Thai bank to tackle student debtors

February 8, 2002

Executives from the state-run Krung Thai Bank, which oversees Thailand's student loan programme, are recommending legal action against thousands of graduates who default on payments and squander their loans on items such as motorbikes and jewellery.

"We don't want to penalise or destroy the futures of these students," a Krung Thai Bank official said. "But it's important that they learn a sense of discipline and responsibility."

Bank executives said students who are unable to pay should apply for a deferment. "To simply ignore one's responsibilities is just unfair and cheats other students as well," said one bank source.

The government is considering a major shift in its 103 billion baht (£1.6 billion) loan programme as part of a strategy to save money on educational subsidies. The system was set up in 1996 to assist students of poor families.

Boonserm Weesakul, president of the University of Business Administration and chairman of a study group evaluating the loan programme, has recommended that the government consider the loan scheme as a means of reducing state educational subsidies.

He said: "If the scheme is implemented, it would mean students would have to pay a higher percentage of their fees through student loans."

Nongram Setapanich, senior adviser on education policy and planning for the National Education Commission, said that making students pay more of their tuition fees would encourage them to be more responsible when it came to paying back loans.

"Right now the government has to heavily subsidise students - especially those in state universities. These students pay only 15 per cent of their tuition fees per head, which is very low," he said.

Amornwith Nakornthap, director of the centre for policy research on education at Chulalongkorn University, said he was concerned that stricter criteria for screening students under a loan-based programme would hurt the poorer students it was set up to help.

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