Commercial banks of Latvia offer two types of loans to prospective and existing students in connection with studies in higher education institutions.
One is the student loan, which is designed to make it easier for the student to cover daily expenses, such as meals and rent. The amount of this credit is usually not too high, but it is needed to make it easier for the student to pay for various household expenses.
A student loan is intended to cover all or part of the tuition fee
It is known that tuition fees at Latvian universities are very high and not everyone can afford to pay for their studies. In this case, a student loan, which can be obtained on your own, parents’ or state guarantee, comes to the aid. It cannot be higher than the tuition fee or the maximum amount of the student loan. This credit is granted for both full-time and part-time studies.
Lending institutions are usually accommodating to students and offer to pay the student loan within 12 months of graduating. During this time, the graduate should be able to find a job and earn a steady income to pay off the credit.
Each spring, the Ministry of Finance of the Republic of Latvia holds an auction for the right to issue study and student loans with a guarantee on behalf of the state. Representatives of the Ministry of Finance, Education and Science and the Treasury participate in the auction. In recent years, the auction has been dominated by one participant, School Bank, which has also won all auctions.
This bank has been providing state and state student loans for more than ten years
On March 2, 2015, the last auction took place and School Bank received an amount of EUR 25.2 million for the provision of student loans in 2015.
The amount of money granted by the state for granting student loans was EUR 10.8 million. The interest rate on both loans was determined by the formula EURIBOR + 2.5%. The terms of this auction are approved by order of the Ministry of Finance.
This loan requires a guarantor with whom the loan agreement is made
There are usually several negotiations with bank representatives until the guarantor is identified and then the contract is concluded with the bank and the Latvian state. The money is then transferred to the account of the institution with the relevant information.
Consequently, School Bank is the only commercial bank in Latvia that offers a loan with state guarantee. Nevertheless, student loans can also be obtained from other lenders, but they will no longer be guaranteed by the State. This type of student loan is considered to be less advantageous because of higher interest payments. Either the student or the guarantor needs a sufficiently high income because they are used to evaluate the amount of credit. The maturity of this loan is 5 to 10 years after graduation. The duration depends on the size of the loan.
To apply for a student loan, you must complete a loan application form at your university
Subsequently, in the event of acceptance, the request is sent to the bank which issues the State-guaranteed loans. You then have to go to the bank (currently School Bank) to conclude the relevant credit agreement. At the time of signing a contract, several details of the contract need to be addressed.
The first is the loan amount and its maturity. The payment schedule should then be checked as it should coincide with the student’s or guarantor’s payment options. And there are a lot of details that still need to be paid attention to, such as contractual penalties, early repayment, etc.