60,000 officials risk losing jobs over student loan defaults

Sixty thousand state officials are at risk of dismissal as they have failed to repay the debts they owe from government-issued student loans, officials said Wednesday.

The Student Loan Fund (SLF) will soon divulge to private companies details of the legal requirement under which they must deduct the salaries of staff who defaulted on the loans.

Finance permanent secretary Somchai Sujjapongse said state officials who have refused to repay their loans would be liable for disciplinary action and risk being dismissed.

Mr Somchai said there are about 200,000 state officials who took out student loans and 60,000 now rank as defaulters.

The SLF has allowed a grace period during which defaulters are offered a special repayment period when they can pay down the loan in instalments at a low interest rate.

If the debts are not settled this year the instalments will automatically be deducted from their salaries starting in January, he warned.

The SLF will also inform companies nationwide of the legal guidelines to help the state recoup the debts from employees who borrowed from the fund to finance their studies but have avoided repaying, it said.

According to the Finance Ministry, these companies are legally obligated to deduct the defaulting employees' pay and pass the money on to the government.

Mr Somchai said if companies fail to deduct the money as required they would be fined.

Last month, the SLF announced it has access to the personal information of borrowers to help it tackle defaults more effectively, according to SLF manager Chainarong Katchapanan.

The SLF Act was amended earlier this year allowing the fund to gain access to the information of borrowers who have finished their education and are currently employed in the private sector or who work for the state.

The fund can now obtain their contact numbers and financial records as their employers are legally obliged to provide these details if requested, Mr Chainarong said.

The law stipulates that once employed, they are legally bound to start repaying their debts to the SLF. But the fund has discovered a vast number of SLF debtors have attempted to skirt this obligation.

To date, the fund has extended 553 billion baht of loans to 5.28 million students since its launch but the level of bad debt has surged.

Around 2 million borrowers have failed to pay debts worth a total of 62 billion baht. The SLF has filed court action against 1.2 million defaulters. The latest revision to the act saw the interest rate on the loans shift from 1% to a maximum of 7.5%.

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