Number of 'tuition poor' hits 20,000

By Choi Sung-jin

There are special kinds of “poor” people in Korea. People who have to spend undue portion of income to repay mortgage loans are “house poor,” and those who drive cars beyond their means are “car poor.”

All of these pale beside the “tuition poor,” those youngsters who graduate colleges and start their life – or cannot start by failing to land jobs – as credit delinquents because of debts they owe for school tuition.

According to the education ministry, the number of credit delinquents, who failed to pay interest and principal for six months or more as of last year-end, amounted to 19,783. Once categorized as delinquent - or “noteworthy” in more recent, euphemistic term – borrowers, they have difficulty conducting normal financial transactions, such as using credit cards and/or taking out bank loans.

“The graduates have to find jobs and repay loans, but their financial status often makes it difficult to get jobs and repay debts in a vicious cycle,” a university professor said. “If unpaid student debts accumulate like this, it will pose problems not only to the financial system but to the government’s fiscal health.”

Outstanding student debt amounted to 12.3 trillion won ($10.1 billion) as of Dec. 30. According to a recruitment portal site’s survey, seven out of 10 college graduates still have unpaid debts. They are spending 240,000 won a month on average to repay their debts, but half of them have sometimes been late with their payments.

These overdue loans are eroding into the lives of freshmen in society, seizing their salaries and even forcing some to give up long-dreamed of careers, debtors said. In 2014 alone, 458 long-term delinquents had properties and wages worth 4.83 billion won confiscated, the ministry figures show. More than 6,000 were taken to court because of debts.

Arrears have rocketed 28.5 times from 359 in 2011 to 10,248 in 2014. Unpaid money also soared from 556 million won to 8.42 billion won, according to the National Tax Service.

“These debtors were supposed to repay a specific sum when they earn an income but failed to do so,” a tax official said. “We have to seize their assets and take other steps according to legal procedures.”

He said that with economic growth stagnating and the job market continuing to tighten, the situation would only get worse.