Only 3 in 10 college graduates able to pay back student loans

By Jhoo Dong-chan

Only three out of 10 college graduates manage to earn enough money to pay back the government student loan, the Deundeun Student Loan, according to the Korean Student Aid Foundation (KOSAF), Thursday.

The Deundeun Student Loan program, introduced in 2010, is an income-contingent loan that enables borrowers to pay back their loans after graduating and landing a job.

According to the KOSAF and the National Tax Service (NTS), a total of 924,500 people have received the student loan as of May.

Of them, about 313,200 people were employed last year and supposed to start paying back the loan. But only 28.2 percent of them, or 88,500, managed to earn more than 18.56 million won annually, the minimum living cost for a four-member family.

Under the loan system, a borrower does not have to pay the principal or interest until he or she has income above that level.

In other words, more than 70 percent of those who got the loan landed low-income jobs, unable to repay their loans.

If a borrower does not repay the loan due to having low income for three years after landing a job, the NTS carries out a property investigation for them. If the annual salary exceeds the minimum living cost, the NTS would collect 20 percent of the person’s monthly pay.

“It is hard to find a college graduate who gets a job right after graduation,” said a convenience store clerk, Park, who is also under the loan program.

“Instead, they do part-time jobs at places like convenience stores or Internet cafes, and their annual salary is less than 18 million won.”