Debt weighs heavily on college students

A group of ruling party lawmakers and student representatives from 25 universities meet on school tuition last month. (Yonhap News)

Korea may be the most costly country to parents, where most children rely partially or entirely on them for college tuition, living costs, rent and wedding expenses.

The expression “deunggol breaker,” or spine breaker, is now a common nickname for children as heavy financial burdens tie down their parents.

But Korean college students say it is not fair to blame kids for seeking economic support from their parents, as there is no way to afford college but to dive into heavy debt.

It was not until January 2012 that state financial authorities set out state-supported low-interest loans via the Life Insurance Social Contribution Committee and the Social Solidarity Bank.

But even this solution falls far short of reaching the surge of student borrowers. Only 585 students were successful candidates for the plan in the first half of this year, down 16 percent from 697 in the previous half.

The Financial Services Commission revealed in its report that 83.6 percent of college students have their parents pay tuition. The remaining 16.4 percent seek student loans, scholarships or part-time jobs.

Some of these student borrowers take out loans from second-tier lenders, which require relatively low credit history in exchange for a relatively high ― 20-30 ― percent interest rate.

It is hardly possible for students to cover 3 million won ($2,700) to 5 million won tuition per semester through part-time jobs and no loans.

“I used to do part-time at a Korean grill for pocket money. But it could not even cover my eating costs,” said Park Dong-il, a sophomore in a local university in Gangwon Province, who spends about 400,000 won a month, excluding tuition and studio rent.

Park, 22, earned slightly over the 4,580 won state-designated minimum wage per hour, serving and doing kitchen chores. A new pair of decent shoes, he said, cost at least 100,000 won.

“It was dehumanizing. I could not spare time or energy for school affairs back then.” He quit the grill soon after starting, and now his parents give him monthly pocket money and utility fees on top of paying for his studio ― 3.6 million won per year plus a 2 million won deposit.

To alleviate students’ debt problems, the FSC said it is seeking to revise a law to allow a state debt relief fund to support student debt workouts.

“Buying the overdue debts will help provide actual support for students who are greatly burdened,” an FSC told Yonhap News.

Source: http://tinyurl.com/lzob7nw