The new draft of the Student Loan Fund Act (KorOT Act) passed the 3rd term from the House of Representatives (MPs) by amending the law from the original objective of the proposed amendment. Laws such as the Ministry of Finance, no less.

is causing widespread criticism

From the draft of the Ministry of Finance that proposes to amend the interest rate from no more than 7.5% to no more than 1%, including a reduction in the penalty rate from no more than 18% to no more than 7.5%

Became an amendment to the House of Representatives (MP) by the essence of the new draft law is to cancel interest collection.

Cancellation of penalties for defaulting on debt payments

and have retrospective effect on all

by giving a brief rationale that

Election Commission should not earn income from interest and fines.

because it is money for education

Such cases have led to concerns that

It may be to encourage Thai youths not to maintain financial discipline.

Lack of consciousness to take responsibility for their own debts

Importantly, such little interest

It is considered as income to the fund to bring money to pass on opportunities for juniors to continue their studies.

This makes the fund have financial freedom without having to rely on the state budget.

And although it can collect interest up to 7.5%, but since the fund's inception

Election Commission keeps interest at no more than 1% only.

Repeatedly during the Covid-19 period from 2020 to December 2022, interest rates have been reduced to 0.01% per annum for borrowers who have never defaulted, reducing the penalty rate for borrowers who default. Debt that has not yet been prosecuted from 7.5% to 0.5%, a penalty of 100% in case of closing debt for borrowers who have not yet been prosecuted, a penalty of 80% for borrowers who have not yet been prosecuted for repaying outstanding debts all, etc.

This week, the "Economic Team" has followed up to ask for opinions from 3 people involved.

from fund managers, university professors

and the former borrower, whose 3 voices agree

I see that interest and fines should not be cancelled!!!

Open the log after the establishment of the KKF Fund.

Back in 1995, the Cabinet (Cabinet) at that time approved the establishment of the Fund.

KU with the objective of providing loans to students or students

in shortage of funds

had the opportunity to study

have tuition money

Expenses related to education

and expenses necessary during the study

And later the fiscal year 2539, the government has allocated the budget.

For the initial capital of 3,000 million baht until 2017, the total amount of the state budget has already been spent 468,673 million baht.

2018 was the last year that the Fund

Election Commission uses money from the state budget

by then becoming a self-sufficient fund

It is a full revolving fund.

Do not rely on taxes

not asking for support from the state budget

The revolving money in lending from seniors to younger generations.

as money from repayment

30,000-38,000 million baht per year and there is also income from interest rates of 1% per year and a penalty at the rate of 7.5%, totaling 6,000 million baht per year, which is considered enough to be used for loan and operating expenses

From that date to the present, for more than 20 years, KU has loaned 6.28 million students with a credit limit of 702,309 million baht, 1.6 million have closed their accounts for 129,183 million baht, 986,668 students are currently studying. Accounting for 114,398 million baht, in debt repayment 3.55 million people, equivalent to 452,677 million baht, 68,787 deaths/disabilities, 6,051 million baht (Table 1)

For the repayment status of 5.22 million borrowers, 2.85 million were in default and 1.18 million were in default, 2.37 million were defaulted, representing 91,260 million baht for the defaulted principal (Table 2).

in respect of the debtor who defaulted on the payment

The EDFA has continuously monitored and issued measures to help debtors.

Especially during the covid period, there is a waiver of conditions for good debtors who have no history of default.

There are also many other measures that

NIDA tries to mediate

in order for the borrower to return to repay the debt as before

including debt restructuring, debt moratorium, salary deduction

Extending the payment for 30 years, the installment payment is reduced.

delaying litigation

except the case near the expiration date

and refrain from selling the property of the borrower and/or the guarantor as well.

But in the debtor who has been sued or has been enforced

The NIDA is unable to help resolve the debt.

because it still stuck with the law

to comply with the court's decision

It is therefore the origin of the proposed amendment to the law this time.

Election Commission explains the purpose of amending the law

Mr. Chainarong Kajchapanan,

Manager of the Student Loan Fund (YOT), mentioned the origins of the amendment of the KOSO Fund Act with the initial objectives.

To help debtors who are in the process of execution, there are more than 1.1 million to be able to join in fixing debts, converting debts to repay installments again.

Chainarong Kajchapanan

It also proposed amendments to interest rates and penalties.

by writing clearly

The interest rate is not more than 1% from not more than 7.5%, the penalty rate is not more than 7.5% from not more than 18% by amending the law to be consistent with reality.

because since the establishment of the fund

The Election Commission never collects more than 1% interest, even though the ceiling can be adjusted up to 7.5% during the covids.

also reduce interest from 1% to 0.01% per annum for borrowers who have never defaulted on debt

as well as reducing the penalty for borrowers who default on debts that have not been prosecuted from 7.5% to 0.5%, etc.

The new bill also includes the cancellation of guarantees.

In which the cancellation of the guarantee, the YorOT Fund has issued a notice of cancellation for 2 years, but it must be enacted as a law for clarity.

In the past, from the number of borrowers of 4 million people with guarantors

Most of the guarantors are parents, 85% of the parents, the rest are relatives 14%, other 1%. In the other proportion, there are teachers and teachers at 0.01% or 4,000 people.

