Premier William Lai (賴清德) yesterday announced changes to a student loan relief scheme that would make interest-only pay and grace periods on repayment available to more than 500,000 people starting on Sept. 1.
Under current regulations, new graduates are entitled to defer their student loan principle and interest payments for up to one year, while people from certified low or middle-income households or those who make less than NT$30,000 (US$978) per month may apply for a grace period of up to four years.
The government is to introduce a policy that would allow anyone who has begun paying their student debt to apply for the ability to pay only interest for up to four years, the Ministry of Education said.
Photo: Wu Po-hsuan, Taipei Times
While more than one interest-only payment period may be granted to the same applicant, the total may not exceed four years, the ministry said.
For lower-income debtors, the Executive Yuan said it plans to expand the four-year grace period program to include those who make up to NT$35,000 per month.
The grace period is granted on an annual basis, during which the debtor is exempt from paying the principal, while the government is to pay their monthly interest, it said.
Photo: CNA
The expansion is expected to add 38,000 people to the program, which currently enrolls 40,000, the ministry said.
The policy permits the same person to enroll in both programs at the same time or in succession to facilitate career planning, it said, adding that a graduate could potentially defer principle payments for up to nine years.
Assuming a principal of NT$300,000, anyone with student debt could see their monthly payments fall from NT$3,273 to NT$288 during the interest payment-only period, Department of Higher Education Director-General Chu Hung-chang (朱俊彰) said.
Flexibility is built into the program to allow applicants to decide how they would spread out the four years, he said.
The estimated combined cost for the programs is NT$600 million in the first year of implementation, Chu said, adding that the figure is to peak at NT$1.54 billion in the ninth year.
According to the ministry’s estimates, 870,000 Taiwanese have taken out student loans and 500,000 have begun paying their debts.
Banks have reported that 7,504 are in arrears with payments.
The average student loan ranges from NT$280,000 to NT$300,000.
In related news, student groups yesterday rallied outside the ministry to protest National Chung Hsing University’s 2 percent tuition hike, which protesters said the ministry approved without performing due diligence.
Members of the Alliance Against the Commercialization of Education said the university’s leadership bypassed talks with the student body and used questionable math to justify the tuition increase.
Asked for comment, department official Lee Hui-min (李惠敏) defended the university, saying that the ministry approved the tuition hike because the school’s leadership has been “very friendly in its communication with students.”
Additional reporting by CNA
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