different in several essential elements: the repayment and interest structure, their high free periods as well as the framework conditions for possible changes to the repayment. A Side-by-Side Comparison: Lastly,
- Start of Repayment and Grace Period
BAFOG
Repayment Start:
You first have to pay back BAFOG 5 years after the end of your funding period — usually also your graduation.
The grace period will carry no interest.
Grace Period:
You do not have to start repaying them until 5 years after graduating (interest free) – giving you time to get a job.
They must be paid back beginning after 5 years from graduation or the maximum period of support for which you are eligible, whichever comes first.
KfW Student Loan
Repayment Start:
You start repaying 18 months after graduating, which gives you a bit of time to find your feet again financially.
Grace Period:
For KfW loans, interest accrues even during the grace period — unlike with BAföG. But you do not have to start paying it back in that time.
Repayment Structure
BAföG
Repayment Amount:
If you are required to fulfil those conditions (i.e. graduating in the normal time frame), 50% of the total loan is waived.
To be paid back the remaining 50% of up to max €10,010 (2024)
It allows you to pay as you earn, with a progressive system.
You will pay back between €105 and €950 a month, based on your income after you graduate.
Your repayments reduce or stop if your income is under a certain level.
Repayment Period:
You pay it back over 20 years, but this could be longer if your salaries are low.
KfW Student Loan
Repayment Amount:
KfW loans offer the option to repay with fixed or flexible terms.
Repayments here are predetermined and depend on the loan amount and period of repayment.
Repayments take your income into account after graduation, making them flexible.
Repayment Period:
The period for paying KfW credits back translates roughly to 6-25 years, depending on the controlling sum and overall off-plan.
Whereas, the length of the period can be shorter or longer, and in general a longer period means a lower monthly payment.
Interest Rates
BAFOG
Interest Rate:
The BAföG loans (debt waiver) do not bear interest during the funding period and after that, except in cases where a very small administrative fee is charged.
KfW Student Loan
Interest Rate:
The KfW loans have an interest rate that is fixed by the government and variable according to market conditions.
Interest rates vary from 1% to 4%, depending on the loan agreement and market conditions.
Repayment of Interest:
That interest does not get deferred, however, and is then capitalized to the loan balance during the grace period.
Flexibility and Adjustments
BAFOG
Income-Dependent Repayment:
If you’ll be receiving a higher salary through the new job, however, you can re-adjust repayment for BAFOG.
For instance, if you earn less than a given threshold — i.e. as long as you have an income below about €1,200 per month — your repayments are adjusted downwards or postponed; wellbeing first).
You should be able to request a deferment on the payments if your finances decline significantly.
Loan Forgiveness:
BAföG loans are partially forgiven (50% of the loan amount) if the recipient meets specific criteria, such as finishing the degree on time.
KfW Student Loan
Income-Dependent Repayment:
Offers flexible repayment that lets you modify the monthly amount to adjust with your income — this is usually only available during the first few months of repayment or if you use the income-contingent repayment plan
Repayment Flexibility:
KfW loans, however, can be repaid early and at no extra cost. If your finances change for the better, you can pay off the loan sooner, saving interest in the long run.
If you are in financial trouble, you may be able to postpone or change your repayment schedule, but the interest will still build during this postpone time.
Loan Forgiveness
BAFOG
Loan Forgiveness:
50% of the loan is forgiven if you qualify (i.e. you graduate on time and earn below a certain income threshold).
However, this form of occupancy is more attractive for students who actually complete their studies on time.
KFW Student Loan
No Loan Forgiveness:
There is no loan forgiveness with KfW student loans, so the entire amount must be repaid, plus interest.
International Students – Additional requirements
BAFOG:
Most international students are not entitled to BAföG, with only rare exceptions (for example, refugees and long-term residents or the spouses of German citizens).
KFW Loan:
KfW Student Loan: This loan provides international students who have been in Germany for a minimum of 3 years and are enrolled full-time at a recognized university.
