Ease terms for student loans: panel

Conditions for state-funded student loans should be made friendlier for borrowers, including allowing them to be self-guarantors, suggested the House panel studying the issue.

Phetchompoo Kiturana, committee spokeswoman, said the panel made the proposal after meeting Chainarong Katchapanan, the Student Loan Fund (SLF) manager, yesterday to discuss growing problems surrounding the loans.

Streamlining the SLF management and providing better assistance for borrowers suffering loan repayment problems were mulled at the meeting, said Ms Phetchompoo. Also discussed were ways to encourage borrowers to adopt financial discipline.

The SLF had struggled because many borrowers fail to repay loans despite having graduated and taking jobs with a steady income.

The fund began taking them to court in 2018, seizing their salaries to pressure them to repay the debts. The measure has substantially boosted repayments and helped turn around the SLF’s finances.

Although the fund is doing better financially, it should revamp the loan conditions so borrowers can act as guarantors themselves, Ms Phetchompoo said. Fines for late repayments should also be reduced to alleviate the financial burden for borrowers, she added.

Mr Chainarong had earlier complained that defaulters had been asked to discuss solutions, but refused to do so.

Since its launch in 1998, the SLF has loaned a total of 605 billion baht to 5.6 million students. An estimated 10% of the country’s workforce are SLF borrowers. About 20,000 of these borrowers now work as doctors, nurses, dentists or engineers, some having earned millions of baht.

However, 65% of them have failed to honour their debts. The SLF charges an annual interest of 1% and offers a grace period of up to nine years.