Waiting for Bill Amendment Decreases Student Loan Repayment


Fewer borrowers have made payments to the Student Loan Fund in the previous three months as they wait for the revised version of the law to take effect, which would lower interest rates and default penalty.

Borrowers have reportedly paid 2.07 billion baht directly to the fund between September 15 and November 30, down 28% year over year, as reported by fund manager Chainarong Katchapanan. The total amount of debt that debtors repaid was down 12% compared to the prior-year period. A new change to the Student Loan Fund Act was enacted by the House of Representatives in September, which may explain why fewer people are taking out loans at the moment.

Fund borrowers would no longer be subject to interest, default penalties, or guarantor requirements thanks to a law that was amended and passed by the House. However, senators made changes to the bill such that the fund may collect no more than 1% annual interest and no more than 0.5% monthly penalty for late payments. In the third reading, the Senate will send the House its amended version for consideration.

Current legislation caps annual percentage rates on student loans at 7.5%; the fund charges borrowers an average of 1% in interest.

Chainarong adds that there are no liquidity concerns for the fund at the present time and that it loans out around 40 billion baht annually. More than 6.2 million students have received grants from the fund, totaling 697 billion baht, with 338 billion baht in debt still owed.


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