A new, relaxed student loan program, featuring easier repayment terms and higher monthly allowances, is scheduled to take effect today, the Ministry of Education said yesterday.
The new program, introduced to help ease the economic pressure on students, is expected to benefit about 100,000 students and 100,000 graduates, the ministry said.
Under the new regulations, for students from low income or lower-middle income families, the maturity period of their loans is now two years for each semester the loan was made, the Department of Higher Education said.
Under the old system, the repayment period for government-issued student loans was one-and-a-half years for every semester of tuition covered, regardless of family income.
Eligibility for three-year repayment extensions will be widened to include lower-middle income families and all borrowers who make less than NT$30,000 (US$1,000) a month, the department said.
Currently, only students from low-income families or those earning less than NT$25,000 a month are eligible for the maximum three-year extension.
The maximum amount loaned to low-income students to cover living costs will be increased from NT$4,000 to NT$8,000 a month. Lower-middle income students will also now be eligible to obtain living-cost loans, at a maximum of NT$4,000 a month.
According to the ministry, the government received about 770,000 applications for student loans in the 2010 academic year and it spent more than NT$3 billion subsidizing the interest on student loans.
If a student borrows money for four years of undergraduate study, two years in a master’s program and four years of doctorate study, the repayment plan can be spread over a maximum period of 31 years, including a three-year deferred repayment period.
However, the relaxed loan repayment program was criticized by Chen Ting-hao (陳廷豪), a member of a group that promotes the rights of university students.
Chen said the most fundamental way of reducing the financial pressure on students is to ensure that tuition is affordable so that they do not need loans. He suggested the government provide more funding to universities, especially private ones, so that they do not have to increase tuition to cover their costs.