'03, Mr. A in his 30s was a second year in 2008 at the time of the financial crisis. It was difficult for the family, so I continued my studies with a student loan with a maturity of 15 years to raise my living expenses and tuition. At that time, the student loan interest rate was 7.8%. When the interest rate skyrocketed due to the financial crisis, I worked hard as a part-timer to pay off interest. By 2014, the Ministry of Education and the Scholarship Foundation implemented a system that converts high interest rate student loans by 2.9% during the financial crisis. Mr. A also received a low interest rate conversion benefit and is still paying off the remaining loans.

The problem was the general repayment student loan that I received for two years from 2010. The interest rates for student loans for the first semester of 2010 to the second semester of 2011 were lower than those at the time of the financial crisis, but still reached 4.9% to 5.7%. This is more than three times compared to the recent scholarship foundation's rate of dropping student loans to 1.85%, which is below the first 2% of history. During this period, I received a total of six living expenses and tuition loans, but the interest alone is over 50,000 won. Mr. A nevertheless worked hard. But there was a problem. In the aftermath of the Corona19, I lost my job, making it difficult to pay back principal and interest.


From the first semester of 2010 to the second semester of 2012, it was a time for loans of high interest rate student loans of 4-5%. During this period, the total number of young people who received general student loans was 1.17 million, of which 75.9% were reimbursed. The remaining 24.1% is still paying off principal and interest, but the balance is around 461 billion won. Most of the youth repaid before maturity due to high interest rates. However, there are more than 130,000 young people who are still unable to get a job or who are still paying off their debts.


The Scholarship Foundation under the Ministry of Education provides low-interest conversion loans for young people who have received a student loan at high interest rates immediately after the financial crisis. However, the target was limited to the 2009 student loan. The scholarship foundation's plea is this. The reason for the low interest rate conversion loan until 2009 is that the first term of 2010 was due to the introduction of the ICL system, which is called'post-employment student loans' for low-income families. In contrast to the fixed rate general loan student loan, the ICL is currently at a rate of 1% when the loan is received at a variable rate. In the end, it was the logic that it was excluded from the low interest rate conversion because it was possible to select between fixed rate and variable rate products at the time of 2010. It's like blaming students on responsibility.

However, there is a loophole in this logic. Even if variable rate products were introduced at the time of 2010, interest rates were similar to those of fixed rates. In other words, when students choose a loan product, I wonder if they have enough financial knowledge to predict even if interest rates will go down in the future. Even the general public with financial knowledge can't predict interest rates in the future. The choice of students was that they only selected fixed rate products at the time of the interest rate level of fixed rate, variable rate products, and whether to pay back after employment or to borrow from the next month.


The Scholarship Foundation has another reason. If you give a low interest rate conversion loan to a high-interest student loan in 2010, it means that it is inconsistent with the youth who completed the loan repayment earlier. There is also a contradiction in this logic. People who haven't paid their loans until now are difficult young people for whatever reason. They couldn't pay off because of their hard livelihood, and they could be busy enough to fight high interest rates. In the case of Mr. A mentioned above, it is also difficult to raise the cost of living right away because he lost his job in the aftermath of Corona19. If you don't care about these young people, the government-sponsored student loan system may be only a means of funding relatively good students. Their demand is to allow them to transfer to a lower interest rate, not to cancel the loan.

At the time, lawmaker Kim Young-shik (Future Integration Party), a member of the National Assembly's Board of Education, last month proposed a bill to expand the target for low-interest conversion to ease the financial cost burden of young people who had previously received loans at high interest rates. The amendment made it possible for the Ministry of Education and the Korea Scholarship Foundation to implement a conversion loan policy in line with changes in economic conditions and interest rates by setting the target for conversion loans under the Presidential Decree. Assemblyman Kim Young-sik explained that the bill would be reduced by reducing the interest burden of young people by about 17 billion won by converting high-interest student loans to low interest rates since 2010. Loan products sold by commercial banks can be changed at low interest rates. In the face of growing concern that Corona 19 will be prolonged, education authorities must listen to the voices of past high-interest student loans, which have been difficult to find employment.