Erdogan woos Turkish youth by canceling interest on student loans 

In a major concession to young people decrying the ballooning costs of university loans, today President Recep Tayyip Erdogan announced that the government was cancelling student loan interest, a plan originally suggested by the opposition. 

“We have agreed in the cabinet meeting that you’ll have to pay back the amount you borrowed, nothing more,” Erdogan said in a move interpreted as an effort to win over the young people who make up 13 million of the 62.4 million Turks set to vote next year.

Many young people went online to thank not Erdogan, but main opposition leader Kemal Kilicdaroglu, with the hashtag #ThankYouKilicdaroglu. The leader of the Republican People’s Party and the likely challenger of Erdogan in the next presidential elections came up with the idea of students just repaying the loan’s principal and not the interest that is ballooning over delays in payment and soaring inflation in Turkey. 

Last week, Kilicdaroglu retweeted a student's complaint that though she had taken a loan of 41,000 Turkish liras ($2,350), the sum she had to pay back has more than tripled to 152,000 liras ($8,700). The minimal salary in Turkey is 5,500 liras ($314), so if a young graduate had a beginner-level job, it will be tough to pay back the loans, as many graduates pointed out. “Do not pay the loan,” Kilicdaroglu said. “Don’t pay off the interest on your loans. Once we are in power, we will only ask you to pay the principal loan and only after you find a job.” 

Far from admitting to adopting Kilicdaroglu’s idea, Erdogan attacked him for accusing the government of charging interest on student loans. “We do not charge interest. We simply calculated the sums in view of inflation, which has exceeded our expectations. But seeing that our young people are suffering, we are saying that they should just pay back the sum they borrowed,” he said. “This means that we are lifting a debt of 26 billion liras [$1,5 million] on more than 3,150,000 young people.” He added that those who cannot find a job could also apply to postpone their repayment. 

The repayment of student loans has been a source of conflict between the government and young graduates for years. Two years ago, students staged protests, saying that around five million Turkish university graduates are in debt to the state-run Credit and Dormitories General Directorate, which issues loans to university students asking them to repay them within five years after graduation. Around 300,000 of them faced prosecution for being unable to pay the debt in 2020. More than 400,000 face prosecution this year, student groups told Al-Monitor.

The problem blew up this year when the directorate recalculated the debts in line with the soaring inflation, which has exceeded 70%, the highest since 1998. The directorate, a department of the Ministry of Youth and Education, has recalculated the standing debts in view of the inflation using the Producer Price Index, which saw a 79% increase this year. 

In practice, however, this meant that many young graduates had to pay about three times the borrowed amount. For the last week, students have taken their complaints online, saying that they could not pay as many of them had been unable to find jobs. The youth unemployment rate in Turkey was 20% in April, about double the OECD average. 

The loan program was announced by Erdogan himself, rather than a minister. The president is trying to woo the youth vote through various online activities, and get-togethers with students. Erdogan boasted Monday that his government provided 14 times as many scholarships than previous governments. “Young people who want to travel Turkey can use state dormitories free of charge throughout summer and enter museums with a special card,” Erdogan said. But critics point out that it is mostly government circles and their children who benefit from these scholarships and that state dormitories are few and run down. 

Many pollsters identify young voters as among Turkey's kingmakers in what promises to be a close race between Erdogan’s 20-year-old rule and the opposition. Some predict that university students in particular may become the government’s Achilles' heel. Worried that young people may use graduation ceremonies to air grievances against the government, many university administrations have canceled the events, such as Ankara’s Middle East Technical University, whose students traditionally carry hand-made banners critical of the government. In Istanbul, the rector’s office of the elite Bogazici University sent out circulars to students saying that those who were engaged in any unauthorized activity during the graduation ceremonies would be severely punished, including the suspension of their campus entry cards.

But the youth’s annoyance with the government over nepotism and repression, heightened by a recent wave of canceled school festivals, may not necessarily translate to support for the opposition. According to Murat Gezici, the owner of Gezici Pollster, they do not entirely trust that side either. 

Can Selcuki, manager of Istanbul Economics Research, which published a report on the political tendencies of the youth in 2011, maintains that the youth’s support for the CHP is increasing and support to Erdogan is declining. “But the party that benefits from the first-time voters is the Victory Party. This, in itself, is not surprising. In Turkey, as elsewhere, young people exasperated with the political system move toward marginal, alt-right groups and the leaders they claim tell it like it is," he told Al-Monitor. 

Selcuki added that Kilicdaroglu’s advice to the young simply not to pay will win him points among young voters, who will not forget whose idea it was. “Unlike Kilicdaroglu’s don't-pay attitude toward electricity bills, this is actionable,” he said. “He also makes a promise he can keep if he comes to power. If I were among the loan-debted youth, I would follow his advice and not pay.” 

“Though the government is trying hard to set the economy right, it faces difficulty in resource allocation. This requires prioritization, and the government has chosen not to prioritize the needs of two vulnerable groups — the low-income and the youth — whose votes are, ironically, crucial in the upcoming elections,” Selcuki told Al-Monitor.