Fund warns defaulters will face legal action
The Student Loans Fund (SLF) says it takes legal action against some 90,000 graduates each year for their failure to repay money borrowed for their education.
About 10,000 of the loan recipients who were sued have come forward for mediation.
“We have offered very generous conditions. But still, many loan recipients have defaulted,” SLF manager Thitima Vichairatana said.
Loan recipients of SLF enjoy an interest-free period throughout their study years. After graduation, they also get a two-year grace period during which they may need time to find a job and settle down.
After the grace period, they are required to make full repayment within 15 years, with a one-per-cent interest rate applied.
“But if they don’t repay, a fine will be imposed at the rate of 15 per cent in the first year and 18 per cent in the following years,” Thitima explained.
She added that, “If students don’t make any repayment at all in the first four years, they will be sued.”
Thitima insisted it was necessary for the SLF to initiate legal action in cases of prolonged default because loan recipients are required by law and ethics to repay what they borrow.
She also pointed out that the SLF had recovered less than half of what was due to date.
“The repayments of Bt71,854 million are due. But we have received just Bt33,304 million in repayments,” she said.
She said these defaults were a serious problem given that the SLF had to find money for new loan recipients too.
While the government has granted about Bt20 billion for the SLF each year, the SLF needs about Bt30 billion each year to grant loans to students in need.
“So, if old loan recipients don’t repay, new recipients may be affected,” she said.
Since being appointed SLF manager last April, Thitima has signed memorandums of understanding with 25 organisations in a bid to encourage SLF loan recipients to repay.
“Repayment records are a sign of responsibility and basic financial discipline. Employers, for example, should take these records into account when they consider hiring someone,” Thitima insisted.
She added that by 2018, SLF would also send these records to the National Credit Bureau.
“And from now on, we will hire private firms to follow up on the repayments,” Thitima said. She hoped the higher repayment rate would facilitate SLF plans to accommodate the needs of all loan recipients.
This year, the SLF is in the process of seeking an additional sum of Bt2.11 billion for new loan recipients. Because the current government is a caretaker, the Cabinet will need to consult the Election Commission too.
From 1996 to 2013, the SLF extended loans to over 4.3 million students from families with incomes of less than Bt200,000 a year.
Of the loan recipients, 64 per cent or about 2.77 million were in their repayment periods. Of those repaying the Fund, 22.6 per cent or 627,330 have been sued.