National Tax Service Provides Debt Adjustment Program Information for Economically Struggling Student Loan Defaulters
Student Loan Repayment Demands and Collection Procedures Immediately Halted Without Separate Application Upon Debt Adjustment Request
Mr. A took out an "Income-Contingent Student Loan" of 18 million KRW while attending university. After graduation, he operated a small seafood processing business from 2016 and repaid the student loan as income was generated. However, due to difficulties caused by COVID-19, he fell behind not only on financial institution loans but also on his student loan repayments. To repay the loans, he worked as a substitute driver and a day laborer on-site, but it was insufficient. In June of this year, Mr. A learned about the Debt Adjustment Program through the National Tax Service and received debt adjustment from the Credit Recovery Committee, allowing him to repay in installments without collection worries and even receive partial debt forgiveness, enabling him to focus on his business.
On the 26th, the National Tax Service announced that over the past three years, 2,634 student loan defaulters were able to have 6.5 billion KRW of mandatory repayment amounts waived.
An official from the National Tax Service explained, "We are actively guiding the integrated debt adjustment system to alleviate the burden on borrowers struggling with student loan defaults. Furthermore, when defaulters apply for debt adjustment with the Credit Recovery Committee, student loan repayment demands are immediately suspended without a separate application, and once the debt adjustment is confirmed, mandatory repayments are waived."
However, some applicants for debt adjustment include those who have been in default for less than three months, resulting in cases where debt adjustment cannot be granted. According to the Credit Recovery Committee regulations, only those who have been in default on income-contingent student loans for three months or more are eligible to apply.
Accordingly, the National Tax Service has improved the system by creating a Certificate of Mandatory Repayment Default that allows borrowers to easily verify their eligibility for debt adjustment at a glance by showing the duration of the default and other default information.
Additionally, by providing an online issuance service where borrowers can obtain the Certificate of Mandatory Repayment Default through identity verification on the Income-Contingent Student Loan Repayment website without visiting the tax office, the convenience for borrowers has been enhanced.
An official from the National Tax Service stated, "Going forward, the National Tax Service will do its best to provide more thorough support so that low-income young people struggling with student loan delinquency can overcome their debt problems and focus on economic activities."
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