Repayment Comparison Summary
Aspect
BAFOG
KfW Student Loan
Repayment Start
5 years after graduation
18 months after graduation
Grace Period
Interest-free for 5 years
During grace period interest accrues
Interest Rate
Not Applicable (Admin fees may apply)
Market conditions: 1%–4%
Repayment Amount
Based on income (progressive)
Loan Amount: Fixed or Flexible
Repayment Period
Up to 20 years
Loan term: 6 to 25 years but depends on the amount
Loan Forgiveness
Half of the loan portion can potentially be excused
No loan forgiveness
Early Repayment
No (fixed repayment)
Allowed without penalties
Income-Dependent Repayment
Yes (income-based reduction/delay option)
No but can set out flexible payments
International Student Special Conditions
Exceedingly seldom enrollment (only during explicit situations)
Open to international students with a minimum of 3 years residency
Conclusion:
BAföG is more forgiving to students who can finish within the timeframe, and is also much better spec-wise by basing repayment on income instead 📕.
The KFW Student Loan, meanwhile, has longer repayment terms and allows you to change the amount you pay toward your loan each month — but has monthly interest payments instead of a grace period and is not forgivable.
Need some guidance deciding between these two loan types or assistance picking a particular loan?
How much do I have to earn before I repay my student loans in Germany?
In Germany, the repayment threshold for student loans is more or less applied to BAföG loans (the Federal Student Aid Program) and less so for KfW Student Loans. The threshold is the amount of money that students must earn above their income before they start having to pay back their loans. It works like this for both types of loans:
The German Federal Student Aid Program (BAföG)
With BAföG, you must pay back the amount depending on your income after graduation. However, there are some thresholds that means you will not need to start repaying.
Repayment Threshold for BAföG
Income Threshold:
Starting from 2024, you will no longer have to start paying back your BAföG loan if you make less than €1.200 (gross) per month.
You’ll pay less debt if you earn up to a certain level, but if your earnings exceed this threshold, the amount due is recalculated according to your salary. The more you earn, the larger your loan will be (relative).
Use of Repayment Period Extension or Deferment:
You can lower or put off repayments if your income is under the limit.
If your financial situation changes (i.e., if you lose your job or experience any other kind of hardship), you can also apply to defer keeping up with your payments, or even ask that the amount you owe be reduced.
How to Calculate Monthly Repayment:
If you earn more than €1,200 a month you will usually begin repaying at €105 a month, rising to a maximum of €950/month depending on your income.
You have up to 20 years to pay back the loan. The debt is then cancelled after 20 years if you still have unpaid repayments.
KfW Student Loan
The KfW Student Loan does not technically have repayment dependent on income, but offers grace periods and an ability to decrease payments if financial circumstances change.
KfW Loans (for home ownership) — Repayment Threshold
Repayment Start:
Repayments commences 18 months after graduation, and there is no income-based threshold for repayments.
Income Flexibility:
Unlike BAföG, which has an income-dependent repayment model, the KfW loan offers you either a fixed or flexible option when it comes to repaying the loan.
It includes a flexible repayment option that will let you change repayments depending on what your earnings are during the repayment period. Interest will still accrue on what they owe throughout this time, however.
The Basics of Repayment Thresholds:
BAföG is income-based, too: Repayments begin if you earn more than €1,200/month. You can defer or reduce your payments if you have a lower income.
While KfW loans have no income threshold, they can help you adjust over time with flexible repayment.
Do you want help with how to figure out what your repayments might be or handling the loan after repayments start?
Can they help you defer or repay?
In Germany, for those who have received loans such as BAföG or KfW Student Loans, alternative repayment assistance programs and deferment options are to be expected. Specifically, these options are meant to help borrowers who need assistance managing their repayments after losing a job, going through other financial hardship, or facing other challenging situations. Here is a breakdown of the support thats available:
BAföG Repayment specifically for tuition fees
Support for Repayment of BAföG
Part of your BAföG is income-dependent, which means that the repayment will be based on how much you earn once you have graduated. Some programs for people experiencing some financial difficulty as well:
Income-Dependent Reduction:
You can have your repayment cut back or even put off if you earn less than a certain minimum monthly payment, (think € 1200/month here, dont ask me how or why).
That means, for instance, that if you have a very low income (below the threshold), your monthly repayment can be suspended and then raised again when you start earning more. This allows you time to get your money under control.
Partial Forgiveness:
For timely graduates, up to half of the BAföG loan will be waived amounting to a lower sum which you have to pay back.
