The ministry decided to slash student loan interest rates by a further 0.25 percent following Premier Liu Chao-shiuan's announcement on Nov. 11 of a 2.95 percent rate cut.

The decision was made after the ministry reached an agreement with the Central Bank of the Republic of China and five lending banks following Chunghwa Post Co.'s reduction of its variable interest rates on one-year term deposits from 2.4 percent to 2.15 percent with effect from Nov. 12.

The lower interest rate plan will substantially reduce the financial burden on students, the ministry said.

For example, the monthly payments for a private university student who has been granted a four-year student loan of NT$500,000 would amount to only NT$5,797, which would include principal and interest, over a period of eight years, the MOE said. Previously, the payment would have been NT$5,991 per month. In addition, under the 2.7 interest rate plan, the total interest payment on such a loan would be sharply reduced from NT$75,113 to NT56,524, the MOE said.

The ministry will also adopt measures to help students pay back their loans, with such initiatives as paying the interest on loans for students from families with an annual income of less than NT$1.14 million, in the first year after the students enroll in or graduate from schools.

The government will allow student loan borrowers with a monthly salary of less than NT$25,000 and those from low-income families to defer their interest payments for three years. The government will provide interest subsidies for such borrowers and allow an extension of the repayment period of 1.5 times the usual time.