A credit recovery organization will operate a special loan program to alleviate the high interest rate burden for young people in their 20s and to support their living expenses through low interest loans.

Financial authorities will also reinforce their administrative guidance, warning young loan borrowers against excessive loans and notifying them of the loan transfer system.

The Credit Counseling and Recovery Service will launch the Sunshine Loan program for college students and young people under 30 from Monday, according to the Financial Supervisory Service on Sunday.

The system consists of two major benefits ― a low interest rate loan for those who need support with their living expenses and a loan transfer system which allows recipients to convert their conventional loans into lower-rate ones.

“The CCRS, in partnership with the Korea Student Aid Foundation, has offered low-rate loans and credit recovery support to young people over the past years,” said an FSS official.

“But with the soaring youth unemployment rate, a stronger support system has been needed.”

The CCRS program can be used by young people in their 20s who earn a yearly income of 30 million ($27,798) or less, as well as college students. The maximum age limit may be extended to 31 for those who serve in the army.

Under the system, beneficiaries can take out a maximum loan of 8 million won, which will be payable in five years, with a four-year grace period at an interest rate of 4.5-5.4 percent per annum.

Alternatively, those who have taken out loans with an interest rate of 15 percent or more per annum can switch to a lower rate of 4.5-5.4 percent. The repayment period and the grace period will be seven years and four years, respectively.

People can apply for one or both options, within the total limit of 10 million won, according to officials.

Applications can be submitted to the CCRS through its official website (www.ccrs.or.kr), call center (1600-5500) or regional offices.

The FSS said it will send brochures and notices to young loan borrowers to inform them about the CCRS program. It also pledged to alleviate the qualification forms and lower the threshold for loan applicants.

By Bae Hyun-jung (tellme@heraldcorp.com)