One in every five college students in South Korea owes banks heavy debts to pay off their school fees and meet living expenses, data showed Monday, amid the government's push to ramp up financial support for the troubled young group.
The portion of students who have taken out a loan from local financial companies for school and living expenses stood at 20.4 percent, according to a survey by the Financial Services Commission (FSC), the country's top financial regulator.
The poll was based on individual interviews of 5,000 university students across the nation who are in either their second or third year.
The majority of the students at 83.6 percent responded that their parents pay the school fees for them. In Korea, college fees stand at about 3-4 million won ($2,680-3,570) every semester.
The data showed that college students need at least 1.12 million won a month on average to get by, including paying tuition, but their monthly income from part-time jobs merely comes in at an average of 470,000 won.
The only option for those who cannot afford college tuition is to take out a loan, the FSC said. But because most students are practically unemployed with lower credit ratings, it's difficult for them to borrow money from banks at a reasonable interest rate.
Instead, they borrow money on credit from secondary lenders such as savings banks, which burden them with heavy interest that comes as high as 20-30 percent a year, the regulator said.
In a bid to prevent students from falling into a debt-mired life, the FSC is pursuing a law revision that will allow a state debt relief fund to buy delinquent student debts for restructuring.
"Buying the overdue debts will help provide actual support for students who are greatly burdened," said an FSC official. (Yonhap News)