The Repayment Period Summarized

Upon graduation, you will enter the repayment phase. Your repayment is income-based and limited by a minimum income and a maximum repayment amount. If you earn above the annual minimum income, you are obliged to pay a share of your income to CHANCEN eG. Your repayment helps the next generation access educational opportunities.

This summary helps you refresh your understanding of the ISA model. For the specific conditions of your Income Share Agreement, please read your personal ISA in our repayment portal

Table of Contents:
How does the Repayment Work?
The Repayment Portal
Submitting Proof of Income
Requesting an Exemption from Repayment
Submitting your Income Tax Assessment
Deducting your Repayment from your Taxes
End of Repayment
Membership in the CHANCEN eG Community

How Does the Repayment Work?

Your repayment period starts on 1 January, in the year following the end of your studies or your training financed by CHANCEN (exmatriculation date). For example, if your exmatriculation is on 30.9.2051, your repayment period will start on the first day of the next year, 01.01.2052.

You only start making payments back to CHANCEN if your income exceeds the minimum income defined in your ISA. If you earn above the minimum amount, you pay so-called monthly “instalments” to CHANCEN eG. They are due on the 15th of each month.

Your monthly installments are defined in your Income Share Agreement (ISA) contract. Your payments are always a fixed percentage of your relevant income. You can calculate your monthly payments by multiplying the income share as per your contract with your relevant monthly income.

Our definition of income is based on the German Income Tax Act. Based on this law, income consists of the following elements:

  1. Income from agriculture and forestry
  2. Business income
  3. Gross income from self-employment
  4. Gross income from employment
  5. Capital gains
  6. Rent income
  7. Other income as per § 22 EStG

You are obliged to inform us about all income which falls in the named categories.

In the next step, income-related expenses, so-called “Werbungskosten”, are deducted from your income (in general we expect deductions of about 9%); as well as potential further deductions. Please find more information on these deductions in § 10 (4) of your ISA. Please note that the actual deductions may deviate from the deductions stated in your ISA since the deductions are contractually linked to the numbers stated in the current BAföG law. But don’t worry, you only need to upload your proof of income in the repayment portal and we will take care of everything else.

It could be possible that you don’t receive your salary in time for the 15th of the month and another payment date would suit you better. Unfortunately, we are unable to offer individual payment deadlines as this would cause a high additional workload on our side. Therefore, we kindly ask you to make sure your balance on the 15th of each month does allow us to charge your account with the amount in question. We will remind you again three days before the payment date so that you can ensure to have sufficient funds in your account. 

The repayment process is very simple. You simply grant us a SEPA- direct debit mandate in our repayment portal and with this authorization we charge your bank account on a monthly basis without any efforts on your part. You will find more information on the SEPA mandate below in the paragraph “the repayment portal”.

In this case, the direct debit transaction fails and will be automatically repeated a few days later. In the meantime, please make sure to cover the account with sufficient funds. If your situation should change and you do not have sufficient funding to make a payment, please contact us as soon as possible to discuss the situation with our team. We strive to stay flexible at CHANCEN and are happy to try and support you as much as we can.

Please note that interests will be charged for delayed payments. It is therefore in your own interest to avoid late payments by always having enough money in your account or by contacting us should you know that a payment cannot be made. 

The minimum instalments represent the lower limit of your monthly repayment. If you earn above the minimum income, you will have to pay at least the minimum instalments to the CHANCEN community every month.

The minimum instalments are especially relevant if you don’t report your actual income to us or if you do not file a request for exemption from repayment in the repayment portal. In these cases, your bank account will be automatically charged with the monthly minimum instalments. Please note that repayments are not related to your actual income under these conditions. It is therefore likely that you will need to settle a major payment as soon as we receive your Income Tax Assessment and know your actual income.

You can find the exact amount of your monthly minimum instalments in your ISA or the repayment portal. The instalments are continuously adjusted to the income of the previous year.

