In our previous blogs, we explored the benefits of studying in Germany which has become a popular study destination in recent years. Its education system is known for its high academic standards and strong emphasis on research and practical learning. Additionally, courses are now available in English as well as in German thus attracting students from all over the world. However, of the various benefits, what stands out the most is that Germany presents a wealth of financial options that make higher education more affordable and accessible. Apart from scholarships and grants, one innovative model that has gained traction in recent years is the 'Study Now, Pay Later' scheme. This blog introduces the system to prospective EU students planning to study in Germany.
Rising Tuition Fees Have Made Higher Education Expensive
Over the past decade, university tuition fees have been rising more rapidly than inflation. In the current education landscape, the average tuition costs at private universities start from €7,000 annually. In addition to the tuition fees, students also need to consider living expenses, costs of books and other academic materials. As higher education becomes an expensive affair, many students now rely on external financial aid to fund their education. This aid often takes the form of grants, scholarships, work-study programmes and student loans. Grants and scholarships can be attractive as they provide essential support without the burden of repayment, thereby opening doors for students from lower-income families. While beneficial, they can have limitations, such as being reliant on maintaining high academic standards. Additionally, the availability of grants and scholarships is typically limited and highly competitive. As a result, many eligible students are left without this crucial financial support.
Among the various funding options, student loans are the most accessible and the easiest to acquire. While requiring eventual repayment, student loans offer immediate relief from financial pressures, allowing students to focus on their studies rather than financial constraints. As a result, student loans play a pivotal role in offering equal access to higher education, ensuring that the opportunity to pursue advanced studies is not solely reserved for those with sufficient financial resources. It is therefore becoming increasingly common for higher education institutions to offer a range of financial options, enabling more aspiring students to pursue higher education degrees.
Germany’s Innovative Approach: ‘Study Now Pay Later’ Scheme
The ‘Study Now, Pay Later’ fund, also known as ‘Study First, Pay Later’ or ‘Generation Contracts’ is a unique scheme aimed at easing the financial burden on EU students pursuing higher education. Based on the student’s application and qualification, the fund offers to cover partial to full tuition fees. It operates on the concept of an Income Share Agreement (ISA), where the student's obligation to repay the tuition fees is directly proportional to their income after graduation. This ensures that the repayments always remain fair and manageable for the students.
This innovative approach is facilitated by private funding organisations, through companies like Brain Capital GmbH, that have established partnerships with several private German universities. With its innovative model, the scheme is a strategic investment in the future workforce, as it enables students to focus on achieving their academic and professional goals without any financial constraints during their education.
Some institutions and universities offering the ‘Study Now Pay Later’ scheme include:
How Does the ‘Study Now Pay Later’ Scheme Work?
The fundamental process involves a student signing a contract with a funding organisation like Brain Capital, which agrees to cover the tuition fees upfront. In exchange, the student commits to paying back a fixed percentage of their income for a prearranged period after securing employment that pays above a minimum income level. This repayment period typically spans a maximum of 10 years and is dependent on the loan amount and the income. One distinctive advantage of this scheme is its fairness: if a graduate's income falls below the minimum level, the repayment is waived for that year, providing significant financial relief during times of lower earning potential or further education pursuits.
Eligibility for the scheme is straightforward, requiring the student to be accepted to a partnering university and holding EU citizenship. Although it is primarily available to EU nationals, students with unrestricted work visas and a residence permit within the EU are also eligible to apply. Furthermore, eligibility to access the scheme may vary among institutions and may also include academic and practical experiences, and basic knowledge of the German language. Prospective students who are considering applying for the fund are encouraged to refer to the institutions’ websites for specific information.
Once accepted to a university, students can apply for funding to support their studies. The application process is quick and simple, aiming to allow students to focus on their education rather than the stress of financial constraints. For example, at XU Exponential University, the application process is facilitated through their Education Fund. Initially, applicants are required to fill out a simple application form and submit a set of basic documents, including a CV, transcripts and university admission confirmation. Following the submission of the application, the university conducts a review to confirm eligibility based on the applicant's academic and personal profile. Successful applicants are then invited for a personal meeting, to discuss the funding model and contract specifics. This conversation aims to offer a full understanding of the scheme including the terms of funding. The final step, upon signing the contract, enables students to commence their studies with the financial aspect securely managed, providing peace of mind and focus on academic pursuits. Throughout the process, students have access to support for any queries related to financing, highlighting the programme's commitment to student welfare.
The fund supports a range of programmes, including Bachelor's, Master's, and MBA degrees at participating universities. It is not affected by other financial aid such as scholarships or grants a student may receive. Additionally, it is also independent of the students’ and their parents’ financial circumstances. This flexibility ensures that a wider demographic of students can access higher education, which is particularly beneficial in promoting social mobility and fostering a more educated workforce.
The ‘Study Now, Pay Later’ scheme has multiple advantages. It offers students the freedom to pursue their educational goals without the immediate pressure of financial difficulties. Additionally, it facilitates a culture of solidarity among students and alumni, as the repayments from graduates enable the financing of future students' education, thus creating a sustainable loop of support. The ‘Study Now Pay Later’ scheme is gaining popularity among EU students as it helps navigate the costs of living and tuition fees.
Thinking about studying in Germany but worried about the costs?
Take advantage of the ‘Study Now, Pay Later’ scheme!
Contact Veritas Mundi Education today and take the first step towards a brighter future in Germany.