Risk or investment? For what and for whom are student loans good?

Author: Tünde Taxner

(The names of students mentioned in the article were changed at their request.)

Jázmin started her second programme in fee-paying form. On the one hand, there were no state-funded programmes available in the late application process, and on the other hand, she would not have had enough state-funded semesters to finish the programme. ‘As I did not have so much money saved, this was the most obvious solution,’ explains Jázmin why she took Student Loan2.

Student Loan2 helps in the financing of fee-paying programmes. The maximum amount you can take is the fee for the programme, and repayment is interest-free, without any hidden costs. You can apply for it any time during your university studies, and after the application, the amount is transferred directly to the institution of education.

Repayment shall start within four months of the termination of the student status at the latest. The instalment keeps changing on the basis of the minimum wage and the current income of the debtor, so it is defined annually. You can make advance repayments any time free of charge, either on ad hoc basis, or regularly.

This way Student Loan2 helps you complete your studies, even if you do not have access to a scholarship programme. This may be particularly important for the Corvinus Scholarship, because in the case of poor performance, the student may lose his/her scholarship place for the second year. ‘Based on the information received from the Student Loan Centre, I find this loan absolutely safe, everything is described in detail and clearly, and the terms are really favourable for students’, says Jázmin.

It is not only the fee-paying programmes that generate expenses for the students, and that is where Student Loan1 can help.

‘In my first year, I did not want to take any type of this loan, but it was necessary, as I was admitted to a fee-paying programme only. As a consequence, the dormitory was also more expensive, and I was not able to rely on my parents to support me, so I finally had to take the multi-purpose loan, too’, says Márk, who is presently attending a master’s programme at Corvinus.

Student Loan1 is a multi-purpose loan, i.e., you can spend it on housing, every-day expenses, or even on culture, recreation or the purchase of technical equipment. Its monthly amount is between HUF 15 thousand and 150 thousand, a student might as well get HUF 750 thousand in a semester. You can apply for it any time during your studies, and it will be transferred in monthly instalments, semi-annually or in one amount.

The interest rate of student loans is presently 1.99 per cent, which is favourable compared to market-based bank loans. There is no loan assessment for any student loan, no need for a guarantor and a collateral, it is enough to have a Hungarian student status for the application. Application is completely on-line, you can do it with a ‘Client Gate’ (Ügyfélkapu) registration. The loan amount can be modified in every six months.

The general repayment moratorium introduced because of the pandemic is valid until 30 September 2021. This refers to student loans in their repayment periods, too. As long as the moratorium is in force, no default interest is charged on existing debts, and no loan contracts are terminated. Debts may be repaid voluntarily during the period of the moratorium.

How will I repay it?

Márk terminated the special purpose loan when he started a state-financed programme. As soon as he terminated his first loan, he started to work, and started repayment in small amounts, Nowadays, because of the loan moratorium, one or two months were occasionally skipped, but as long he can work, he is not worried about repayment. He says both student loans helped him a lot in financing his studies, but because of the risk of a high final amount, he would not like to take it again if it was not absolutely necessary.

Jázmin is not worried about repayment, either. ‘I would like to make early repayments as soon as I can, but as the instalments are calculated on the basis of my income, I am not worried at all. Luckily, I have a job that I can continue after graduation, too, so it may not happen that I am unable to pay the instalments’, says Jázmin.

For the repayment, the student should have a firm job within a relatively short time, and the instalment will be adjusted to the income. And if he/she is able to work during his/her studies, early repayment is possible during the university years, too.

There is a family allowance system related to repayment, too. If a woman taking the loan has two children after disbursement, half of the debt is waived off, and in the case of three children, the whole amount of the loan is waived off. There are additional benefits related to having children, which are described in detail on this page.

You can apply for and manage the student loan on this page or through the Diákhitel Direkt mobile app.