Surely you had good reasons for your decision and CHANCEN eG wants to support you in your next steps. 

Since we have already paid for parts of your studies or training, it is only fair that you will have to pay back to the cooperative as soon as you can. If it is the case that you have no or little income, you can request an exemption from repayments via the repayment portal. This way you can take your time – if necessary – to plan your next steps. 

If you earn above the minimum income you are obliged to make repayments. Your income share will be recalculated in relation to the share of your tuition we have already paid. You can review these numbers in your repayment portal

For example: In the ISA, we had agreed to cover € 10,000 of your tuition fees and the income share was 8% over 5 years. You drop out of your studies after half of the time, so we have paid € 5,000 for your studies. Consequently, your income share drops to half of the originally agreed percentage, i.e. 4% (still over 5 years).

Inflation describes the devaluation of money over the course of time. Slight inflation adjustments are considered normal and usually occurs in Germany. 

The figures in the ISA are adjusted to this time value of money which means that they automatically adjust to the real German inflation. We expect that all amounts in our contracts which are stated in Euro will slightly increase over the course of time. This applies especially to the maximum limit, monthly instalments, minimum income and the payments which are due for not handing in the Income Tax Assessment in time. These numbers are adjusted when the sum of inflation over several years exceeds 5%.

Your income share does not change with regard to inflation. It remains the same throughout your repayment period.

Sounds complicated?

Don’t worry! It is normal that you may have questions about the income definition, the exact procedures of repayment or other topics. You are most welcome to sign up for one of our repayment webinars where we will explain these topics in more detail and answer all questions you may have.

Book a webinar

The Repayment Portal

You can easily communicate with us via the Repayment Portal. It offers the following functions:

You can modify your address as well as phone mobile number in the repayment portal. To change your name, nationality or e-mail address, you need to file a request through the portal.

Through the portal, you can easily grant us a SEPA mandate. We need the mandate to process your payments. Please note that you are obliged to grant us a valid SEPA mandate throughout your entire repayment period even when your repayment is currently paused. 

In order to grant us a new SEPA mandate, you need to revoke your current mandate first before you can grant us a new one. If you don’t have a SEPA-compatible bank account, you can set up a SEPA-compatible payment method via Transferwise. (Find detailed instructions here.)

In the portal you can view your repayment conditions and also download your signed ISA.

The portal provides you with an overview of all payments you have already made as well as those that are still outstanding.

In the portal, you can submit information about your income, request an exemption from repayment and ask us to change special personal data (name, nationality). You can find more details in the next paragraph.

Submitting Proof of Income

To calculate your repayment, we need income information from you via the portal.

Our repayment portal provides you with a fast and efficient way to declare your income.

Navigate to “requests and repayment”, choose the case type “communicate change in income” and provide us with a scan / photo of your income proof. Possible proofs are your employment contract or a payslip.

As a freelancer, you can neither share an employment contract nor payslips with us. It might also be the case that you do not know yet how much you will earn exactly.  No problem!

Navigate to “Communicate Change in Income” in the menu “Requests and Repayment” of your repayment portal, fill in your estimated gross income and instead of a proof of income, you can for example upload a chart with your expected income and a short explanation. In general, we trust that the estimations of your income are as accurate and as thoroughly as possible and that you will keep us informed on any changes. 

You can provide us with updates throughout the entire year and we can adjust the monthly payments at any time. 

If you expect to earn below the minimum income you can also request an exemption from repayment. 

If you have difficulty forecasting your income, we recommend you to pay the monthly minimum installments set in your ISA. We can make adjustments as soon as your income becomes more predictable.

Just as always you can upload the relevant documents (e.g. employment contract or pay slip) in your repayment portal by choosing “communicate change in income” in the menu “Requests and Repayment”. We will contact you if we have any language difficulties and need documents translated. 

