[Consecutive Defeats Debt Measures-②] Tearful Youth... Surge in 20s Whose Debts Were Paid by the Country

20s Subrogation as of August: 21,216 Cases
Already 21.6% More Than Last Year's Total
20s Account for Largest Share at 30% Among All Age Groups
Assemblyman Min Hyung-bae: "Must Prevent Cases from Reaching Subrogation"

[Asia Economy Reporter Song Seung-seop] It has been revealed that the number of people in their 20s who failed to properly repay even policy financial loans with relatively low interest rates, resulting in the state repaying on their behalf, has surged. This is interpreted as meaning that the number of young people burdened by accumulating debt and unable to find a breakthrough has increased accordingly. Since the insolvency of the younger generation can seriously hinder future growth engines, there are calls for urgent, proactive, and comprehensive measures.

According to data submitted by Min Hyung-bae, a member of the National Assembly's Political Affairs Committee from the Democratic Party of Korea, received from the Korea Inclusive Finance Agency as of last August, the number of subrogation repayments for policy guarantee products (Worker’s Sunshine Loan, Sunshine Loan Youth, Sunshine Loan 15, Sunshine Loan 17) among people in their 20s recorded 21,216 cases.

Subrogation repayment refers to the act of a third party repaying the debt on behalf of the borrower. It usually occurs when the principal and interest are overdue or when undergoing credit recovery, personal rehabilitation, or personal bankruptcy procedures. Unlike rehabilitation procedures that allow debt reduction if certain conditions are met, subrogation repayment requires the Korea Inclusive Finance Agency to use its funds.

The number of subrogation repayments among people in their 20s is increasing faster compared to other age groups. Considering that last year’s number was 17,436 cases, it has already increased by 21.6%. This contrasts with other age groups that have not yet reached last year’s figures. Considering COVID-19 and the economic situation, subrogation repayments among people in their 20s are likely to grow further.

The proportion of the total cases (70,646) accounted for by people in their 20s is also the highest among all age groups at 30%. This is the first time in the past five years. In terms of generational proportions, last year those in their 30s accounted for the largest share at 31.0%, followed by those in their 40s (24.4%). People in their 20s were third at 24.1%. From 2016 (22.5%), the level had been stable but surged sharply this year.

The main reasons for the sharp increase in subrogation repayments only among people in their 20s are cited as soaring housing prices and consequent debt-financed investment (debt investment) and "Yeongkkeul" (borrowing to the limit, investing with all one’s resources). Since it has become impossible to own a home solely with labor income, the younger generation is said to have recklessly taken out loans to build assets.

Assemblyman Min Hyung-bae pointed out, "The high number of subrogation repayments means there are many financially vulnerable people," adding, "It is important to prevent people in their 20s from reaching the point of subrogation repayment through debt adjustment and other measures."