 Second Semester of 2006 Sees 322,512 Students Apply for Student Loans

  - Interest rates drop significantly from 7.05% in the first semester

 After receiving applications from June 19 through August 18, KHFC announced that a total of 322,512 students had applied for the government-guaranteed student loans for the second semester of 2006. This figure represents 15.6% of the 2.07 million students ('05) enrolled in junior colleges, universities, and graduate schools, and an increase of 2.7% in applicants compared to the 313,887 in the first semester. The volume of applications has increased because loans may be applied for only a part of the total tuition beginning in the second semester and the loan rate was set at 6.84%, a significant reduction from 7.05% in the first semester. Although the market rates, including the call rates, are generally rising, the Ministry of Education lowered the student loan interest rate by reducing the securitization costs as much as possible in order to ease the burden on borrowers, including especially students from low-income households. Interest rates on unsecured loans from commercial banks usually range from 7% to 14%, so this student loan rate is very attractive.

 Considering the number of cancellations and poor credit-rating holders, about 260,000 students are likely to be approved for loans, easily achieving the initial goal of 250,000 students.