Also if you work abroad, you will have to send us your Income Tax Assessment in the following year. This means that you have to file your Income Tax Assessment in the country where you work and upload the tax assessment to our portal. If we have difficulties understanding the tax system, we can ask you to have your income converted to the German tax system by a German tax consultant or auditor.

This is not a problem, simply submit a new proof via the repayment portal and let us know from when the income change is valid.

Then you can simply request an exemption from repayment in the repayment portal and we will directly pause your repayment.

Requesting an Exemption from Repayment

If your income is below the minimum income, you can ask for an exemption from repayment.

You can request an exemption from repayment if you earn below the contractually agreed annual minimum income. This minimum income guarantees that you only have to pay back to CHANCEN eG if you can afford it. You should therefore request an exemption from repayment if you are still looking for a job at the beginning of the year or if it is foreseeable that you will earn little.

Important: Without information from you, we cannot know whether you are earning above or below the minimum income. Therefore, you must actively request an exemption from repayment. If you do not request the exemption, we will automatically debit the monthly minimum instalment from your account.

You can find your general minimum income in your ISA or in the repayment portal. The amount is secured and adjusts to inflation. Inflation describes the devaluation of money over the course of time. A slight inflation is considered normal and is also generally observed in Germany. We expect the minimum income to increase slightly over time due to inflation. We always make concrete adjustments to the minimum income if the sum of the inflation of several years exceeds 5%.

The minimum income can also increase due to your personal circumstances such as marital status, children, BAföG repayments and health impairment. All these factors represent possible financial burdens to which your repayment adapts. This means that if you can prove increased costs, your minimum income will increase. If you earn less than the increased minimum income, you can be exempted from the repayment.

  • Marital Status: If you are married and have to support your partner financially because he/she earns little or nothing, your minimum income will increase.
  • Children: You also have additional costs for children. They can increase your minimum income, provided you are unmarried or your spouse earns little or nothing. You can also submit maintenance payments here.
  • BAFöG-repayments: Your minimum income is increased by your monthly BAFöG minimum payments (repayments of education support you received from the Federal Education Promotion Act). So this is not about how much you really pay back to the BAFöG office, but only about how much the minimum payment has to be.
  • Disability-related expenses: Disability-related expenses defined in §33b EStG also increase your minimum income.

To find out by how much your minimum income would increase, please read your ISA.

You can easily request an exemption in the repayment portal by navigating to “Request temporary exemption from interim payments” in the menu “Requests and Repayment”.

The request for exemption must be submitted at the beginning of the month that you would like to be exempt at the latest. This is due to the fact that monthly instalments are always debited on the 15th of each month. Please also take into account that the technical initiation of the debit needs some time to be modified and a certain processing time of your request is also to be expected. If the request for exemption is not submitted in time, the monthly instalment payment is automatically debited on the 15th.

Depending on the situation, different proof is required:

  • Low income: Employment contract / payslip
  • Unemployment: Certificate from the Job Center or the Federal Employment Agency
  • Study / further training: Certificate of Matriculation
  • Parenting: Proof of maternity or parental leave
  • Illness: Proof of illness / occupational disability/incapacity to work

If you do not have proof of your current activity, for example, because you are not registered with the job center, simply write that in your request text.

If it turns out in the course of the year that you will earn more than the minimum income, you can simply upload proof of income in the repayment portal and the repayment will start automatically.

Submitting your Income Tax Assessment

We need your Income Tax Assessment every year in order to calculate your final income.

The Income Tax Assessment is a letter from the tax authorities which you will receive after filing your income tax return. It lists your official income from the previous year and tells you if you have to pay additional taxes or if you receive a tax refund, and if yes, how much. 

As an ISA re-payer, you are obliged to submit your Income Tax Assessment to CHANCEN eG annually for the income of the previous year – and this means that you have to file an income tax return in each year of your repayment.

In most cases, filing an income tax return is advantageous for you: Since you can, for example, deduct moving allowances and income-related expenses from your tax bill, you will in many cases get money back from the tax authorities.

