220,000 Student Loan Borrowers Required to Repay... 2-Year Deferment for Those Facing Unemployment or Financial Hardship

National Tax Service, 2023 Tax Year Mandatory Repayment Guidance for Employment-Linked Student Loans

Last year, 220,000 student loan borrowers with total annual salaries exceeding 25.25 million KRW are required to make mandatory repayments this year. If economic difficulties arise due to unemployment or other reasons, they can apply for a deferment.

On the 24th, the National Tax Service announced that it will notify 220,000 borrowers who incurred repayment obligations last year based on their earned income after employment of their "2023 mandatory repayment amount."

The mandatory repayment amount arises when the previous year's income exceeds the repayment threshold income (total salary 기준 25.25 million KRW), and any voluntary repayments made to the Korea Student Aid Foundation in the year income was earned will be deducted.

If the voluntary repayment amount in 2023 exceeds 20% (undergraduates) or 25% (graduate students) of the amount exceeding the repayment threshold income, the mandatory repayment amount will not be notified.

Borrowers who have applied for electronic delivery will be notified via KakaoTalk or text message and can immediately view the calculation details of the mandatory repayment amount after identity verification.

The notified mandatory repayment amount can be paid by the borrower using their preferred method. If employed at a company, in principle, the company will withhold one-twelfth of the mandatory repayment amount from the monthly salary over one year and remit it. If the borrower does not want the company to withhold the amount, they can prepay the mandatory repayment amount. If the full or half amount of the mandatory repayment is paid by the end of May, the borrower will not be notified as a withholding target to the company where they are employed, and if paid by the end of June, it will not be withheld from the salary.

The National Tax Service operates a repayment deferment system to reduce the repayment burden for borrowers facing difficulties.

If earned income was generated last year but economic circumstances have worsened due to unemployment or other reasons, repayment can be deferred for two years; if enrolled in university or graduate school, repayment can be deferred for four years. If the sum of other income excluding interrupted earned income due to unemployment (business income + retirement income + capital gains) is less than the repayment threshold income (16.21 million KRW), the borrower qualifies as economically distressed and can apply for deferment of the mandatory repayment amount. However, if enrolled in university or graduate school, deferment can be applied for regardless of economic hardship.

A National Tax Service official stated, "If you qualify for deferment, applying for repayment deferment will allow you to focus on job searching or studies without the burden of student loan repayment, and we will actively support this."