(EDITORIAL from the Korea Times on Jan. 18)

Student Loan Program
Universities Urged to Refrain From Raising Tuition

College students can get long-term state loans to pay tuition from this spring
semester. Under the ``study-now-pay-later" program, student borrowers will be
allowed to pay back their loans after graduating and landing a job.
Financially-strapped students welcomed the debut of the credit package, but not
without some worries about paying back their debt.
Their main concern is that the interest rate for the loan is set relatively high
at 5.8 percent. The rate might go up following possible hikes of the market
interest rates, thus bringing heavier burdens to borrowers. Some students
described the program as an ``interest time-bomb," which could explode after
graduation. Others said the loans will weigh them down until they retire from
work.
Excessive debt payment burdens may also lead borrowers to default on their
obligations and file for individual bankruptcy. The bad loans then must be
shouldered by the government using taxpayers' money. Thus, it is necessary that
the authorities make the utmost efforts to make student loans available at a much
lower interest rate. They also need to do more to guarantee the success of the
program that is designed to help students of poor families study without
experiencing financial difficulties.
For this, the government is required to go all-out to tap more financial
resources to provide more loans to students at cheaper borrowing costs. Besides,
it must provide more financial support to colleges and universities in a move to
reduce their dependence on tuition for their school operations.
The government currently sets aside 0.6 percent of the nation's gross domestic
product (GDP) for financial support for higher educational institutions. The
figure is only half the average 1.2 percent of the 30 countries belonging to the
Organization for Economic Cooperation and Development (OECD). And 75 percent of
local colleges and universities' budgets come from tuitions paid by students, far
higher than the OECD average of 25 percent. Against this backdrop, the nation's
higher learning institutions cannot join the ranks of the world's prestigious
schools, leaving students stripped of their right to better education.
Together with the loan program, the government plans to place a yearly cap on the
increase rate of tuition in order to keep colleges and universities from hiking
tuition excessively. According to official statistics, tuition fees skyrocketed
by 115.8 percent between 1999 and 2009. We urge colleges and universities to
refrain from tuition hikes so that the burden on students and their parents can
be eased. Instead, they must make efforts to diversify their sources of income in
order to ensure that there are no students who quit their studies due to
financial difficulties.
(END)

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