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Employers to begin garnishing wages to repay student loans

Govt workers to be first affected as new mandatory deductions ordered.

Employers to begin garnishing wages to repay student loans

EMPLOYERS of former students with outstanding loans will face demands starting in June to garnish the wages of their employees for outstanding sums related to the Student Loan Fund.
The fund’s manager, Chainarong Kajchapanan, said recently the Comptroller-General’s Department would be the first employer to deduct loan recipients’ salaries for repayments to the fund.
“The Comptroller-General’s Department will start doing this in June,” he said. “Then other government agencies will follow suit.” 
There are 170,000 student-loan recipients working in the government sector. 
He added that he expected employers in the private sector to begin making such deductions around October. 
“If employers fail to make deductions, they will be held accountable for the debts owed,” he said.

Employers to begin garnishing wages to repay student loans
Deductions are possible under the Student Loan Fund BE 2560, which came into effect last year. 
Between 1996 and 2017, the Student Loan Fund lent Bt560 billion to 5.4 million students across the country.
About 3.57 million loan recipients are now required to start repayments. However, just 1.3 million have made regular repayments. 
 “About 2.2 million others have defaulted. Together, they owe us Bt68.8 billion,” Chainarong said. 
The Student Loan Fund has already taken legal actions against 1.2 million loan recipients for defaulting, Chainarong said. Of them, 960,000 came forward to negotiate their debts and signed a new contract for repayment. But about 240,000 did respond and the courts delivered guilty verdicts in their absence. 
Chainarong said loan recipients who did not earn a regular salary were still expected to come forward. If they failed to do so, the Student Loan Fund would go after their repayments via the Legal Execution Department. 
He claimed that many loan recipients had failed to repay monies owed because they lacked financial discipline. 
“They do not manage their income and expenses well enough,” he said. 
The Student Loan Fund offers more generous conditions than a typical bank loan. Recipients have to start paying back loans two years after their graduation and the interest rate is at just 1 per cent a year. 
Chainarong said some loan recipients were prone to repay to lenders that charged a higher interest rate first. 
“Some have also told us that they thought they received money from the fund for free. This is not correct,” he said. The fund needs to be repaid so that it had sufficient funds for new students, he added.
Chainarong urged loan recipients to repay on time to boost the educational opportunities of others. 
The Student Loan Fund is now communicating with various organisations, including the Federation of Thai Industries and the Thai Chamber of Commerce, so that they better understand student loan repayment conditions. 
Loan recipients are required to inform their employers within 30 days of their start date that they have borrowed money from the fund. 
Repayment records for the fund have improved during the past three years. In 2015, the fund received Bt18 billion from repayments. In 2016, the repayment reached Bt21 billion and last year, the fund received Bt26 billion. 
“We believe we will get a higher repayment amount this year,” Chainarong said.

Published : February 18, 2018