Student loan defaults blamed on poor discipline

Student Loan Fund often fields calls asking for haircuts

Lack of financial discipline is the most common reason borrowers have defaulted on their education debt, says Chai­narong Katchapanan, Student Loan Fund (SLF) manager.

Inability to service student loans and lack of responsibility are also common reasons student loan borrowers fall into default, he told the Bangkok Post in an exclusive interview.

The fund's borrowers have directly called him requesting a debt haircut because they shoulder high debt from buying cars and homes, making them unable to pay back 2,000 baht a month.


"They bought cars immediately after they got a job. They purchased city cars priced at around 500,000 baht, though they borrowed less than 500,000 baht from the SLF," he said.

Moreover, Mr Chainarong has asked some defaulters to discuss finding solutions, but they said they could not make it because they had overseas trips, or some always posted photos of their parties, meals or travels.

Since its launch in 1998, the SLF has lent 605 billion baht to 5.6 million students and it is estimated that 10% of the country's workforce are borrowers.


Moreover, about 20,000 borrowers now work as doctors, nurses, dentists and engineers, and some have made millions of baht.

However, 65% of the fund's borrowers who are due to pay have failed to honour the debt.

The SLF charges borrowers at 1% annually and offers a grace period of up to nine years.

Mr Chainarong said borrowers could easily pay back their student loans by refraining from buying bubble milk tea every day.

Student Loan Fund (SLF) manager Chai­narong Katchapanan

The SLF's call centre has a high turnover rate because of the stress from calling 100 borrowers a day to demand debt repayment, he said.

The outstanding balance of unpaid loans is automatically deducted from monthly salaries of debtors who are state officials and company employees to ensure that the debt is repaid in full.

The fund joined hands with the Stock Exchange of Thailand in January this year to launch a financial literacy project for students who borrow from the SLF.

Under the scheme, all of the fund's borrowers are required to take the financial literacy course via e-learning. Time spent on the course counts as volunteer hours for social activities. Each borrower must volunteer for 36 hours.

Mr Chai­narong said 5,500 borrowers have passed the e-learning course.

Starting in 2021, the SLF will offer a Gifted Student Fund for whiz kids and those studying in fields related to Thai national identity, including traditional music and archaeology, to encourage them to study for a doctorate.

The SLF is considering providing incentives to those who borrow from the Gifted Student Fund, and repayment of a mere 10-20% of the borrowing amount could be among them, Mr Chai­narong said.

To serve the government's policy of encouraging students to pursue vocational education in S-curve industries such as aviation or robotics, the SLF offers a 50% haircut for those studying in vocational schools and 30% debt forgiveness for those studying in S-curve industries facing a workforce shortage.

Some 65% of borrowers study arts subjects, with the rest in science.

Bureau of Information and Communication Technology Office of the Permanent Secretary Ministry of Education E-Mail :
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