[비즈한국] One in five young people has defaulted on their student loans. This is the highest level since statistics were first collected in 2012. According to the National Tax Service's National Tax Statistics Portal, the cumulative non-repayment rate for Income-Contingent Loans (ICL) in 2025 reached 18.0% by number of individuals and 19.4% by total amount. Out of the 419.8 billion won subject to mandatory repayment, 81.3 billion won remains unpaid. This is the first time since related statistics began that the delinquency amount has exceeded 80 billion won. The average delinquency amount per person is also at a record high of 1.41 million won.
Student loan repayment can be deferred if one has no or little income, but those in arrears are not these low-income earners. They are young people who have surpassed the mandatory repayment income threshold of 17.52 million won in annual income (26.79 million won in total salary). Despite successfully finding employment and meeting the mandatory criteria, they still cannot pay off their debt. Experts suggest that the rapid rise in delinquency rates is not because they are 'earning nothing,' but because the harsh economic reality forces young people to prioritize basic living costs over student loan repayments.
Rent and Food Come First, Student Loan Repayment Last
Currently, government student loans are largely divided into 'General Repayment' and 'Income-Contingent Loan (ICL)'. With General Repayment loans, you must pay off principal and interest every month regardless of income once the grace period of up to 10 years ends. On the other hand, for ICL, repayment is deferred until income exceeds a certain threshold, after which 20% (for undergraduates) or 25% (for graduate students) of the excess amount is charged as mandatory repayment.
The problem is that this mandatory repayment is a 'debt that is easy to delay,' ranking lowest among the fixed costs for young people.
The biggest cause is housing costs. According to the 'Factors Determining Housing Costs for Young Single-Person Households' published by the Korea Research Institute for Human Settlements in 2024, 29.5% of employed young people spend more than 20% of their monthly income on housing. This means one in three young people spends over a fifth of their paycheck on rent. If you don't pay rent, you get kicked out immediately, but student loan penalties are capped at 5% of the principal. For young people struggling with living costs, it is obvious which one they will put off.
Food prices are also a major burden. According to the National Data Agency, the Consumer Price Index in March 2026 rose by 2.2% compared to the same month last year, keeping overall indicators near a stable range, but polarization among specific items is clear. While the overall cost of agricultural, livestock, and fishery products fell by 0.6%, driven by vegetables (-13.5%), the livestock price index rose by 6.2% compared to the previous year, nearly three times the overall inflation rate. In particular, the sharp rise in dining out and grocery costs has created a gap between official inflation and the cost of living as perceived by the public. The Bank of Korea has also raised its inflation forecast for this year from 2.1% to 2.2%.
As a result, a novice earner's disposable income is first allocated to 'unavoidable' fixed costs such as rent, food, insurance, and communication fees, leaving student loans for last. This is why a 20% repayment rate is by no means light for a young person just starting their career.
"Let's Just Get Through This Month"... Young People Pushed Between Delinquency and Deferment
Ahn (28), in his second year at an SME, was notified of mandatory student loan repayments as soon as his income exceeded the threshold. However, he said, "After paying rent, utilities, and food, I don't have the capacity to pay back the loan." He shared, "I keep putting it off because I'm told the interest rate is low. I know I have to pay it back someday, but the mindset of just getting through this month keeps repeating."
The number of young people deferring repayments or unable to enter the repayment stage at all is also increasing rapidly. As of 2024, the amount of deferred repayments was 24.2 billion won, about 2.2 times higher than in 2020 (11 billion won). In particular, the number of people deferring for reasons such as unemployment, business closure, or parental leave nearly doubled from 6,871 in 2020 to 12,158 in 2024. In a sense, a bifurcated structure is deepening where those who have entered the mandatory repayment stage are pushed toward delinquency, and those who haven't even entered the stage are pushed toward deferment.
The National Tax Service, the responsible agency, maintained a cautious stance, highlighting the safety valves in the current system. An official from the NTS's Student Loan Repayment Division emphasized the essence of the system, saying, "The fundamental purpose of the Income-Contingent Loan system is to prevent the mass production of credit delinquents and provide equal educational opportunities." Unlike the general financial sector, the agency does not easily report delinquency to credit bureaus, and penalty surcharges are capped at 5% of the principal. There are also safety nets such as installment repayments, interest support, and reductions in late payment penalties. They explained that this is an intentional consideration to prevent young people from starting their social lives saddled with excessive debt.
Regarding the recent surge in delinquency, the NTS official stated, "Although the current figures are at an all-time high, we view this as a temporary phenomenon (due to the economic downturn), and the delinquency amount will gradually be resolved as young people stabilize in society." An official from the Korea Student Aid Foundation also expressed the view that "the total number of borrowers has increased because the system has been operating since 2010," adding that "in the medium to long term, things will improve once graduates settle down."
Voices Calling for "Change to the Repayment Structure"
On the other hand, there are voices suggesting that the ICL repayment structure itself needs to be overhauled. Critics argue that the system must assess whether the amount is truly affordable for young people after mandatory repayment obligations arise. Because essential fixed costs like rent, food, and utilities have already eroded disposable income, a structure that automatically collects 20% of excess income turns student loans not into 'repayable debt,' but into 'debt that has to be put off.'
State-run research institutes are pointing out the same issue. The National Assembly Budget Office suggested, "As repayment conditions worsen due to employment instability and rising living costs among the youth, the non-repayment rate for those subject to mandatory repayment is continuously increasing. The government needs to consider measures to alleviate the repayment burden for low-income youth, such as raising the income threshold for repayment or lowering the repayment rate."