Germany is a pioneer in the automotive industry. It is home to prestigious universities such as the Humboldt UniversityTU- Munich, the Heidelberg University, etc. This explains why most engineering majors choose this country to pursue their higher education. Most students who plan to study in Germany tend to fund their higher studies with the help of an education loan. One important point that every student who plans to study abroad needs to note is that every country has set certain guidelines for immigrant students. Many of these embassies have very strict policies regarding the funding options chosen by such students. Germany is no different. It is common knowledge that most students who plan to study in Germany, borrow an education loan to support their studies. This article will tell you all about the Germany education loan process.

The 20th episode of Loanflix, a web-series curated by our team, will also give you information on the same. Do click on the below video to watch this episode and understand the Germany education loan process, even better.

In this article, major topics like the concept of a blocked account, the phases in which a student is expected to arrange funds, the problems faced by students who opt for an education loan for Germany, etc. will be covered. So read on.

What kind of Loans are available for students who need funds to study in Germany?

Higher education aspirants who are looking to fund their higher studies in Germany with the help of an education loan have the option of borrowing both secured loans as well as unsecured loans. For those who wish to borrow unsecured education loans, the maximum loan amount offered for studying masters in Germany is Rs.20 Lakhs. This, again, depends on your academic profile and your co-applicant’s financial profile.

Coming to secured loans, there is no limit on the maximum loan amount that can be borrowed from government banks. Although borrowing unsecured education loans is an available option, it is recommended that you consider the possibility of borrowing a secured education loan from any of the government banks or PSBs, as they are much cheaper.

When do students need a loan sanction in the Germany education loan process?

Applicants have to go through two different stages before they can proceed to study masters in Germany. They are:

  • Applying to universities and receiving their admit.
  • Arranging for a blocked account and the student visa process.

One of the most important point that students need to note is that none of the German universities requires their applicants to provide proof of their finances before their admission to a particular university is confirmed. It is only after they have applied to universities and are accepted for a course in Germany that they are required to provide this proof. Applicants are generally required to arrange for their funds just before they apply for a student visa to study in Germany. Let’s take a closer look at the two stages in the Germany education loan process.

The Blocked Account Concept

Most students who have applied for their higher education in a German university must be aware of a Blocked Account. The German embassy stresses on migrant students having a blocked account. So what is a Blocked Account in the Germany education loan process? What is the purpose of a Blocked Account in the whole German visa process? What is to be deposited into such an account? It's time to stop worrying about these questions. Read on to find out the answers.

A Blocked Account is a special account which is a pre-condition necessary for those applying for a residence permit in Germany. Simply put, a Blocked Account is kind of a savings account which you need to open with a Germany-based bank and you are required to deposit your one year’s living expenses into this account in order to qualify for a German student visa and a residence permit.

What goes into a German Blocked Account?

Moving on to the next obvious question asked by many loan applicants, students need to deposit their living expenses for one year, which as of 1st September 2019, is 10,236 Euros, into their Blocked Accounts. When you convert this amount into INR, the approximate figure comes close to Rs. 8 Lakhs. The monthly expenses are limited to 853 Euros.

How do applicants receive their living expenses through a Blocked Account?

Once the applicant has deposited the required funds into their Blocked Accounts, they are required to open a savings account with a bank in Germany once they reach there for their higher studies.

On the completion of this step, the applicant is required to inform the bank in which they have opened their Blocked Account, about their savings account. On validating its existence, the Blocked Account bank will transfer approximately 853 Euros every month, for the next 12 months, into the applicant’s savings account.

How to open/purchase a Blocked Account?

There are multiple ways to go about this procedure. One way is to open one with the Kotak Mahindra Bank. However, many of the students had difficulty with linking their German savings account with the Kotak Mahindra Bank.

Another option is to approach third-party service providers in order to open a blocked account. 
The most convenient method is to directly open a Blocked Account with a German branch of the Deutsche Bank. I am attaching a sample link to the application form and the guidelines stating the procedure to open a Blocked Account with the Deutsche Bank.
The Deutsche Bank Blocked Account Procedure 

Deutsche Bank Blocked Account Sample application form

How to fulfill the German embassy’s conditions with the help of a Germany education loan?

