Premier Lai Ching-te on Thursday applauded the Ministry of Education's (MOE) plans to ease repayment terms on student loans starting September 1, which he said will significantly reduce the burden on fresh graduates starting out in the workplace. Aside from helping young people better plan a career path and save money to start a business, the measures will provide greater flexibility for financial planning.
Currently all borrowers enjoy a one-year grace period following graduation during which no payment on interest or principal is required. The new measures will allow the borrower to pay interest only on the loan for the four-year period thereafter, the premier said.
Low-income borrowers also qualify for an additional four-year deferment period, with eligibility requirements to be relaxed under the new measures: Whereas previously only those earning an average of less than NT$30,000 (US$980) per month during the previous year qualified for the deferments, those earning less than NT$35,000 (US$1,143) will qualify as well. No interest or principal payments are required during the deferment period.
The MOE said the new measures are expected to benefit more than 500,000 borrowers. The interest-only and deferment periods may also be used simultaneously to allow young people greater flexibility in career planning.