Student Loan Fund to free guarantors from liabilities under new law
Students will no longer require guarantors to borrow from the Student Loan Fund once a new law comes into effect, the fund chief said on Friday.
Krisada Chinavicharana, permanent secretary at the Finance Ministry who is the ex-officio chairman of the fund, said the bill to amend the Student Loan Fund Act has passed the first reading in the House and it should clear Parliament soon.
He said once the bill is enacted and takes effect, students will no longer need third-party guarantors to seek loans from the fund because they can themselves be the guarantors.
Earlier, there had been reports that some teachers had suffered a financial crisis after they guaranteed loans of their students who would not repay the debt, prompting the fund to make the guarantors liable for the repayment.
Krisada said the new law would empower the fund to help the borrowers, who have been sued for not paying the debt after they graduated.
The new law would allow the fund to help the sued borrowers during the trials or after the court has made rulings or when they are under legal execution of the court orders, Krisada added.
The fund would be empowered to restructure the bad debt so that the former students could return the borrowed money to the fund, he said.
“During the past three years, the fund has not sued more ex-students because we would like to help the borrowers during the time of crisis,” Krisada said.
“We sued only in cases where the statute of limitations was about to expire. Anyway, the sued borrowers can try to reach an out-of-court settlement with us.”
Krisada urged borrowers to honour their debt repayment commitment to the fund so that it would have money to provide loans to future university students.
After the new law is enacted, guarantors who have been sued by the fund can also negotiate with the fund to find better solutions, he added.
Currently, the Student Loan Fund has about 600,000 debtors and about 40 per cent have become non-performing loans. During the past three years, the fund has reduced the fine for late payment from 7.5 per cent annually to 0.5 per cent annually. Apart from reducing the fine, the fund also reduced the fine amounts for borrowers who returned to negotiate debt restructuring, Krisada added.
