Presidential Committee to Promote Principal Repayment Deferment on Loans During Parental Leave

The government is pushing forward a plan to allow a deferment of principal repayment on loans during parental leave.

On April 29, the Presidential Committee on Ageing Society and Population Policy held the 11th Emergency Population Policy Meeting in the afternoon and discussed additional supplementary measures to address the low birth rate, including this plan. The government also decided to consult with financial institutions to allow parental leave to be recognized as a valid reason for principal repayment deferment even for loans from private financial institutions.

During parental leave, income temporarily decreases, which increases the burden of repaying loan principal and interest. For this reason, policy loans such as student loans and mortgage loans currently allow principal repayment deferment during parental leave. However, most private financial institutions do not currently recognize parental leave as a valid reason for principal repayment deferment.

Accordingly, the government plans to consider ways to expand the principal repayment deferment system during parental leave to loans from private financial institutions as well. The committee stated, "We plan to discuss this with financial institutions, taking into account the impact on banks' soundness and the criteria for eligible recipients," and added, "The expansion of this system is expected to improve households' short-term financial situations and significantly reduce the economic burden that discourages the use of parental leave."

In addition, regarding housing policy, support will be strengthened for households that give birth while residing in 'lease-to-own purchase rental housing.' The minimum rental period required for conversion to ownership, which was originally six years, will be halved to three years.