Germany proposes higher student aid but plans to cut housing allowance for students living with parents

Germany's federal government has proposed changes to its student financial aid system, including higher monthly support, revised housing allowances and a move towards digital-only applications, as parliament prepares to examine the legislation.

The proposed 30th amendment to the Federal Training Assistance Act, known as BAföG, is scheduled for its first reading in the Bundestag on Oct 15. The draft legislation will then be referred to parliamentary committees for further consideration. The proposals have not yet become law.

Germany proposes phased increase in student support

Under the draft legislation, the basic needs rate for students would increase to €503 per month in the winter semester of 2027–28, followed by a further rise to €563 in the summer semester of 2029. Support rates for school students would also increase correspondingly.

The government has additionally proposed annual increases in income exemptions from the winter semester of 2028–29. These exemptions determine how much income students and their families can earn before it affects eligibility for financial assistance.

The proposed changes also include adjustments to supplementary payments for health and long-term care insurance to better account for rising insurance costs.

Housing allowance changes could affect students differently

The draft proposes increasing the monthly housing allowance for students living away from their parents from €380 to €440, beginning in the summer semester of 2027. This represents an increase of around 16 per cent.

However, students who continue living with their parents would see their housing allowance reduced to €41 before it is abolished in a subsequent step.

The difference in treatment has drawn criticism from Germany's Bundesrat, the federal body representing the country's state governments. It argued that the government had not sufficiently demonstrated that the proposed basic support rate would cover the needs of students living in their family homes.

The Bundesrat also warned that the changes could place an additional financial burden on students and their parents.

BAföG applications to move to digital portal

The government also wants to simplify and speed up the application process by requiring students to submit applications through the BAföG Digital portal, except in specified exceptional circumstances.

The proposed reform would remove certain complex, individual administrative requirements. One example is the performance certificate currently required from students from their fifth semester to continue receiving educational assistance.

The draft also proposes corresponding adjustments to vocational training assistance and training allowances.

Bundesrat raises concerns over implementation timeline

Although the Bundesrat welcomed some aspects of the reform, it argued that the proposals fell short of expectations and called for further changes.

It criticised the delay in increasing the housing allowance, which is now proposed for the summer semester of 2027 rather than the winter semester of 2026–27, as indicated in the governing coalition's agreement.

The body also objected to the second increase in basic student support being scheduled for summer 2029, one semester later than previously agreed. It questioned whether annual adjustments to income exemptions would adequately compensate for inflation.

The Bundesrat further called for simpler legal provisions, greater use of standardised allowances, longer approval periods and fewer repeat applications. The federal government rejected most of these demands in its response.

The proposed legislation will now enter parliamentary scrutiny, with its provisions on student support, housing costs and application procedures likely to remain central to the debate over the reform.