Student loans to back bond offering
The Student Loan Fund is preparing to securitise its loans to mobilise Bt20 billion.
The SLF needs Bt50 billion next year to cover its student loans and income-contingent loans (ICL), SLF manager Prempracha Supasamout said yesterday. The fund will issue bonds backed by the loans if it can get the law applying to it revised, he said. If this faces obstacles due to the prevailing political climate or other factors, the SLF may ask the Finance Ministry to issue government bonds instead, he said. The SLF is basically financed from a direct government budget appropriation and through debt repayment, which is estimated to be about Bt2 billion a year. The scheme would make the SLF self-financing within 25 years, meaning that it would not depend on the government budget, as debt repayment would increase over time. The SLF has outstanding loans worth Bt250 billion, about 30 per cent of them in distress. It has served 2.5 million students nationwide in its eight years of existence. High-school graduates are not any more delinquent in paying back their loans than holders of vocational or bachelor's degrees, Prempracha said, adding that, surprisingly, those with a college education did not fare any better than the other two groups. The ICL scheme was introduced this year to reflect the repayment ability of graduates as they enter their careers. No interest is charged while borrowers are in school, but graduates have to repay principal plus the inflation rate over 15-20 years. This year the SLF will extend Bt4.8 billion under the ICL programme, with each student getting up to Bt50,000. Prempracha estimates that 700,000 students will enter colleges and universities this year and 80 per cent of them will borrow from the ICL plan. The SLF will also provide Bt25 billion of loans to further the education of those who finish vocational school, with interest charged at 1 per cent and repayment over 15 years. This loan scheme will fade away when ICL is fully implemented. Prempracha believes that debt repayment under ICL will be better than that of ordinary loans, with only 10 per cent of ICL loans going bad. The SLF will grant loans worth Bt700 million to students from poor families attending secondary school this year. Wichit Chaitrong The Nation
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