Why is there a difference between the amount of the government-backed student loan and the amount actually paid out by the bank?

As a general rule, students must pay their share of the interest every six months.

For the student, the interest rate is capped at 2.00% and the excess is paid every 6 months by the Luxembourg government.

If the student has not paid the half-yearly interest (on 30 June and 31 December each year), it will be accrued and, in general, deducted when any new tranche is paid.