Deputy Finance Minister Tanusak Lek-uthai reported today that the default rate for holders of government-backed student loans in Thailand has risen to a shocking 50%.
At present, only THB25 billion of the THB50 billion in student loan payments owed to the government has actually been repaid.
In the past, the default rate for the government’s low-interest student loans stood at 28%, but this year has seen a remarkable increase in loan defaults, pushing the default rate up to 50%. Those students who fail to repay their loans are placed on a “blacklist” and denied further credit by banks and financial institutions.
This increased delinquency rate has caused the government to lower the annual funds it makes available for student loans. Next year, the amount will decrease by roughly THB5.5 billion.
In order to compel students to repay their student loans, the Thai government is going to shorten the repayment period for loan holders.
The Bangkok Post reports that at present, graduates have five years to repay their debt burden. Under the condensed plan, this time period will be constricted to three years.
