The Korea Student Aid Foundation, a state-run institution, has taken legal action against more than 1,000 long-term delinquent borrowers so far this year. While the government has pressed private financial firms to write off debt and sell loan receivables at discounted prices in the name of supporting vulnerable groups, a public agency has continued aggressive debt collection.
According to the office of Rep. Lee In-seon of the People Power Party, a member of the National Assembly's Education Committee, the foundation, which runs the student loan program, took legal action against 1,078 long-term delinquent borrowers from the start of this year through the end of July, the lawmaker's office said on the 20th. The measures included lawsuits, provisional asset seizures and forced collections aimed at recovering a combined 7.9 billion won ($5.7 million). The number of borrowers subject to legal action was 2,061 in 2024 and 2,025 in 2025. At the current pace, this year's total is expected to be similar to previous years.
Financial industry officials say the foundation, which does not fall under the Financial Services Commission, has been relatively slow in clearing long-overdue debt. After President Lee Jae-myung described the practice as "cruel finance," financial authorities have been working to establish an inclusive finance approach across individual sectors and state-run financial institutions. Banks carried out 21,449 in-house debt restructurings in the first half of this year, 17% more than the 18,306 recorded for all of last year, according to the Financial Supervisory Service.
By contrast, the foundation's own debt restructuring support, such as installment repayment agreements, totaled 2,762 cases worth 15.7 billion won as of the end of July. In-house debt restructuring came to 7,430 cases worth 42.2 billion won in 2024 and 8,170 cases worth 50.1 billion won in 2025. More than half of this year has passed, but the figure stands at just 34% of last year's annual total.
The foundation's long-term delinquent receivables are also growing each year. Loans overdue by seven years or more rose from 24,716 cases in 2022 to 33,764 in 2024, and reached 42,660 by the end of July this year — a 72% increase in four and a half years. Loans overdue by six months or more grew from 120,227 cases in 2022 to 134,902 in 2024, and expanded to 159,264 by the end of July. An official in the financial sector said the government "puts pressure on private financial firms while letting public agencies do everything they can to avoid any risk of breach of duty."
As unresolved delinquent loans pile up, borrowers in arrears are also getting older. As of the end of July, 50,101 student loan borrowers were overdue by six months or more. Of those, 18,993, or 37.9%, were in their 40s or older. Borrowers who have been unable to repay loans taken out during their university or graduate school years for more than a decade are accumulating.
Critics say the way delinquent loans are managed needs to be改 improved from the perspective of vulnerable young adults, so that student loans do not become a shackle on their entry into society. The foundation was established to support educational opportunities for young people regardless of their financial circumstances. Lee said the Lee Jae-myung administration "has called on the financial sector to actively write off debt, but there has been little real change in how public agencies pursue collections." She added that "because the foundation exists to help young people enter society, it needs to strengthen support for their fresh start."