As mentioned in the very first paragraph of this article, it is common knowledge that most aspirants who wish to study in Germany borrow education loans to fund their higher education.  

Opening a Blocked Account is one condition that every student who has plans of studying master's in Germany needs to fulfill. So how does one go about it? How do students who borrow education loans to fund their studies, fulfill this requirement? Do not worry, here’s a glimpse of how you can complete this procedure if you plan on borrowing a Germany education loan.

  1. Most students who opt for an education loan for MS in Germany, need to open a Blocked Account and deposit the required funds even before they apply for a visa.
  2. A majority of Indian students mostly tend to borrow secured loans from government banks and PSUs to fund their higher studies in Germany. 
  3. Now the biggest hurdle faced by such students is when they need their lending banks to sanction the loan amount before their visa process. This sanction is called a pre-visa disbursement in banks’ terms. 
  4. Most government bank officials who are authorized to disburse education loans hesitate to disburse funds to their applicants before their visa is approved. 
    This is because many such officials are not aware of the policies stated by the embassies of different countries for student visas. 

This is where the financial team at WeMakeScholars comes to the rescue. Students who had applied for education loans through our team did not have to face this problem with government banks. This is because our team has been at the core of many crucial decisions regarding abroad education loans, taken by some of the major banks functioning in India. Due to our knowledge and expertise in this field, we have been able to make pre-visa disbursements possible for our students. If you are stuck in any stage of the Germany education loan process, do not hesitate to contact us by requesting a callback from our team.  

A Major hurdle in the Germany education loan process

Many banks who lend an education loan for MS in Germany to aspirants are not aware of the fact that German public universities charge very less or no tuition fees for most MS courses. On the contrary, the cost of living in Germany is high. Hence, most students resort to an education loan for Germany blocked account.

However, according to the conditions set for a model loan product by the IBA for all the member banks, which includes most of the banks functioning in India, an education loan is majorly supposed to fund the tuition fees of the loan applicants.
When students approach their lending banks for an education loan for Germany blocked account, many banks hesitate to lend these funds under an education loan.

They insist that the candidates borrow these funds as personal loans or as any loan product other than education loan. We recommend our readers not to fall for such suggestions because applicants become eligible for benefits like a moratorium period and repayment holidays only if they borrow an education loan. 

In order to avoid being in such a situation, we would suggest you approach the financial team at WeMakeScholars. We ask you to do so because the WeMakeScholars team has contributed to many policies taken by our partner banks regarding education loans. Hence, if you are in need of a Germany education loan to fund your living expenses and your lending bank refuses to provide it as education loan, do not hesitate to avail the assistance of the financial team at WeMakeScholars.

When is it the right time to apply for an education loan for Germany?

The answer to this question is pretty simple.  Knowing when to apply for a Germany education loan, is very crucial to the whole process. Once the student applies, the general time taken by banks to disburse the loan amount can is estimated to be around 1.5 months. However, if you happen to apply through WeMakeScholars, this time gets cut short into 15-20 days. Overall, including the visa process, applicants need to consider the time taken to complete the following procedures, before they apply for an education loan.

Blocked account process: 1 week
Visa process: 6-8 weeks.
Education loan process: 18-20 days via WeMakeScholars. Approximately 2 months if applied through banks.

Keeping the above-mentioned timeline in mind, we would recommend you to apply at least 1.5 months prior to the time when you require the funds for your higher studies in Germany.

Borrowing an education loan may seem like taking on a huge financial liability, However, if you go about it in the right way, this need not be the case. When it comes to education loans for abroad studies, it is extremely essential that you conduct a thorough study of the market and then go ahead with your decision. If you are still in a state of confusion, do not hesitate to contact the WeMakeScholars team to help you out of it.

The next episode of Loanflix is going to give you complete information on how you can fulfill the financial requirements to study in the UK. So do subscribe to our channel and keep a lookout for updates!

Note: WeMakeScholars is an organization funded and supported by the Government of India that focuses on International Education finance. We are associated with 10+ public/Pvt banks/ NBFCs in India and help you get the best abroad education loan matching your profile. As this initiative is under the Digital India campaign, it’s free of cost. The organization has vast experience dealing with students going to various abroad education destinations like the US, Canada, UK, Australia, Germany, Sweden, Italy, China, France among others