The Income Tax Assessment is the most official document regarding your entire income. It is issued by the tax authorities and is therefore very reliable. In addition, unlike your payslips or employment contract, it also lists other sources of income according to §2 of the German Income Tax Act, such as your income from rent and capital gains.

We value trust-based relationships with our members, but when it comes to the final proof of income we have to ask for solid evidence, in the interest of the CHANCEN community. Therefore, repayers are required to submit this document every year of their repayment – even if they were exempted from repayment in that year.

Yes, there are no exceptions from the obligation to file the Income Tax Assessment!

Since you could have other sources of income besides employment (for example rent income or capital gains), we need your Income Tax Assessment every year. But don’t worry, if you have no income to declare, the income tax return is done quickly and should not take a longer period of time overall.

Simply navigate to “Income Tax Assessment” in the menu “Requests and Repayment” in the repayment portal.

Please make sure to scan or photograph the complete Income Tax Assessment including the official seal of the tax office. Please also ensure that all pages of the Income Tax Assessment are also submitted.

You always have to submit your Income Tax Assessment for the year by December 31 of the following year at the latest. For example, if you want to file your Income Tax Assessment for the year 2051, the deadline is until December 31, 2052.  This means that you have a whole year to obtain your Income Tax Assessment. We will send you regular emails to remind you of this obligation.

Important: Please make sure to submit your Income Tax Assessment on time. If you fail to submit your Income Tax Assessment by the allocated deadline, significant costs will be added to your repayment sum, you can refer to your individual ISA for more details. Please also take into account that the tax authorities can take several weeks or months to send you your Income Tax Assessment after having received your income tax return. Please make sure to file your tax return in the first half of the year to avoid delays. 

Upon receiving your Income Tax Assessment, we calculate your repayment obligation for the year in question and compare it with the payments you have made:

  • If you have paid too much, a credit balance is created which will be offset against your next payments. This reduces your next payments.
  • If you have paid too little, there will be an additional one-time payment which needs to be settled within two weeks. If the back payment is very high, you can contact us about a payment in instalments.

In order to keep the balance and the one-time payments as small as possible, it is important that you keep us informed about your current income.

Please submit your income tax return in the country where you have worked. You will also receive an equivalent of the Income Tax Assessment in your country of residence which you can submit in the repayment portal. We will contact you if we require any translated documents or are not familiar with the local tax system. In this case, we can ask you to have your income converted to the German tax system by a German tax consultant or auditor.

Important: According to the ISA you are obliged to cover the costs for a tax consultant or auditor. We will try to request the conversion only if it is really necessary, but please be aware this might incur additional costs.

In this case, we will debit the maximum amount stipulated in the ISA from your account. This amount is very high, so you should avoid this in your own interest by submitting your Income Tax Assessment in the given time period.

Important: By signing the ISA you have agreed to pay the maximum amount if you do not submit the Income Tax Assessment within the deadline. We owe it to our members and investors to enforce our contractual claims and guarantee a reliable repayment. Therefore, we will exercise our right to collect the maximum amount if it should become necessary. Of course, we would much prefer if it does not reach this stage, however, CHANCEN eG reserves the right to do so. 

OMG, a German tax return?

If you are not yet familiar with the topic or tend to procrastinate on your tax return, you can find information and instructions on iamexpat.de. We also offer regular tax webinars. Have a look at our Webinar Page!

Book a webinar

Deducting Repayments from your Taxes

You can deduct your repayment from your taxes and get a tax refund.

The costs of studying or training are tax-deductible in Germany as “special expenses” or “income-related expenses” (more information on the distinction between the two can be found on our blog). Therefore, you can deduct your ISA repayments from your income tax and thus receive a tax refund. Currently, we expect an average tax refund of 25-33% of the repayment – we’d say it’s worth it.

You can find further information in our tax leaflet, which was written by tax consultants and experts. We also cover the topic in our tax webinars.

