[THE INVESTOR] The Education Ministry and the ruling Saenuri Party have agreed to cut interest rates on tuition loans to ease the financial burdens of students, the National Assembly’s Education Committee said on July 7.

Following the decision, the interest rates on tuition loans will be revised down to 2.5 percent compared to the current 2.7 percent.

The move will help students save 16.5 billion won (US$14.2 million) annually, the committee said. The policy will go into effect starting the second semester of 2016.

Rep. Lee Jang-woo from the committee said the move came as the Bank of Korea slashed the key rate to a new record low of 1.25 percent for June, marking the first rate cut in 12 months.

“Slashing interest rates, however, is not a fundamental solution,” Lee said. “We also urged to government to come up with various policies to help the youth in the low-income bracket focus on studying without having to worry about financial problems.”

The government and Saenuri also agreed to roll out further plans to ease the youth’s tuition burdens in September.

(theinvestor@heraldcorp.com)