The government cuts interest rates to assist millions of people in repaying their school loans.

The government cuts interest rates to assist millions of people in repaying their school loans. 

According to government spokeswoman Chai Wacharonke, the government has been implementing steps to address the Student Loan Fund (SLF) debt issue. These include lowering interest rates and default penalties to assist 3.5 million borrowers in repaying their debts. Over 3.5 million active debtors in the SLF, according to Chai, owing roughly 454.64 billion baht. Additionally, the fund contains about 5.3 million former borrowers who have not yet closed their accounts; around 49% of these borrowers were already in default and were subject to legal proceedings..

The SLF’s debt problem is due to several factors, including the economic downturn, the rising cost of living, and the difficulty in finding a job after graduation, he added.

The debt problem of the SLF has prompted Prime Minister Srettha Thavisin to task related agencies with finding measures to help borrowers pay back as much as possible, said Chai.

In response to the PM’s order, the government’s special committee responsible for tackling debt problems of the general public approved the move to let the SLF cap the interest rate at 1% annually, and limit the fine for default to 0.5% annually to make it easier for borrowers to settle their debt.

Chai said the SLF had also adjusted its repayment calculation model to prioritise capital before the interest. This had resulted in lower overall interest and therefore allowed more borrowers to close their accounts immediately, while those who had already paid interest before the adjustment would be granted a refund.

The committee also ordered the SLF to remove loan guarantor requirements from 2022 to facilitate loan applications by new borrowers and minimise legal complications and expenses in case of repayment default, Chai added.

On February 15, the SLF launched a debt restructuring programme for its borrowers who have problems with repayment. Registration is open at the SLF website daily from 9am to 8pm.

The SLF is a government programme that provides loans to students who cannot afford to pay for their education. The loans are typically repaid over 15 years.