At the beginning of the year you can download your payment overview for the repayment of the previous year in the repayment portal. You can submit the payment overview to the tax authorities.

We cannot give a general answer to this question, as it depends on the tax system of the respective country. Therefore you have to do some research on the local tax system to see if the same conditions compared to the German tax system apply. Generally speaking, the tax systems of different countries differ greatly, which means that the tax deductibility can vary from one country to another and not be applicable in some countries.

In this case, the tax-deductibility of the repayment is limited or not possible at all. We recommend you look into potential tax deductibility possibilities during your studies. There are several websites and apps available to get more information; you can refer to Taxfit, which we think provides a nice first overview (CHANCEN eG has not been paid to endorse the aforementioned app).

End of Repayment

Your repayment can end in three ways:

You can find your applicable relevant repayment period in your ISA. The contract defines for how many years you have to pay a share of your income to CHANCEN. If you have made repayments to CHANCEN eG for the specified number of years and have made the minimum annual payment, the repayment ends.

The repayment period is also defined in your ISA. It is usually 25 years after the completion of your studies/training. When the repayment period ends, the ISA also ends, regardless of how much you have paid back.

This means that you don’t have to worry in the event of long-term illness, occupational disability or unemployment – your ISA repayment obligation expires at the end of the repayment period eliminating the possibility of falling into a situation where you owe money you are unable to repay. 

The ISA also sets a maximum limit of your repayment. It is usually 200% of the tuition fees that CHANCEN eG has paid for you. The amount is secured and adjusts to inflation (Inflation describes the devaluation of money over the course of time). Slight inflation is considered normal and is also generally observed in Germany.  We expect that the maximum repayment limit will slightly increase over time due to inflation.  We always make concrete adjustments to the maximum repayment limit if the sum of the inflation of several years exceeds 5%.

If you earn very well, the repayment is capped: If your total repayments reach the maximum limit, your repayment will stop. Once this happens, the ISA ends automatically. Your high repayment has created more educational opportunities for the next generation.

With loans, you often have the possibility to end the contract by making a large one-time payment. With the ISA this is more complicated. That is due to the difference between the ISA and standard bank loan:

  • With a loan, you owe a certain amount of money plus interest. It is easy to calculate which repayment is still outstanding. By paying the outstanding amount, you can redeem early and terminate the loan agreement.
  • With an ISA, you owe a share of your current and future income. This amount is hard to predict as it depends on your future salary development. Therefore, early repayment is difficult to implement with the ISA.

You can end the ISA at any time by voluntarily repaying the maximum repayment limit. In this case, you create more educational opportunities for the next generation, but you may also pay more than you would have to.

At any time, you can also voluntarily pay more than you are currently required to pay to reduce your future payments.

Membership of the CHANCEN eG Collective

In your Repayment phase, you will always remain a member and part of CHANCEN eG.

During the repayment period you remain a member of CHANCEN eG which comes with the following advantages:

  • Voting right in the annual general meeting (AGM): As a member, you can shape important decisions, request changes in the statutes and propose new members of the supervisory board (you can find a detailed list of your rights in our statutes). In summary, you have real co-determination and control rights.
  • Dividend payments: If CHANCEN eG distributes profits, you will receive a dividend on your share.
  • Community: As a member of the CHANCEN community, you benefit from free workshops and networking opportunities. In your role as an alumnus, you can also share your knowledge with other community members and thus give back more than just money to the community.

After your repayment, your membership is voluntary – if you wish, you can finish your membership of CHANCEN eG at the end of your repayment period. To do so, you have to cancel your membership. You can find the relevant cancellation deadlines in our statutes.

We would be very happy if you decide to remain a part of the CHANCEN cooperative after your repayment period and continue to contribute as an alumnus. You also have the possibility to purchase additional shares and to continue supporting CHANCEN eG with this impact investment to make sure that even more students can benefit from an ISA in the future.

Contact

Stephanie Inter

Payment & Career Support Manager