General information
Income Contingent Loan (ICL) is an education fund provided by the Thai
government as education loan scheme. Under ICL scheme, the government
will decide on basic and reference tuition fees for all subjects taught
in both public and private higher education institutions. The reference
tuition fess or reference unit costs will indicate how much the government
is willing to provide its share and the share students have to responsible.
Higher education institutions will receive these tuition fees in full
amounts whether students have decide to pay tuition fees upfront, with
discount, or to avail themselves for the income-contingent loans from
the government. Students from disadvantaged families who need financial
assistance beyond tuition fees (already fully covered by ICL) can apply
for grants either fully or partially to cover daily costs of living while
attending universities. Upon students’ graduation, the Department of Revenue
will keep track of these students’ records, update the status of their
debts, and collect the repayments whenever the threshold income is reached.
ICL outlook
Main objectives of ICL is to reform the current practice of higher education
financing by using tuition fee structures that better reflect the true
costs of higher education. The new financing scheme also tries to adjust
the share of subsidies by the state that better reflect a fairer distribution
of benefits. In order to cushion the short-term effects of the new system,
the government is willing to provide complete loans to all students the
repayment of which is contingent upon the future income of these students
after their graduation. Under ICL, the risk of loan debt default is effectively
removed, and all students, rich or poor, are free to choose any subjects
that they want to study within each individual’s capability. The default
risk is removed because if, and whenever, the future income of these students
is below a sufficiently high threshold level, they are not under an obligation
to pay back their debts. This should create an incentive for more students
who hitherto are unable or unwilling to seek further or higher education
because of lack of funds or fear of insolvency. The country’s knowledge
base should increase, with greater efficiency and excellence. The future
income of these students will also form an effective income tax base for
the country.
Eligibility for ICL
During the transition period, students who are currently enrolled full-time
in associate degree (diploma) or at undergraduate level and who are willing
to apply for the loan will be eligible for ICL. Every first year student
who passed university admissions system in academic year 2006 will be
eligible for applying ICL. In the subsequent years second, third, and
fourth year will be successively eligible for ICL.
Students who used to be granted student loan for education including upper
secondary education students (vocational and high school) will continue
to receive the former loan until they finish their education and obligated
under the old regulations.
In the long run, ICL will be available for students attending associate
degree, undergraduate and postgraduate education. The government will
implement the scheme incrementally depending on financial situation so
as to cover students at all levels of education as much as possible.
ICL Coverage
ICL will cover tuition fee which will be determined in proportion to the
reference tuition fees set by the ICL administration. If tuition fee is
higher than the rate prescribed in the reference tuition fee, students
have to pay the difference by themselves. The reference tuition fees will
be adjusted according to costs of particular discipline or depending on
groups of institution having similar standards. Proportion of coverage
and responsibility of government and student for different disciplines
are also contingent with demand for profession of particular discipline.
Proportion of the coverage is also contingent with demand of labour market,
social benefit and social value, profit for student, and income earning
capacity of students. For academic year 2006, the general proportion of
responsibility of government and student is set at 50:50 per cent of the
costs for delivering full time equivalent course. The government will
bear more responsibility in providing more coverage for disciplines necessary
for social and economic development such as medical science, science,
history, or archaeology. Disciplines not necessary for development or
over produced will receive less support from the government. Objective
of such coverage is to encourage students to study in shortage disciplines.
Proportion of ICL coverage might be changed in the future depending on
market demand and mechanism.
Assistance for poor students
Poor students will not only be granted ICL, in addition they will receive
financial support for their costs of living while studying. Institutions
where poor students enrolled have to provide assistance to find part-time
job for them and to ensure that financial deficiency will not deter them
from opportunities for studying.
Guarantee for education loan
There is no need for students to have guarantor to be able to get ICL.
The scheme believes that ability to repay the loan debts be determined
by capacity to earn income in the future.
Repayment
Repayment is flexible depending on ability to pay or when student lender
can earn up to threshold level (salary of 10,000 or 16,000 baht per month
which need government decision). If lenders are unemployed, they can request
for a break and will continue to repay when earn enough income. Generally,
there is no interest for the debts but interest will be fluctuated with
the rate of inflation. If inflation was too high, the administration can
set appropriate interest rate for the debts. When lenders earned enough
they need to repay at least 1 per cent of their income earning. If lenders
decided to repay upfront they will receive discount as incentive for early
repayment.
Administration
ICL will be administered by Commission on Higher Education, Ministry of
Education.
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