FINANCING OF LIVING EXPENSES
Finance your studys in times of crisis – with the help of CHANCEN eG
As of this year, we are financing living expenses for students studying at universities and tech bootcamps. This offer matches the current economic situation, with inflation reaching levels not seen since the late 1970s. Price plateaus hiked by 10 % in the month of September 2022 alone, which is especially hard to handle for students.
Although the maximum BAföG (government support for the education of pupils and students in Germany) rates were raised by 5.75% in the 27th amendment in 2022, these subsidies are by no means available to all BAföG entitled students due to differentiations related to their parents’ income. In addition, due to the Covid-19 crisis, many students exceed the standard period of study for their degree and can no longer receive BAföG. The offers of the state-owned KfW Bank are also becoming less attractive: while the interest rate of the student loan had been at 0% in the disbursement phase since May 2020 as part of a Covid-19 aid for students, it has since risen to 5.9% when the offer expired at the end of September 2022.
Following this development we are even happier to be able to offer a fair and flexible financing alternative with our new product. In 2022, living expenses contracts already accounted for 12% of the ISAs we concluded.
Particularly interesting for bootcamp participants from the EU: the offer is supported by the European Investment Fund (EIF) through a default guarantee. Thus, in case of default of an ISA, the EIF offers monetary security for our investors, which speaks volumes to their trust in us and our product.
How does the ISA for living expenses work?
Students can receive a sum of between 5,000 euros and 30,000 euros from CHANCEN eG to finance their living expenses. For a high degree of flexibility, the contract is concluded over a range of 5,000 euros instead of a fixed amount. Up to 5,000 euros are paid out monthly. Once a calendar year, students can also receive a special payment of 1,500 euros for a special occasion (e.g. new laptop, travel expenses for a semester abroad).
Students conclude an ISA with CHANCEN eG for a repayment period of 15 years. The actual repayment begins after they have completed their studies and have reached a minimum annual gross income of 27,000 euros. Thanks to the guarantee of the European Investment Fund and the associated trust of the EU, the model is associated with less risk for investors associated with it who will receive an annual return.
If you would like to learn more about impact investing for this sustainable type of investment, please feel free to contact us. We will be happy to advise you on the design of your impact investment and answer any further questions you may have. We look forward to hearing from you! investment@chancen-eg.de
More information on the ISA for living expenses can be found here.
STUDENTS SUPPORTING STUDENTS
Our Mentorship Program
Since 2022, mentors with many years of professional experience have been supporting mentees in all kinds of matters, from graduation and applications to career entry.
Mentors and mentees can register and then are matched. After aligning expectations, individual one-on-one meetings take place over the course of several months. In quarterly meetings with the CHANCEN eG student service department information about the experience are exchanged. After about twelve months, the program ends and the participants are awarded with certificates.
The program was initially aimed at Games Academy apprentices as well as participants in tech bootcamps. Since bootcamps are relatively short and are often used for professional reorientation, many participants aim to start their careers right away. This is where experienced mentors can be very helpful. In October 2022, the project was expanded to medical students in EU countries: Studying medicine, especially abroad, is demanding. Therefore, it makes a lot of sense to ask for support and gather tips from people who have already had similar experiences.
Interested in participating?
OUR ANTI-DISCRIMINATION CONSULTANT: REGINIE SUNDER RAJ
CHANCEN eG’s efforts against discrimination
“A lot of people talk about diversity. CHANCEN eG has taken the first step. It’s a long road, but it also brings a lot to the company”
– Reginie Sunder Raj
As we deliberately support many people who are the firsts in their families to study and/or whose families were not born in Germany, our applicants are often affected by classism and racism. Therefore, we are particularly concerned about always ensuring a fair selection process. Nevertheless, there was a discrimination complaint from an applicant in 2021. We were able to resolve this issue, but at the same time we took it as an opportunity to establish the function of an anti-discrimination consultant.
Reginie Sunder Raj has been working for us as an external anti-discrimination consultant since November 2021. She studied Psychology and Cultural Relations and Migration in Scotland and Berlin.
Reginie is the point of contact for applicants who feel discriminated against during the selection process for an ISA. So far, only one complaint has been filed. Nevertheless, we consider this function to be essential, because the offer alone is an important signal for applicants who have experienced discrimination before. Reginie is also an advisory member of the social committee. Here, she brings in a different perspective to the discussion about hardship cases in order to provide a holistic view.
A detailed interview with Reginie is published here.
BOND 2023
Second BildungsCHANCEN bond in the offing
Following the successful emission of its first BildungsCHANCEN bond 2019/2031, the education cooperative is planning to issue another bearer bond for 15 million euros in 2023. This is intended to secure financing for around 2,500 new students.
