New loan plan for poor students

The government yesterday announced a new state loan plan for underprivileged university students that will relieve them of the burden of repayment until they land a job.

The lending will begin next year and students will not have to pay back interest or principal before they begin earning money.

The Education Ministry unveiled the plan when President Lee Myung-bak met university presidents, students and parents to discuss educational issues.

Lee has promised to ensure that there will be no more students who give up study because of poverty.

Currently, students who have borrowed 10 million won for school expenses must pay monthly interest ranging from 50,000 won to 300,000 won.



They must begin to repay the principal sometime after graduation, regardless of their income.

Dept-ridden students have to earn money instead of studying. The number of credit delinquents related to school loans were 13,804 in 2009, compared to 3,726 in 2007, according to government data.

The number is expected to increase as youth unemployment grows due to the economic crisis.

The new loan will be provided to students from poor families with an annual income of less than 48.39 million won.

It will cover all school fees plus 2 million won in living expenses per year.

The ministry will finalize the plan by the end of September after further coordination with financial authorities.

Education costs account for 13.8 percent of household expenditure.

This year`s tuition is estimated at an average of 4.16 million won at public universities and 7.42 million won at private ones.

The ministry also said it had cut interest on tuition loans in the second half to 5.8 percent from the current 7.3 percent.

Lee recently stepped up moves to cut education costs, enhance public school learning and reform the university admission system.

He has vowed to drastically expand the admissions officer system at universities and his government is intensifying crackdowns on private cram schools that operate after 10 p.m.

(jjhwang@heraldm.com)



By Hwang Jang-jin