5,080 Young Borrowers Failed to Repay Student Loans, Annual Loss Reaches 27.3 Billion Won

In 2023 alone, 5,080 young people who had borrowed student loans from the Korea Student Aid Foundation (KOSAF) failed to repay 27.3 billion won due to personal rehabilitation, bankruptcy, discharge decisions by the Credit Counseling and Recovery Service (CCRS), or death. Although this represents a decrease of about 1 billion won compared with KOSAF’s 2022 losses of 27.4 billion won, losses due to death more than doubled, rising from 2.4 billion won (370 people) in 2022 to 5.7 billion won (871 people) in 2023.
According to data titled "Status of Loss Compensation for Student Loans by Type over the Past Five Years," submitted by the Korea Student Aid Foundation to Democratic Party of Korea (DPK) lawmaker Park Hong-bae of the National Assembly Committee on Climate, Energy, Environment and Labor on the 26th, the number of young people who could not repay their student loans due to personal rehabilitation, bankruptcy, CCRS discharge, or death totaled 5,080 in 2023.
Through personal rehabilitation, 3,533 young borrowers were discharged from 17.042 billion won in student loans. Bankruptcy accounted for 4.449 billion won written off for 628 people, and 48 young people had 48 million won discharged through the CCRS. In the same year, 871 young borrowers died, leaving 871 million won unpaid, bringing KOSAF’s total losses to 27.315 billion won.
KOSAF’s losses, which stood at 5.149 billion won for 855 people in 2019, rose steadily to 8.229 billion won for 1,550 people in 2020, 11.862 billion won for 2,218 people in 2021, and 27.489 billion won for 4,778 people in 2022. Observers say that youth employment has declined since 2022 due to the COVID-19 pandemic and the economic downturn, leading to more young people being unable to repay their student loans. In fact, the number of delinquent student loan borrowers surged from 60,729 in 2021 to 66,954 in 2024.
According to the "2024 Administrative Statistics by Life Stage" released last year by the Ministry of Data and Statistics (KOSTAT), the leading cause of death among young people was intentional self-harm (suicide), accounting for 48.3 percent. Analysts note that, even though the number and amount of student loans discharged through bankruptcy and personal rehabilitation decreased compared with 2022, discharges due to death increased, underscoring the need for institutional support.
In reality, student loans discharged due to death amounted to only 791 million won for 124 people in 2019, but rose to 1.287 billion won for 190 people in 2020 and 2.47 billion won for 370 people in 2021. In 2022, 871 borrowers died and 5.703 billion won in student loans was written off.
Park Hong-bae stated, "The growing losses from student loans, which are meant to support stable learning and entry into society for young people, are a red flag indicating that the financial foundations of the younger generation are being shaken." He added, "We must closely examine the financial stability of young adults at the start of their careers and establish structural solutions that link finance, employment, and welfare."
mj@fnnews.com Park Moon-su Reporter