The government should make student loans interest-free, the Chinese Nationalist Party (KMT) caucus said yesterday, citing more than 430,000 people annually who cannot afford to repay loans.
The government has vowed to use a portion of last year’s tax surplus to help disadvantaged households, so it should start by making active student loans interest-free for the year, the caucus told a news conference.
“There is a surplus of NT$380 billion (US$12.6 billion), and absorbing the interest from student loans for this year would only cost about NT$4.4 billion, based on the current interest rate of 1.525 percent,” it said. “It just depends on whether the administration of President Tsai Ing-wen (蔡英文) is willing to make good on its promise.”
Photo: Liu Hsin-te, Taipei Times
KMT caucus whip William Tseng (曾銘宗) said that the wealth gap has grown under Tsai’s administration, and that the KMT caucus has long pushed for interest-free student loans.
“Young people have low salaries and cannot afford to repay loans. Salaries for young people experienced negative growth of 0.4 percent in 2021, and negative growth of 0.11 percent last year,” he said.
Citing statistics from the Small and Medium Enterprise Credit Guarantee Fund of Taiwan, Tseng said that as of August last year there were 437,379 young people in Taiwan who could not afford to repay loans.
That number had increased by 31 percent from 104,112 in 2016, he said.
The NT$4.4 billion it would take to make student loans interest-free for the year would only account for 1.3 percent of the Ministry of Education’s total budget of NT$289.8 billion for this year, and 0.15 percent of the central government’s annual budget of NT$2.69 trillion, he said, adding that it would benefit more than 400,000 young people.
“The average salary for new graduates in 2021 was only NT$30,000. Many graduates could find themselves unable to repay their loans until they are older than 30 years old,” KMT caucus secretary-general Hsieh Yi-fong (謝衣 鳳) said.
“Many students also find themselves working during the school year to meet their expenses, which means they cannot fully focus on their studies,” Hsieh said.
There was a subsidy of NT$2.6 billion for student loan interest in 2016, but the budget decreased annually after that, Hsieh added.
KMT Legislator Alex Fai (費鴻泰) said there are about 50,000 students who have defaulted on their loans and are facing litigation.
While the Tsai administration has introduced a policy allowing graduates to defer payments on the principal and interest of student loans for up to eight years if their salary is below NT$40,000, the government should lower that salary threshold based on median monthly average incomes, he said.
“It could be adjusted annually in line with increases to the consumer price index and income-tax deductions,” he added.
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