Relief for Young Borrowers as Student Loan Rate Cap Reduced
- A total of 92laws, including the Special Act on Income Contingent Loan, coming into effect in June
Starting in June, the interest rate cap on income contingent loans for students will be lowered, and the re-starting of failed businesses will be recognized as startups and be eligible for government support.The Ministry of Government Legislation (Minister Lee Wan-kyu) announced that a total of 92 statutes will come into effect in June. Some of the key details and enforcement dates of the forthcoming statutes are as follows.
The First Reduction in the Interest Rate Cap on Income Contingent Loans for Students (「SPECIAL ACT ON INCOME CONTINGENT LOAN」, June 19)
Starting on June 19, the interest rate cap on income contingent student loans is being lowered to reduce the burden of repayment for young people. Previously, the rate was capped at 120 percent of the average yield of five-year State bond for the three years immediately preceding the start of each semester under the State Bond Act, and this rate will now be reduced to 110 percent. This is the first reduction in the interest rate cap since the implementation of the income contingent loan system for students, and it is expected to help ease the financial burden on young people who borrow money for education and support their independence.
Re-Startups by Business Failures of Good Faith Recognized as Startups (「ENFORCEMENT DECREE OF THE SUPPORT FOR SMALL AND MEDIUM ENTERPRISE ESTABLISHMENT ACT」, June 12)
From June 12, individuals who operated businesses in good faith but failed will be recognized as startup businesses even when re-establishing the business of the same kind as the old one. Under the current Support for Small and Medium Enterprise Establishment Act, "startup" refers to the establishment of a new SME to begin business operations. Previously, if a business in the same industry was restarted within two years of closure due to bankruptcy or within three years for other reasons, it was not recognized as a startup. However, going forward, entrepreneurs who managed their businesses sincerely and without legal violations, such as fraudulent accounting, intentional bankruptcy, or unfair dismissals, may still be recognized as startup founders even when restarting in the same industry. This recognition applies regardless of how much time has passed since closure, as long as the Minister of SMEs and Startups determines that the individual demonstrates strong potential for recovery through innovative business models or new technologies. This change will allow experienced individuals to re-enter the startup ecosystem and benefit from government support programs, helping to promote a virtuous cycle of entrepreneurship.
Interference with Breathalyzer Tests Faces Prosecution and Penalties(「ROAD TRAFFIC ACT」 AND 「ACT ON SPECIAL CASES CONCERNING THE SETTLEMENT OF TRAFFIC ACCIDENTS」, June 4)
Effective June 4, acts intended to hinder alcohol testing, such as consuming additional alcohol to interfere with measurement, will be prohibited. Violations will be subject to the same criminal penalties as fail to comply with a request for a breath alcohol test, including license revocation and disqualification from reissuance for a certain period. In addition, if a traffic accident occurs during such obstruction, prosecution will proceed regardless of the victim's consent or the offender's insurance status, reinforcing penalties for offenders.
Ban on Penalties for Missing Work or School Due to Military Exam(「MILITARY SERVICE ACT」, June 19)
From June 19, schools and workplaces will be prohibited from disadvantaging individuals, such as marking absences or enforcing unpaid leave, due to attending military-related examinations, including the draft physical and enlistment assessments. While the current Military Service Act bans unfair treatment during direct military service, such as being called up for military mobilization training, it does not clearly address preliminary examination days to fulfilling military service obligations. The revised law now extends protection to days for draft physical examinations and re-examinations, enlistment examinations, and other required medical checks. School principals of high school or higher and employers are now legally barred from penalizing students or employees for attending these exams. Violations without just cause may result in up to two years of imprisonment or fines of up to 20 million won.
The reasons for the enactment of the new statutes, including those stated above, can be found at the Korean Law Information Center (www.law.go.kr).
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