“I defaulted twice on 3 million won ($2,120) Youth Sunshine Loans. The government ended up covering everything, so all my debts were settled with no problem,” read a post shared in July on an online forum for recipients of basic livelihood assistance. As stories like this are becoming more common in Korea, questions are being raised whether government-backed lending for young people is addressing the root cause of financial hardship or merely delaying it. While the programs are intended to help young borrowers bridge temporary cash shortages, experts warn that the worsening employment and income conditions are leaving more young adults unable to repay their debts. One of the clearest signs is the Youth Sunshine Loan, a state-backed program that provides living expenses to job seekers, entry-level workers and young entrepreneurs aged 19 to 34 with annual incomes below 35 million won. According to the Korea Inclusive Finance Agency, the share of these loans that had to be repaid by the state-run guarantee agency after borrowers failed to make payments rose from 4.8 percent in 2022 to