According to a response from the federal government to an inquiry made by the Left faction in the Bundestag, students taking out loans from the Kreditanstalt für Wiederaufbau (KfW) must pay increasingly higher interest as they repay their debts. The news, reported by the “Redaktionsnetzwerk Deutschland” editions published on Thursdays, reveals a significant increase in the overall interest burden for fully repaid loans. In 2017, the average total interest cost was still €1,633, but this amount is projected to be roughly three times higher by 2026, reaching €4,493. Current interest rates range between less than 5 and over 7 percent. Furthermore, out of 159,511 loans currently in repayment, 1,002 were classified as “distressed” but had not defaulted.
The KfW stated in its governmental reply that it does not aim to make a profit with the KfW student loan program. However, it clarified that the interest rates are set to cover the costs incurred during the loan term, including administrative and risk costs. Despite this, the government declined to release the exact profit or loss the KfW has made from the KfW student loan program over the last decade, citing the bank’s operating and business secrets.
Nicole Gohlke, the spokesperson for the Left faction in the Bundestag for Education and Science, criticized the situation, telling the journalists that while the historical peak interest rate of nearly 8 percent has slightly dropped, this relief is negligible for those affected. She pointed out that the interest rates are expected to rise again in 2026, forcing nearly 30,000 borrowers to pay rates exceeding 7 percent, resulting in the burden of €4,493 in interest alone for many students-a figure she deemed “unfathomable.” Gohlke asserted that the current interest level remains “far beyond good or bad.”
The Left politician further argued that this loan system risks creating an existential poverty trap, particularly when combined with the chronically underfunded BAföG scholarship, which is barely reaching most students. Gohlke criticized the ministry for labeling the exact KfW profits as confidential, stating that a state funding instrument must not become a debt trap. She called for a fundamental reform of the BAföG program, advocating for a genuine full subsidy and living-wage loan rates. Supporting this concern, data from the German Student Union recently indicated that 36 percent of students are affected by poverty.