The issue was preceded by the cooperative’s “Impact 2024” campaign which started at the end of 2020. In order to be prepared for further growth on the balance sheet the campaign’s purpose was to push the expansion of its equity capital. Another measure to increase equity was the introduction of silent partnerships, decided by the Annual General Meeting in June 2021. To date, three investors have invested 1 million euros through silent partnerships. In total, 9.8 million euros in silent partnerships, cooperative shares and qualified subordinated loans have been collected (effective as of November 30). Many thanks to all impact investors!
The second bond is to be issued with GLS Bank with a duration of up to twelve years. The interest coupon will be based on the capital market at the time of the issue. Subscription will be possible via GLS Bank as well as via other German credit institutions. The bond is expected to be secured by a so-called negative clause (no better position of future creditors after this bond) and the control of the collected funds from this bond via an external trustee. A listing on the over-the-counter market of a stock exchange is also being considered. Background: The first bond (WKN A2TSCT) has been listed on the Open Market of the Frankfurt Stock Exchange for two years.
UPDATE SOCIAL COMMITTEE
What happened, what was decided. Who is new?
Since 2021 CHANCEN eG has its social committee! The committee consists of three members who where once funded, two supervisory board members and our anti-discrimination consultant in an advisory capacity. The main purpose of the social committee is to decide about cases of hardship in repayment. These are rare because the ISA provides automatic protection:
Those earning under 27,000 euros gross per year are automatically exempt from repayment. Hardship applications therefore only have to be submitted if graduates cannot afford repayment despite income above the defined threshold.
Under which circumstances will the social committee step in? Repayers are more likely to be affected at the beginning of their career, when their income is not yet significantly above 27,000 euros. If unusually high costs are added, repayment can become a burden. Examples are payments to family members, further repayment obligations (e.g., student loans) or increased living costs abroad.
In each of the seven hardship cases that have been handled so far, the Social Committee recognized a justified case of hardship and exempted the applicant from repayment in the corresponding calendar year. Thus, members in difficult situations were able to be relieved not only financially, but also mentally. In general, the affected repayers report a strong relief thanks to this and express positively that, as soon as possible, they will gladly make their contribution in future repayment years in order to finance further students with their repayments. Due to the long-term nature of the ISA funding contracts, it is expected that applicants will resume their repayments after the hardship period has expired.
New members of the Social Committee: Vanida Melanie Schwing (left) and
Melvin Rinkleff (right) replace Kubrom Tzeggai and Hasan Güzel.
AWARD
First place: Pitch for the Financial Founders Series
We won first place at the 16th Bavarian Finance Summit, section Financial Founders Series! The presentation by Florian Kollewijn and the subsequent award ceremony took place on October 27th in Munich at the Haus der Bayerischen Wirtschaft.
In order to reach the final round, we had to convince an expert advisory board consisting of seven members (Prof. Dr. Ann-Kristin Achleitner/ TU Munich, Dr. Marc Beise and Herbert Fromme/ Süddeutsche Zeitung, Dr. Christine Bortenlänger/ Deutsches Aktieninstitut, Christian Gnam/ InsutTechHub Munich, Prof. Dr. Stefan Mittnik, Ludwig-Maximilians-Universität Munich and Dr. Frank Walthes / Versicherungskammer Bayern).
We had applied for the award in order to draw attention of insurance companies and pension funds which are looking for sustainable impact investment opportunities. The ISA is a fair financing concept which aims to fill some of the growing need for specialists and executives on the labor market. How? By enabling young people who do not have the financial background for university studies or further IT training to pay for their desired training. The ISA enables them to do this without running the risk of accumulating unbearable debt. Particularly migrants who are vital for Germany’s labor market as they will amount to around 2.5 million workers by 2030 (according to IAB forecasts) struggle with financing further education. Also worth mentioning: An ISA portfolio with average contract terms of 15 years offers an attractive long-term perspective for investors, as is typical for annuity insurances.
We like to illustrate this principle with the symbol of a horizontal eight: Professionals make their contributions for their later pension to an occupational pension fund. The pension fund invests a part of these contributions in an ISA portfolio and thus enables the education of more young people. Once they have completed their studies / further education and earn enough at work, they will pay back their ISA over a period of years – and we can return the investment including interest to the pension fund, which in turn can serve their former contributors.
Bottom line: The participation at the Finance Summit was both an incentive and a joy for us. We also got into talks with a family office and an insurer – let’s hope this leads to further growth!
