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Government considers student loan scheme for low-income families

Jakarta Globe - March 18, 2024

Whisnu Bagus Prasetyo, Jakarta – The government is in the process of developing a scheme to provide soft loans for university students from low-income and middle-income families who do not receive financial assistance from the state, an official said on Monday.

According to Warsito, a deputy with the Coordinating Ministry for Human Development overseeing national education quality, recipients of these loans will not be required to start repayment until they have obtained a stable income.

The initiative arises in response to reports indicating that many students have become indebted to online lenders with high interest rates, leading to financial difficulties and drop-outs.

Warsito said the proposed loans will offer reasonable rates and flexible terms.

"Recipients may begin repayment approximately two years after graduation," he said during a seminar in Jakarta. However, he did not provide specific details regarding the estimated interest rates for student loans, as discussions on this matter are ongoing.

The funding for this program may come from various sources, including the state budget, banks, or corporate donations, Warsito added.

He acknowledged that a student loan scheme was previously implemented in the mid-1980s but proved unsuccessful as it resulted in a high rate of non-performing loans and imposed a financial burden on the state budget.

However, he expressed confidence that the proposed program will differ, as it will involve a rigorous selection process supported by an integrated data system to monitor the credit flow and ensure accountability.

Source: https://jakartaglobe.id/news/government-considers-student-loan-scheme-for-lowincome-familie