Park Han-sol reports on Korea's financial regulators, along with fintech and insurance. She previously wrote about the art world, from biennales and exhibitions to fairs and auctions, with a focus on Seoul and the figures shaping the scene. Before joining The Korea Times, she spent a year at ABC News' Seoul bureau, contributing to coverage of major Asia-Pacific events.
Student loan delinquencies hit record high as employed graduates struggle to repay
Job seekers scan listings at a career fair hosted by the Suwon City government at the Suwon Convention Center in Gyeonggi Province, April 9. Yonhap
By Park Han-sol
Park, a 29-year-old dental technician, first took out student loans in her sophomore year of college, choosing a standard repayment plan that requires borrowers to set fixed grace and repayment periods in advance, regardless of when they find work.
Some of her friends chose income-contingent loans, which only require repayment once graduates begin earning an income. Most have since landed jobs and are gradually paying down what they owe. But even low-interest debt can weigh heavily when starting salaries are slim.
“As soon as your paycheck comes in, part of it is already set aside for student loan repayment,” she said. “But wages are so low that after rent and basic living expenses, there’s barely anything left.”
There are others, she added, who are falling behind altogether as student debt is pushed down the list of financial priorities.
“I know people who had to take out additional loans after graduation because they were short on money,” Park said. “Those loans carry much higher interest, so they pay those off first. Student loans tend to get pushed back because they feel less urgent compared with other debts.”
Such stories reflect a deepening financial strain among young Koreans. Even after borrowing their way through college and securing work in a fiercely competitive labor market, some are unable to keep pace with the debt they carry into adult life.
According to the National Tax Service, the delinquency rate for income-contingent student loans reached a record 18 percent last year, the highest since related statistics began in 2012.
Under the system, borrowers must start repayment once their annual income exceeds a set threshold — 17.52 million won ($11,770) in 2024 — paying back 20 to 25 percent of the amount exceeding the threshold.
In 2025, nearly 320,000 borrowers were required to make payments, but 57,580 failed to do so. Total overdue balances climbed to 81.3 billion won, the first time unpaid debt has crossed the 80 billion won mark.
At the same time, there is a rising number of young borrowers who are postponing repayment simply because they have yet to find stable work.
The amount of deferred student loan repayments rose to 24.2 billion won in 2024, more than double the 11 billion won in 2020. Most of that rise came from people citing unemployment, business closure or child care leave — a sign that labor-market instability is increasingly shaping debt strain.
The broader employment picture offers little relief.
According to the Ministry of Data and Statistics, the unemployment rate for those aged 15 to 29 stood at 7.7 percent in February, the highest in five years and more than twice the overall national rate of 3.4 percent.
The National Assembly Budget Office flagged the trend as a deeper structural problem.
“As repayment conditions worsen due to youth job insecurity and rising living costs, the share of borrowers failing to make mandatory repayments has continued to climb. The simultaneous increase in deferred repayments suggests that young borrowers’ overall ability to pay back may be weakening,” it said.
“As overdue balances and delinquent borrowers continue to accumulate, youth debt risks have become a prolonged burden, with late charges making repayment even harder and credit risks heightening further.”