Graduates who fail to pay back student loans for over three years after leaving school could face asset seizure, the education ministry said Wednesday.
According to a draft bill on the repayment of the "income contingent loan scheme (ICL)," the newly introduced state-funded student loan program, the government is authorized to investigate financial conditions of college
graduates who do not repay their loans for more than three years and seize their assets if the borrower has overseas real estate or memberships at private sports clubs.
Under the law on the ICL, which began this year, students must pay back the loan by deducting part of their income after getting a job or extend the repayment period if they fail to get a job after graduation.
The Ministry of Education, Science and Technology said the new rules will cover students who graduate from colleges next year. Property inspections will be conducted to find out whether violators possess special forms of
assets, including foreign real estate or expensive memberships, if they fail
to pay the loan within three years after leaving school.
Those who manage to pay back 5 percent of the total amount of the loan will be exempt, it said.
"Domestic real estate, houses and financial assets are stipulated in the law, but we drew up the new rules to cover the borrowers who hide these types of property," an official from the ministry said.