university loans, an increasingly serious crisis

The program was created to help 70/80 thousand young people, today the beneficiaries are 6.2 million and many are unable to repay the sums. A proposal to modify the law to grant loans without guarantees is being studied, which has revived the debate on private debt in the country, the highest in the last 16 years. Critics consider that the situation may become unsustainable for the state coffers.

Bangkok () – The passage from the House of Representatives to the Senate of a new law on the debt incurred by students during university studies has sparked a public debate in Thailand and criticism of the government’s policies, which are considered inappropriate and targeted to obtain electoral results at the expense of the state coffers.

With the new regulations, students can obtain loans without presenting guarantees and not repay their debts. The former prime minister and current president of the House, Chuan Leekpai, considered that the proposal to modify the law could implode a situation that is already difficult.

Many educational institutions are trying to minimize the negative consequences for students who have trouble paying off debt. However, when Chuan was prime minister (1997-2001), a fund financed with the equivalent of 80 million euros was created, destined to offer help to 70-80 thousand students with economic difficulties. Subsequently, that fund grew disproportionately, both in terms of financial availability and in the number of beneficiaries. There are currently 6.2 million students in the program, with loans reaching 18.6 billion euros. On the other hand, there are 2.5 million students who cannot repay the amounts received, a problem that is part of the broader picture of private debt.

According to the Bank of Thailand, the incidence of private debt in GDP is 89.2%, a figure slightly lower than that of the two previous years but which must be related to a lower production of national wealth.

In August, the annual survey of the University of the Thai Chamber of Commerce showed that today Thai families face the highest level of debt in the last 16 years, with an average burden of around half a million baht (about 13,500 euros). ). 99.6% of those surveyed declared that they had debts, which represents an increase of almost 4% year-on-year.

The situation is only partly due to the stagnation that followed the pandemic: the tendency to borrow has its origin in many factors, including the ease of access to credit, income that often does not correspond to the increase in the cost of goods and services, the greater propensity to purchase durable goods and the need for money for investments.

The outlook is not totally emergency because it responds to known circumstances, but it risks spiraling out of control if Southeast Asia’s second-largest economy fails to meet its growth targets at an already uncertain economic time.