The government's low-interest student loan scheme will offer a haircut and unpaid interest reduction to encourage its debtors to repay after the default rate surged to 70% of loans outstanding, says Areepong Bhoocha-oom, the finance permanent secretary.
Student loan debtors can apply for the programme between November and March. The scheme will offer a 3.5% principal haircut to debtors who have a good payment record and want to pay off the lot in one lump sum.
It will also cut overdue interest by 50% to delinquent debtors who want to pay off the debt at one time, and waive ongoing overdue interest for those who want to pay off the debt in instalments.
Delinquent debtors are typically subject to an 18% late payment fee plus a penalty interest rate.
Government student loans have been available since 1996 with the aim of widening educational opportunities for low- to middle-income families.
Some 2.8 million debtors remain, comprising 666,000 with debt of 58.4 billion baht making regular payments, while 1.48 million with 136 billion in outstanding loans are delinquent debtors.
Of troubled debtors, 104,000 cases worth a combined 13.2 billion baht have already been settled out of court, while 572,000 cases worth 42.3 billion remain in the courts.
Mr Areepong said the programme could be more useful in cutting the default rate than legal proceedings, since the debt collection process is costly.
The student loan programme is also conducting a study to explore putting delinquent debtors on a credit bureau blacklist to improve their payment discipline.
About the author
- Writer: Wichit Chantanusornsiri
Position: Business Reporter