When the tuition bill arrives and the national scholarship still leaves a gap, the next step is a student loan. Open the application on the Korea Student Aid Foundation site, however, and two options appear: the standard repayment loan and the income-contingent repayment loan. The names suggest only the timing differs, but in practice the way interest accrues and how long the debt stays with you are different. Here is what to base the choice on.

First — the interest rate is identical on both

This is widely misunderstood. Standard repayment is not the cheaper product and income-contingent the dearer one. For the 2026 academic year the student loan rate is 1.7 per cent a year on both products, frozen for a sixth year. It is not comparable to commercial unsecured lending.

Nor is lending limited to tuition. Alongside the tuition loan there is a living cost loan, available up to a set limit per semester. It is applied for on the same screen as the tuition loan.

Applications open each semester. There are separate first and second windows for each of the two semesters, and missing them means no loan for that semester. You must apply yourself, on the Korea Student Aid Foundation site, not through your university, and an income bracket assessment often has to be completed first — so starting once the tuition bill arrives is already late. The calendar largely interlocks with the one covered in how the national scholarship assesses income and its deadlines.

Standard repayment — principal and interest over a fixed term

The structure matches an ordinary loan. During enrolment there is a grace period in which only interest is paid, or interest itself is deferred; after graduation, principal and interest are repaid across the repayment period. Grace and repayment together can be arranged over up to twenty years.

The advantage is predictability. The monthly outgoing is fixed, which makes planning straightforward, and because there is no early repayment charge, you can pay ahead whenever funds allow and cut the interest.

The drawback is equally clear. The repayment date arrives whether or not you are employed. With no income after graduation the due date does not move, and arrears affect your credit standing. Standard repayment, in other words, rests on the assumption that a steady income will follow graduation.

Income-contingent repayment (ICL) — repayment starts once income passes the threshold

The income-contingent repayment loan is usually called ICL. The essential point is that nothing is repaid until a defined level of income exists. The obligation is not triggered by the calendar but by the previous year's income as recorded by the tax authority.

That line is the repayment threshold income, and the figure is frequently quoted wrongly. Online you will see "you repay once you pass 30.37 million won", but the comparison is not against gross salary; it is against taxable income after the earned income deduction. On 2025 income the threshold is taxable income of 18.98 million won, which converts to gross pay of about 28.51 million won. Below that, the mandatory repayment for the year is zero and no notice is issued.

Above it, the amount is calculated as (annual taxable income − threshold income) × the repayment rate, with the rate at 20 per cent for undergraduate loans and 25 per cent for postgraduate loans. Voluntary repayments already made are deducted. The tax authority issues the assessment in April, payment is due by 30 June, and employees may elect to have it withheld from salary.

When repayment is difficult — deferral must be applied for

Even under ICL, circumstances can change after the notice arrives. That is what repayment deferral is for. Where income has stopped through job loss, retirement or parental leave, it can be deferred for up to two years; while re-enrolled at university or graduate school, for up to four.

The point to hold onto is that it is not automatic. There is no need to visit a tax office — the application is made online at the tax authority's ICL site — but without it the amount stays payable. If a notice arrives and your circumstances are difficult, the order is to apply for deferral within the deadline rather than ignore it.

Deferral postpones; it does not cancel. The deferred amount is billed again once the period ends, and interest continues to accrue in the meantime.

So which one — three tests

First, if post-graduation income is uncertain, take income-contingent repayment. Paths where income registers late, such as the arts or research, and cases where postgraduate study is planned, belong here. Tying the repayment point to income is itself the safeguard.

Second, if you can repay during study or soon after graduating, standard repayment may work out better, because the shorter the debt is outstanding, the less total interest accrues. Under ICL, income below the threshold leaves the principal in place for longer and the interest accumulates over that time.

Third, check whether you have worked through the steps that reduce the borrowing itself. The principle is to go through the national scholarship, institutional and external scholarships and schemes such as education benefit and education cost support first, and borrow only what remains. A loan is the last resort.

If you withdraw or repeat a year midway

Withdrawing mid-semester or deciding on a repeat year entangles the tuition refund with the loan. A refunded tuition payment is generally applied to the loan rather than paid to the student, so check with both the university registry and the foundation.

The refund proportion depends on when you withdraw. The thresholds by timing are set out in what to check before deciding on a repeat year. With a loan in place, the point at which interest starts has to be added to that calculation before the real position is visible.

In summary

Both products carry 1.7 per cent a year. What separates them is when repayment starts. Standard repayment is set by the calendar; income-contingent repayment is set by income. Uncertain income points to ICL; the ability to clear it quickly points to standard repayment.

If you choose ICL, two points prevent most of the confusion: the threshold is compared against taxable income, not gross salary, and deferral only applies if you apply for it. Semester windows and limits are best confirmed in the loan plan published each semester. Other education cost schemes continue in the parents board.