Delay of Payment For BAföG
Repayment Deferment:
However, if you are in a serious financial pickle (like unemployment or living on low income) you can defer repaying your loans. That suspension can be for up to 1 year.
After 1 year, you can apply to extend your stay if things are still not working out.
Repayment Suspension:
During repayment, you can suspend payments if your income is below a certain level (around €1,200/month).
Zero-Interest Periods:
Not having to pay interest on the deferred amount (depending on circumstance, payments during deferment or low income) can ease financial pressure.
KfW Student LoanRepayment Aid And Postponement
Similar to student loans from KfW, it has flexible repayment options, but on the other hand does not have an income-based deferral as BAföG. Still, there are a few different methods that could make paying back the loans easier:
Repayment Deferrals for KfW Loans
Repayment Deferment:
In case you are experiencing a temporary financial setback, KfW permits repayments deferrals for as long as 2 years.
You will be able to postpone payments, but where interest will continue to accrue over the course of this deferment, you won’t have to conceed monthly payments until after the deferment is done.
Flexible Repayment Options:
KfW loans enable you to pay the rates flexibly, meaning that you can make your regular payments in line with your income or financial means. You can opt for a longer repayment term to help lower those monthly payments as well.
Interest Rate:
While the interest rate will be locked at the time of loan disbursement, you might have options to modify other loan terms.
Financial Hardship Deferment:
Should you get into financial trouble, there is always the option to ask for a temporary suspension of loan payments — but the total amount owed will not go down. Interest will accrue during the deferment period, which adds to the amount owed.
Broad Repayment Help Programs
Beyond the specific BAföG and KfW loan options, there are some general repayment assistance programs that are potentially available to all loans in Germany:
Federal Financial Aid (Deferment or Installment Plan):
This option grants you postponement of your payment and asks to pay you in monthly installments if you’re unable to pay back the full sum.
Debt Counseling:
If your debt due to the student loans is large (and slowly encroaching upon your sanity), you may also wish to consider turning towards debt counselling services (Schuldnerberatung), which can often assist in restructuring your plan of repayment whilst simultaneously seeking further options for alleviating or delaying repayments.
Key Takeaways on Help with Payment and Postponement
Loan Type
Deferment Options
Repayment Assistance
BAföG
Defers up to 1 year (financial difficulty)
Payments reduction or suspension for income based
KfW Student Loan
Financial hardship deferment — last for 2 years
Repayment plans that can be flexible (payments you can adjust)
General Assistance
Debt management, debt in installments
Federal student financial aid programs for struggling borrowers
Deferring Your Loans or Getting Repayment Help
BAföG:
You have to contact the BAföG office responsible for your region if you want to apply for a deferral or assistance. Back up your claim of income with documentation that shows you don’t fit in the high-earner definition, or that your financial situation warrants a deferment or reduced payments.
KfW Loans:
If you need to defer payment or have other flexible repayment options, however, then you will need to talk directly with KfW. Before changing your repayment schedule, they will request documentation of your financial situation (income statements and evidence of job loss).
Would you like information distinguishing how to apply for these or other assistance programs?
How can students prepare themselves financially to pay off their loans?
This is particularly important for students after they graduate, who will have to manage their repayments such as the BAföG or KfW Student Loan option. Proper financial planning would avoid the stress of defaulting on loans affecting other commitments. Students can follow these steps and strategies to plan their finances:
Understand Your Loan Terms
Before arranging a reimbursement plan, ensure you are familiar with the terms of your loan(s).
Loan Size: Be aware of how much you owe, including any interest and fees that may be charged.
When To Start Repaying: For BAföG, you will start repaying 5 years after your funding period ends. KfW loans have a start date 1/2 year after graduating.
Payback model: BAföG repayments are based on income, while KfW can be either a fixed or flexible rate, depending on the plan you choose.
Interest Rate: Note the KfW loan, typically between 1% to 4%, depending on market conditions.
Create a Budget
One makes a clear budget concerning financial planning and managing repayments of the loans. Here’s how to approach it:
Log Earnings: Write every single stream of your money, be it either your paychecks, part-time businesses or gigs.
Keep Track of Spending: Write down all monthly expenses, including your rent, food, bills, transport and entertainment. Do not get into unnecessary expenses, if you have to pay off the loan.
