Up to 3% Interest Subsidy for Workers' Loans... Expansion of Livelihood Stabilization Fund Loans

The government is expanding its livelihood stabilization fund support to ease the financial burden on workers amid high interest rates.

The Ministry of Employment and Labor and the Korea Workers’ Compensation and Welfare Service announced that they will expand the interest subsidy loan program for livelihood stabilization funds. This program is a system in which the government partially subsidizes the interest generated when workers borrow livelihood stabilization funds from financial institutions.

The support is up to 3 percentage points. For example, if a worker borrows 20 million won at an annual interest rate of 6%, the actual interest rate burden will be reduced to 3%. As a result, the interest saving in the first year will amount to about 600,000 won.

Ministry of Employment and Labor

With this expansion, both the coverage and the eligible expense categories have been significantly increased. Child-rearing expenses, previously limited to children under the age of seven, are now extended to those under the age of 18, thereby including households with school-aged children. In addition to the existing categories of wedding and child-rearing expenses, expenses for supporting elderly parents and funeral expenses have been newly added as eligible items.

The support limit is up to 20 million won for wedding, child-rearing, and elderly parent support expenses, and up to 10 million won for funeral expenses. The repayment method is principal amortization in equal installments over three or four years, following a one-year grace period.

The application requirements have also been relaxed. For wedding expenses, the application period based on the marriage registration date has been extended from one year to three years. For funeral expenses, applications can be submitted within one year of the date of death.

The eligible recipients are workers and special-type workers who have been employed for more than three months as of the application date, as well as self-employed individuals who have been enrolled in industrial accident insurance for over three months. The income requirement is limited to those with a monthly income at or below the median income (5,359,036 won per month).

The Ministry of Employment and Labor expects that this expansion of the system will help reduce the perceived financial burden on workers during periods of increased spending, such as the start of the new school term or marriage. The Korea Workers’ Compensation and Welfare Service also emphasized the practical effect of reducing financial costs in the current high interest rate environment and stated that support will continue.

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