Bosses to take rap for student debt
Employers who fail to deduct from employees' salaries to pay off their government-funded student loans will be held legally and financially responsible for missed loan repayments, says the Student Loan Fund (SLF).
SLF manager Chainarong Kajchapanan said yesterday that private companies and state agencies that fail to make the monthly deductions are liable for punishment under the revised Loans for Education Act. The law requires employers to deduct from salaries of employees who borrowed from the SLF to finance their high school and tertiary studies. The deductions are then remitted to the Revenue Department.
Employers are also responsible for missed loan repayments, plus 2% annual interest, according to Mr Chainarong. Government student loans, which are provided to needy students, charge low interest of 1% per year.
Mr Chainarong said 1.8 million people employed in more than 100,000 workplaces, both in the state and private sectors, are currently having problems repaying their student loans.
The biggest employer of student loan debtors is a major retail company, he said, without naming the business. The number of debtors in the company is estimated at 20,000. The SLF also disclosed that about 400,000 employees are having their pay deducted. The fund hopes to double that number this year and increase it by one million next year. Mr Chainarong added the fund was still chasing debts from freelance workers.
The SLF said last week that it had struggled for some time because many borrowers fail to repay loans despite having graduated and taking jobs with a steady income. The fund began taking them to court in 2018, seizing their salaries to pressure them to repay the debts. The measure has substantially boosted repayments and helped turn around the SLF's finances.