Ruling Party and Government Promote Differential Application of Student Loan Interest Exemption... "Package Support for Vulnerable Groups"

Democratic Party Leads 'Hakjageum Sanghwan Law' Clash
Effectively Demands Bill Reconsideration

On the 13th, the ruling party and the government agreed to promote the exemption of interest on student loans limited to college students with a median income of 100% or less. This move effectively demands a re-discussion of the bill, opposing the 'Student Loan Repayment Act' passed last month by the Democratic Party-led Education Committee in the National Assembly.

Park Dae-chul, the Policy Committee Chair of the People Power Party, said to reporters after the 'Party-Government Council on Expanding Student Loan Support for Vulnerable College Students' held at the National Assembly on the same day, "In accordance with the principle of walking with the vulnerable, we agreed to provide more meticulous support to vulnerable groups, exempt interest so that financially struggling college students can continue their studies, and further provide package support including national scholarships, work-study scholarships, and expansion of low-interest living expense loans."

The ruling party and the government agreed that the exemption of interest on student loans should be applied differentially according to income. Chair Park explained, "We propose to re-discuss the bill limited to those with a median income of 100% or less. Interest will be exempted before repayment starts only for the vulnerable groups who are in urgent need of help, and for households in income brackets 1 to 5, considering the period until employment, the interest exemption period after graduation will be determined."

This stance differs from the amendment to the Student Loan Repayment Act pushed by the Democratic Party. The 'Income-Contingent Repayment Student Loan' system requires college students to repay principal and interest after graduation when they start earning income. Previously, interest accrued before the start of principal repayment had to be paid, but under the amendment, interest can be exempted if a certain income level is not reached. The amendment also includes provisions to exempt interest if income disappears due to unemployment, parental leave, or business closure even after employment. The Democratic Party unilaterally passed the amendment at the Education Committee's plenary session on the 16th of last month. Education committee members from the People Power Party opposed the bill and boycotted the session, later holding a press conference opposing the bill on the grounds that "income bracket 8 covers young people with monthly household incomes exceeding 10 million won, exempting their interest, which violates social equity."

Park Dae-chul, Chairman of the Policy Committee of the People Power Party, is speaking at the party-government consultation meeting on expanding financial support for vulnerable college students held at the National Assembly on the 13th. Photo by Kim Hyun-min kimhyun81@

Chair Park said, "We share the view that the Student Loan Repayment Act unilaterally passed by the Democratic Party is a populist policy. Exempting interest on student loans up to income bracket 8 would cost 86 billion won annually in interest expenses, but even so, it would not practically help students who are struggling financially to continue their studies."

The People Power Party emphasized that this issue can be resolved through bipartisan negotiations. Lee Tae-gyu, the ruling party's secretary of the Education Committee, said, "If the details, including specific amounts, discussed by the government and ruling party are agreed upon by both parties, it can be resolved through amendments during the Legislation and Judiciary Committee process and the plenary session."

Along with this, the ruling party and government decided to expand support for national scholarships, work-study scholarships, and low-interest living expense loans to fundamentally address the burden of student loans on low-income groups. Chair Park emphasized, "For basic and near-poverty households, the scale of tuition support for all households will be significantly expanded, and the support limit for the middle class will also be raised. The low-interest living expense loan limit, which was increased in this year's livelihood stabilization measures, will be further increased."

This content was produced with the assistance of AI translation services.