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Loan Scheme Must Improve
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The authorities should improve the student loans system to ensure it can benefit more students, says a signed article in Shenzhen-based Jing News. An excerpt follows:

Upon the arrival of their new students, the Ministry of Education has issued documents asking universities to supply necessary information about their student loans. In addition, the State has drawn up a number of policies to help college students get necessary financial aid.

However, the current student loan scheme is beset by many problems. Some student borrowers stop paying back their loans after graduation and cannot be found.

These problems actually originate from the design of the scheme itself.

First of all, there is no existing system for the individual credit records. As a result, students can simply stop repaying the loans after they leave college.

A properly functioning database of individual credit records would ensure that defaulters would have great difficulty obtaining further loans for their houses and cars.

Under the current student loans scheme, the banks have no guarantee that the students will ever repay their loans.

Another major defect in the scheme is that the time limit for paying back the loans is very rigid. The students only get two to three years to repay the money after they get jobs, and no flexibility is allowed in terms of the monthly repayments they make.
Such requirements do not take into account the students' real situation.

They may have difficulty finding a decently paid job in the first few years after their graduation. Some even have to get their parents to help repay the loans.

A more flexible system should therefore be introduced, allowing loans to be repaid over a longer period of time. Under certain circumstances, it could also allow for repayments to be temporarily suspended. The authorities should be tougher on those who can pay but won't pay, while also giving more leeway to those in genuine financial difficulties.

(China Daily July 10, 2006)

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