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Gov`t to Cut Interest on Student Loans

Posted March. 13, 2009 20:15,   


The government said yesterday that it will cut three tenths to eight tenths of a percentage point on interest for college loans.

Fifty-two billion won (34.7 million U.S. dollars) from a supplementary budget will be set aside to allow debt rollovers until the end of the year to unemployed college graduates from low-income households.

To prevent college graduates from defaulting on student loans due to difficulty finding jobs, a two-year grace period from loan repayment after graduation will begin in May.

Among measures either being implemented or considered to help college students, one is providing students living on basic livelihood grants with a full four-year scholarship from this year.

No-interest student loans that went only to students from households in or near poverty were expanded last year to include students from households in the bottom 20 percent of the income bracket. From June last year, students from households in the bottom 30 to 70 percent got their student loan interest cut one percentage point.

For male students serving in the military, a system to delay interest payments began last year.

Work scholarships granted to college juniors will also include fourth-year students this year. The amount of scholarship given to one student for a year will be raised from two million won (1,335 dollars) to three million won (2,000 dollars).

The biggest institutional change will be the introduction of customized scholarships from the second semester this year. The system was adopted based on a law governing scholarship foundation.

The Korea Research Foundation and the Korea Science and Engineering Foundation will combine their scholarship functions to provide a one-stop service for students, including loan disbursement, securing loan guarantees, and getting scholarships. The issuance of foundation bonds is expected to reduce interest on student loans an additional one percentage point.