Rearrange college loan paymentYoung Koreans are withering under joblessness and bad credit. They took out loans to get through higher education, and many of them become delinquent on their dues because they cannot find stable jobs and income.
According to the Korea Credit Information Services, about 37 percent of 25-year-olds fresh out of college are indebted by an average 19.26 million won ($16,377). The rate of delinquency on refinancing loans in the same age group is 2.3 percent, nearly doubling the broad debtors’ average of 1.2 percent.
Debt payment should be an individual obligation. But the problem cannot be solved by leaving the matter entirely to the young people to deal with while jobs have become scarce due to a slow-moving economy. The government must address the issue so that society can ease some of the debt burden for young people. Debt write-off leads to moral hazard. Still, if student loan default is further neglected as a problem of the financial sector, society will be inundated with young credit delinquents.
Prime minister and acting president Hwang Kyo-ahn should address youth joblessness and debt problems. Payment on student loans should be rescheduled to allow some relief to those without a stable income. Interest rates should be lowered for those faithfully repaying so they do not give up.
Other lenders should consider deferring student loan payments until borrowers find stable jobs, as the Korea Student Aid Foundation has been doing since 2010. They should also study the U.S. system of rearranging loan payments according to earnings. The government needs to work on moderating the country’s college entry levels, which are the world’s highest at 68 percent.
JoongAng Ilbo, Jan. 21, Page 26