According to a student loan official, about 30 per cent of recipients in the old student-loan scheme have defaulted because they remained unemployed or were earning too little to meet repayments.

Student-loan fund manager Prempracha Supasamout said the scheme - available to university students from low-income families until last year - approved 2.5 million applications totalling Bt216 billion. Many recipients are not yet required to start making repayments.

However, of those who were, only 70 per cent were doing so.

Prempracha's office commissioned Chulalongkorn University to study why the borrowers could not get jobs, or were in employment that paid below the Bt4,700-a-month repayment threshold. Those earning below that figure are not required to make repayments.

According to the study, the biggest problem was that many recipients graduated in fields that offered few job opportunities.

Other reasons were that students started families soon after leaving university, or went on to universities after completing their vocational education.

Prempracha said yesterday that graduates in law, political science, economics and business administration had flooded the market and there were few positions available.

"Supply is far outnumbering demand here," he said.

He added that those with business-administration certificates from vocational schools had difficulty finding jobs because they lacked the experience demanded by the market.

Prempracha said the situation would improve if vocational schools focused on producing skilled workers who could find jobs more easily.

The government launched a new student-loan programme this year. Called the "Income-Contingent Loan" (ICL), it requires repayments only when borrowers earn more than Bt16,000 a month. The new programme is open to all students regardless of financial status.

Prempracha said the new programme would encourage educational institutes to produce graduates in fields "responsive to market needs".

"Within three years, everything about the new programme should be settled," he said.

He added the government had earmarked Bt4billion in scholarships for underprivileged students.

"The recipients of the scholarships cannot apply for student loans" Prempracha said.

Scholarships are available from kindergarten to university level.