Application and Procedures for Student Loans in Case Students Borrow through Household in Vietnam

Application and Procedures for Student Loans in Case Students Borrow through Household in Vietnam

Pursuant to Subsection 1, Section 2 Guideline 2162A/NHCS-TD of 2007 as amended by Point a, Clause 3 Official Dispatch 1485/NHCS-TDSV of 2018, the documentation and loan process for student loans from the Social Policy Bank of Vietnam through a household is as follows:

* Loan Application

- Loan application form, including a capital use plan with a Confirmation from the school (original) or Admission notice (original or photocopy from the original, or certified copy).

* Loan Process:

Step 1: The borrower fills out the loan application form along with the Confirmation from the school or Admission notice and submits it to the Savings and Loan Group.

Step 2: The Savings and Loan Group reviews the loan application, conducts a meeting to evaluate and approve the loan, checks the elements on the loan application, and verifies that the applicant complies with the Government of Vietnam’s loan policy. If the borrower is not yet a member of the Savings and Loan Group, the current group will admit the new member or form a new group if conditions permit.

If only 1 to 4 new borrowers are present, they will be added to the existing group, even if the group already has 50 members. Afterward, the group creates a List of households requesting a loan from the Social Policy Bank of Vietnam, including the loan application and Confirmation from the school or Admission notice, and presents it to the Commune People's Committee for verification.

Step 3: After verification by the Commune People's Committee, the Savings and Loan Group submits the entire loan application file to the Social Policy Bank of Vietnam for approval.

Step 4: Upon receiving the file from the Savings and Loan Group, the Social Policy Bank of Vietnam's assigned officers check for the legality and validity of the loan documents, present them to the Credit Manager (Head of the Credit Team), and the Director for approval. Once approved, the bank issues an approval notification to the Commune People's Committee.

Step 5: The Commune People's Committee informs the relevant social-political organization (the unit entrusted with the loan) and the Savings and Loan Group to notify the borrower to come to the service point at the commune or the Social Policy Bank of Vietnam headquarters to receive the loan.

Loan Application and Procedures for Student Loans in Case Students Borrow through household in Vietnam (Image from the Internet)

What is the Interest Rate for Student Loans in Vietnam?

According to Article 7 of Decision 157/2007/QD-TTg:

Loan Interest Rate:

1. The preferential loan interest rate for students is 0.5% per month.

2. The overdue debt interest rate is calculated at 130% of the loan interest rate.

Clause 1 of Article 1 Decision 750/QD-TTg of 2015 adjusts the loan interest rate as follows:

Adjusting the Loan Interest Rate for Certain Social Policy Loan Programs at the Social Policy Bank of Vietnam as follows:

1. The loan interest rate for poor households, students, policy beneficiaries working overseas for a certain period, loans from the National Employment Fund is 6.6% per year (0.55% per month). This regulation replaces the provision of Decision No. 872/QD-TTg dated June 6, 2014, by the Prime Minister of the Government of Vietnam on adjusting the loan interest rate for certain social policy loan programs at the Social Policy Bank of Vietnam.

2. The loan interest rate for the Rural Clean Water and Environmental Sanitation Program, production, and business households in disadvantaged areas is 9.0% per year (0.75% per month). This regulation replaces the provisions of Clause 2 and Clause 3, Article 1 of Decision No. 1826/QD-TTg dated October 9, 2013, by the Prime Minister of the Government of Vietnam on adjusting the loan interest rate for certain social policy loan programs at the Social Policy Bank of Vietnam.

Thus, the student loan interest rate is 6.6% per year (equivalent to 0.55% per month).

Can Students Extend the Loan Term if They Can’t Repay Due to Hardships?

According to Article 11 of Decision 157/2007/QD-TTg:

Adjusting the Loan Repayment Period, Extending the Repayment Period, and Converting to Overdue Debt:

1. At the final repayment period, if the borrower faces difficulties and cannot repay the debt, they must submit a written request for an extension to be considered by the Social Policy Bank of Vietnam; the extension period is up to half of the repayment period.

2. If the borrower does not repay the debt on time according to the final repayment period and does not obtain an extension, the Social Policy Bank of Vietnam will convert the loan into overdue debt. The bank will cooperate with local authorities and social-political organizations to take measures to recover the debt.

3. The Social Policy Bank of Vietnam specifies the adjustment of the repayment period, extension of the repayment period, and conversion to overdue debt.

Thus, if students cannot repay the loan at the final repayment period due to hardships, they can apply for an extension by submitting a written request to the Social Policy Bank of Vietnam for consideration.

If students do not repay the loan on time at the final repayment period and do not obtain an extension, the loan will be converted into overdue debt, and the Social Policy Bank of Vietnam will take measures to recover the debt.