KYK debt restructuring concerns up to six million students and graduates. The law on restructuring tax and social security premium debts took effect when it was published in the Official Gazette. This change also created an important payment opportunity for those who owe KYK loans.
Will KYK Debts Be Erased?
To help students avoid financial hardship during university, the Credit and Dormitories Institution (KYK) provides loans to applicants each year. Commonly called KYK loans, these are popular because repayment is not required during studies. After graduation, however, the demand for repayment of accumulated principal plus interest often causes hardship, and many graduates cannot afford to pay. Those who cannot find work or who accept low-paid jobs risk falling into enforcement proceedings if they fail to pay KYK debts within the legal deadlines.
For this reason, borrowers have long asked whether KYK loans will be erased. With a recent bill on restructuring taxes and various debts brought before the Grand National Assembly, it was announced that KYK debts would be included in the restructuring scope. After the bill was approved and became law, many people wondered whether debts would be wiped out. The restructuring does not mean the debts will be erased entirely.
How Can KYK Debts Be Deferred?
Under the law passed by the Assembly to restructure tax and other debts, KYK restructuring became applicable. In basic terms, restructuring makes repayment easier; it does not cancel the debt. However, substantial discounts are offered for lump-sum payment and interest reductions are applied. Within the scope of KYK debt restructuring, a one-year deferral for initial installments was also granted due to the pandemic. Beneficiaries — students or graduates covered by the restructuring — can therefore begin installment payments one year later.
Normally, collection of KYK debts starts two years after graduation. Interest is applied based on the wholesale price index (TÜİK WPI), which increases the amount borrowers must repay. Those who cannot find work often request an additional one-year postponement, but unpaid balances accrue interest at about 1.40% per month, causing some loan totals to nearly triple. Under the new law, borrowers who already struggle with KYK loan repayments can benefit from the one-year deferral. The deferral request is submitted through the e-Devlet portal by accessing the KYK page. Applicants choose reasons such as military service, graduate studies, doctoral studies, or unemployment when applying for deferral.
KYK Debts Included in the Restructuring
Students and graduates have long expected KYK debts to be included in a comprehensive restructuring. Loans taken during university and billed two years after graduation created serious problems for many. The COVID-19 pandemic and deterioration of economic conditions reduced incomes, making repayment difficult and increasing the value of restructuring. The tax and premium debt restructuring, published in the Official Gazette on November 17 and now in force, includes KYK debts.
Under this program, KYK debts can be paid in up to 18 installments, and significant benefits apply for lump-sum payment. Those who want to use the restructuring must apply between the law’s publication date and the end of the year — by December 31, 2020 — to arrange payment in up to 18 installments. If the debt is paid in full before the first installment date, accrued interest may be canceled. The first installment payments for restructured debts were scheduled to start in January 2021. Installments are collected every two months, so though the plan allows 18 installments, payments effectively extend over a 36-month period.
How Is KYK Debt Calculated?
KYK debt calculation depends on the chosen payment method. Restructured amounts may include the principal and interest accrued for late payment. Borrowers who pay in full are eligible for discounts on the WPI portion — up to 90% reduction on the indexed amounts. If the entire debt is paid within the period covering the first two installments, a 50% discount on the indexed amount is available. Those who choose installment payments will face interest, typically at a rate of 4.5%, as in previous restructuring programs. KYK debt totals are determined according to these payment terms.
How to Restructure KYK Debt
KYK debt restructuring procedures are carried out through the Interactive Tax Office or via the e-Devlet portal. Logging in via e-Devlet redirects users to the Interactive Tax Office, so both paths offer the same functionality. To apply for restructuring, follow these steps:
- Access the Interactive Tax Office website; you may log in through e-Devlet.
- After logging in, select the restructuring operations menu and open the restructuring screen. At the bottom, choose the application form to proceed.
- The system will display the debt amount as of the login date. To avoid additional interest accrual, complete restructuring quickly.
- If other debts appear in the options, select “Credit and Dormitories Institution Debts” to focus on KYK loans.
- A screen with information about restructuring conditions will appear. Close it to access the application form.
- Fill in all required information accurately and select the preferred installment plan for repayment.
- Read the explanatory notes, check the confirmation box for “I have read, understood and accept,” and click the submit button to complete the application.