Dr. Dieter Dohmen Thessaloniki, October 4, 2010

Loans for VET in Germany Dr. Dieter Dohmen Thessaloniki, October 4, 2010 D.Dohmen@fibs.eu

Content • Loans – the frame • VET-Loans – Regulations • VET-Loans – Data • VET-Loans – Efficiency & Effectiveness D.Dohmen@fibs.eu

The environment Two loan schemes: Federal Law on Student Support and Federal Law on Support for VET-upgrading programmes (e.g. Master-craftsmen programmes and comparable qualifications) Full-time school-based (initial) VET – 100% grants Full-time studying at universities – 50% grant, 50% loan -> CVET-programmes are covered, if Master programmes are considered CVET (=> if at all, this law is of minor relevance in this context) D.Dohmen@fibs.eu

Regulations Federal Law on Student Support (BAfoeG): Full-time studying at universities – 50% grant, 50% loan Full-time school-based (initial) VET – 100% grants -> CVET-programmes are covered only, if Master programmes are CVET (age restriction: 30 years at the start of the programme) => if at all, this law is of minor relevance in this context D.Dohmen@fibs.eu

Regulations Federal Law on Support for VET-upgrading programmes (AFBG): i.e. Master-craftsmen programmes and comparable qualifications Full- or part-time programmes Programme and examination fees (of up to € 10.226) Costs for preparation of “master-piece” Costs of maintenance (in case of full-time programmes) (means-tested) D.Dohmen@fibs.eu

Regulations Federal Law on Support for VET-upgrading programmes Maximum support for full-time programmes: Maintenance: up to € 675 up to € 155: loan (based on income assessment) rest: 56% loan/44% grant Plus € 215 for husband/wife (if applicable) 50% loan/50% grant Plus € 210 per child (if applicable) 50% loan/50% grant (plus € 113 per child for lone parents (if applicable): 100% grant) Loans are interest-bearing: Euribor + 1% (+0.7% risk contribution) D.Dohmen@fibs.eu

Regulations Federal Law on Support for VET-upgrading programmes Maximum duration: full-time - 2 years, part-time - 4 years Maximum loan (depending on personal situation): e.g. € 16,200 (un-married) or € 21,300 (married, 1 child) Grace period: time of studying plus 2 years afterwards (can be extended to 6 years) Repayment period: max. 10 years Repayment rate: min. € 128 per month, but can be adjusted to the maximum repayment period (e.g. in examples € 135 and € 177) D.Dohmen@fibs.eu

Special regulations Loan can be reduced … • by 25% upon successful examination • by up to 66% in case of foundation of a company, if one employee or trainee is deployed • in case of part-time employment due child-rearing and insufficient income repayment can be postponed (and can be granted eventually) D.Dohmen@fibs.eu

Some data Number of trainees supported: 157,500 (2009) 136,000 (2006) Average amount: € 2.892 (for all programmes) (2006: € 2,715) for public institutions: € 3,837 (25% of participants) for private institutions: € 3,547 (9%) for courses at public institutions: € 2,802 (34%) for courses at public institutions: € 2,317 (25%) Distance education courses: € 1,433 (8%) Average support (per Person and month): € 745 Average share of loan: 69% (2009) (2006: 71%) D.Dohmen@fibs.eu

Some data Average support (per Person and month): Grant for maintenance: € 195 (26%) Grant for child care: € 115 (15%) Loan: € 433 (59%) Total: € 745 Average share of loan: 69% (2009) (2006: 71%) D.Dohmen@fibs.eu

Some data Number of trainees supported: 157,500 (2009) 136,000 (2006) female share: 31% (2009) (2006: 32%) full-time: 26% - part-time: 34% (2006: 26 and 36%) 83% have no income, 12% less than € 5,000 (no gender differences) D.Dohmen@fibs.eu

Some data D.Dohmen@fibs.eu

Efficiency & effectiveness No official data on administration cost is available however administration cost of interest rate is 1%point (in comparison: for BAfoeG costs of loan administration are at 2.7%) Default rates are not known: however, the 0.7 %points increase of the interest rate suggest that they are not too high D.Dohmen@fibs.eu

Measures to improve efficiency & effectiveness Regulations in Germany are based on legal approaches, i.e. efficiency and effectiveness are of minor importance. However, few changes have been made, e.g. • Loan was transferred from public budget to KfW, … • … and introduction of interest-bearing loans (from interest-free) (though interest during training and 2 year grace period is paid by government) Support for children and partner turned to a 50% loan (from 100%) 25% reduction for successful examination has been introduced last year D.Dohmen@fibs.eu

The Future KfW Future Education Loan? D.Dohmen@fibs.eu

Dr. Dieter Dohmen Thessaloniki, October 4, 2010

Dr. Dieter Dohmen Thessaloniki, October 4, 2010

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