Interest-Free During the Entire Repayment Phase
The interest-free period applies throughout the entire repayment phase, regardless of how long the borrower takes to repay. Unlike other loans, there are no interest charges with Bafög, even if the borrower requests a deferment or extends the repayment period.
Benefits of Interest-Free Repayment
The interest-free repayment offers several advantages for borrowers:
- No Additional Burden from Interest: The repayment amount remains constant, as no interest accumulates, making the financial burden manageable.
- Social Compatibility: This regulation also allows graduates with low income to repay the loan without additional costs.
- Planning Certainty: Since there is no risk of interest charges, borrowers can plan their repayment in the long term and allocate their financial resources accordingly.
Comparison with Other Loans
In contrast to traditional study or education loans that incur interest, the Bafög loan remains interest-free during the entire repayment period. This makes it one of the most affordable ways to finance education or a degree. While other loans can become more expensive due to interest charges, the amount to be repaid with Bafög remains unchanged.
Deferral and Interest-Free Status
Even during an approved deferral, the loan remains interest-free. This means that the borrower does not incur additional costs if they must temporarily suspend repayment due to low income or other circumstances. This also distinguishes the Bafög loan from many other loans where interest continues to accrue during deferral.
Early Repayment
Since no interest is charged, there is no financial disadvantage for borrowers who make regular payments and do not proceed with early repayment. However, it may be beneficial to repay the loan early, as discounts on the outstanding loan amount are often granted in such cases.
Relevance of Interest-Free Repayment
The interest-free repayment makes the Bafög loan an attractive and socially compatible option for trainees and students. It significantly reduces the financial burden after training and helps graduates plan their professional entry without an additional debt burden. With the interest-free status, it is also ensured that the repayment remains fair, regardless of the borrower’s economic situation.