But the result appears that the new draft of the NEPC Fund Act, which has passed the 3rd term of the House of Representatives (MP), has been changed to

cancel loan interest

Cancellation of penalties for defaulting on debt payments

It has become a hot question in society at the moment.

“Confirming the cancellation of interest, fines, is not a solution to the problem of access to education.

If the KKP fund is depleted, it will affect the burden of the state budget.

It also forwards social norms of honesty.

responsibility

and financial discipline of the new generation

that is the future of the nation as well.”

More importantly, there are now a lot of people who understand that.

Borrowing money for KU is very difficult.

and do not want their children to be in debt since childhood

therefore turned to borrowers outside the system instead

because he does not want his children to be in debt

and therefore accepting himself as a debt

which this method is not recommended

“I would like to understand that the NIDA Fund is a guarantee for every family.

for equal access to education

And poverty is no longer a barrier to accessing education.

Just come and apply for a loan with the KOK Fund if any family

shortage of funds

Children can borrow

From high school to bachelor's degree

especially in this era

The NIDA can help lighten the burden of living expenses.

expenses of parents and guardians.”

In the event that there is a problem with payment

Please come in for a debt reconciliation consultation.

Confirm that there is a solution for all borrowers

Afraid of youth becoming people without credit

Assoc. Prof. Dr. Pinyo Meechana,

former Head of the Department of Mining and Petroleum Engineering

Faculty of Engineering

Chulalongkorn University

comment

Initially did not agree to amend the law, except for interest, fines, because at the time of the loan agreement.

Everyone is likely to suffer from the burden of education expenses.

The fund was set up to alleviate this burden.

When borrowing, you must know the terms of repayment with interest, which 1% interest is not expensive compared to normal borrowing.

The fund managers manage it so well that they can use the revolving money to help millions of the next generation of underprivileged people.

Assoc. Prof. Dr. Pinyo Meechana

In addition, it would also be taking advantage of others that he borrowed and paid back with interest.

and may cause a bad example

Because it may encourage financial discipline.

until becoming a person without credit

But if some people still can't find a job

Or even if some people have jobs but their income is not enough to pay back the burden.

Fund service providers should also have waiver measures that are appropriate for each person's income.

However, Thailand has very high economic inequality.

It might even be number one in the world.

Of course, economic inequality resulted in educational inequality until in 1995 the state set up a fund.

to be part of helping to solve such problems

Education disparities in Thailand

There are so many that it affects the quality of education.

Thailand is a country that attaches great importance to education.

The state provides a proportionate portion of the education budget as high as some developed countries.

But the quality of education has declined.

It can be seen from the results of the PISA (International Student Assessment Program) that Thailand's rankings are steadily dropping.

Against the budget that has been invested

The country's biggest challenge is

What can we do to address education disparities and improve the quality of education at the same time?

which I support to make education a welfare state.

This is a study that does not collect tuition fees.

Along with subsidizing the cost of studying for everyone

I would like to pass this on to everyone and politicians who are campaigning.

Former borrowers point out that interest is not a barrier

,

state enterprise employee

Former KK Borrower revealed that as a KK Loan from Mathayom 5 until the end of Bachelor's degree (during 1999-2004), and now the debt has been completely repaid.

By starting to pay according to the schedule specified by the NESDB from the first year

If any year with extra money

will be taken to cut some

This makes it possible to pay off all debts in 14 years from the full 100% loan amount that art students will be able to recover.

Ananya Moonpen

Personally, I do not agree on some issues of the draft of the Election Commission, No. of the House of Representatives.

The resolution was passed on the draft.

especially the issue of not calculating interest

no penalty

Even those who have regular debt repayments

late payer

or those who default on payment

by considering that no interest charge

Fines will incentivize further defaults.

Support personal financial disciplinary action

The interest that the NEPC charged with the current debtor is considered very low, 1% per annum.

From the personal that used to pay debts in the early years, even though the principal is still very high

interest per year

It's still only a few thousand baht.

and when paying the debt according to the schedule

Interest rates continue to decline.

Because the interest of the KKR is like the interest on the house, that is, the principal is reduced, the interest is also reduced, so it is seen that interest is not an obstacle to repayment.

“If you want to help

Should be a matter of extending the repayment period, for example, to 25-30 years or reducing interest, for example, to 0.5% or 0.25% per year, but at least there should be interest money that comes into circulation to manage the fund further can

Balancing opportunities for disadvantaged youth with budget burdens

which is the tax money of the common people

Penalties and interest for late or default payments may be reduced from the present.

but should be set higher than the normal payer

To create incentives not to default

and have financial discipline.”

As for the issue, no guarantor is required.

Agree to cancel

Because this has created problems for many guarantors.

Both in the part of parents, government officials, including teachers, teachers who provide guarantees for borrowers.

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In this regard, the current status of the Draft Fund Act, the KSOE Fund, has been reviewed by the House of Representatives.

(Senator.) All three terms are awaiting consideration in the level of senators (senators), which the Ministry of Finance and the NESDB have prepared information to clarify all issues. Agreed, the said bill will be officially in effect

However, if the senator's meeting disagrees and wants to amend the law, the KK Fund Act will be sent back to the meeting.

MPs consider again

However, the level of the senator's meeting will be considered in the first agenda of the next session in November 2022 because this session has already closed the National Assembly on Sept. 19. In the past 2022, we have to wait for the next meeting to see what the senator's opinion will be....

economic team