Pay Your Loans First — Allocate Your Income Towards Repaying Your Loans. Regardless of whether your repayments are income-based or not, you should try to save or pay off a little extra towards the total debt too.
Tools to Help You Budget:
Track your expenses with budgeting apps such as Mint, you need a budget (ynab) or the German app “Outbank” to save up accordingly.
Consider their loan repayment options
If you have a fluctuating income, then make use of the flexible repayment options:
Income-Dependent Repayment Scheme (for BAföG): If you are below the income threshold, your repayments are reduced or staggered If you see your income growing, plan to grow your payments too.
Flexible Payments (for KfW): If your income depends on the season or if there are periods with little or no employment, pick a flexible repayment schedule to be able to adapt your payments according to your ability of paying.
Payment Plans: Choose fixed payments if you want more stability in what your monthly budget looks like. In case you are expecting a larger sum of money in future, make partial repayment so that total interest may be reduced.
Build an Emergency Fund
An emergency fund comes very handy to overcome any unplanned financial pressure such as losing a job or health issues that can disturb your loan repayments.
Objective: Aim to have at least 3 — 6 months of living expenses saved,
Start Small – Even if its just €50 a month, starting early builds you a buffer that will help give you peace of mind in tough times.
Consider Extra Income Sources
When your regular earnings are insufficient to meet your repayment and livelihood needs, find ways to increase income:
To find part-time jobs: Search for freelance, part-time, remote work based on your study fields or those where you possess skills.
Internships — Some internships, especially in tech, consulting and finance — are some of those high-paying gig jobs though so you can save a nest egg for repayments.
Side Gigs — If you can spare a time, opt for flexible gig jobs such as tutoring, delivery or freelance writing (when needed) that can help contribute towards your expenses and loan repayment;
Prepare for Postponement or Repayment Adjustments
Both BAföG and the KfW loan allow deferral or repayment adjustments in case of financial strain.
BAföG: You can defer or reduce payments if your income is low (less than 1200 € / month) If you can foresee a disruption to your income, make sure this is applied for early.
KfW Loans: In case of financial distress a repayment deferment can be requested (max 2 years) or you are granted additional flexibility to adjust your repayments and lower the montly burden.
Have an Emphasis on Financial Goals in the Future
As you repay student loans, be sure to balance loan repayments with other long-term financial goals:
Establish Credit: Repaying your loans on time regularly will build your credit profile necessary for future lending (car loans, home mortgage, etc.).
Retirement Savings: Start in good time with a retirement savings account (r. b. a Riester-Rente or Rürup-Rente). Save at least small amounts for old-age provision, of course only if the main stream is guaranteed! In the long run, compound interest working in your favor will serve you well.
Develop Yourself: Buy a professional development course (classes, certifications) that will increase your ability to earn money.
Take a Regular Check of Your Finances
You will want to review your financial situation occasionally (Distribution allows for major life indicators — graduation, employment change, moving away.
Yearly Review: Every year, take a look at the income and expenses you’re going to be making and about how you’ll be repaying your debt. If your income increases or you receive a bonus, consider paying more.
Refinance Possibilities: If you have been able to accumulate good credit during the next couple of years while maintaining steady income, look for refinance possibilities on your KfW loan in order to try and obtain a lower interest rate.
Use Government Resources
Take advantage of resources to learn more about student loan repayment:
BAföG-Ämter: Call your local BAföG office for more specific advice on income-dependent repayments and deferment options.
KfW Customer Service — If you have questions regarding KfW loans, contact KfW to ask about flexible repayment options or if payments can be deferred in case of financial hardship.
Mental and Emotional Well-Being
Handling loan repayments comes with added stress, so make sure that you do the following for your mental and emotional health:
Maintain Organization: Have a record about your loans, repayment terms and any interaction with service members.
Be Optimistic: Accept that debt management is a long-term endeavor. Create an outline to work with, follow it strictly, and ask for assistance if necessary.
Conclusion:
An example of effective financial planning towards the repayment of these loans includes knowledge about your loan terms, budgeting appropriately, choosing flexible repayment options and saving for emergencies as well long-term plans. You can use your repayment in Germany without experiencing too much hassle if you remain disciplined, continue to adapt your repayment strategy and seek help when needed.
Ask for help: If you want help on how to make a financial plan or if you have more doubts about negotiating and organizing your loans, ask!
