More students fail to pay back loans
- Source: Global Times
- [09:37 July 15 2010]
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By Zhang Cao
Student loan disputes in Yangpu district increased sharply last year to over 800 cases compared to about 200 cases the previous year, with an increasing number of graduates failing to pay back their debts.
Some 10 percent of the students studying in the northeastern district that is home to nearly a dozen universities, including the city's renowned Fudan University, left their loans unsettled after receiving notices from authorities, according to Yu Yao, a press officer for Yangpu District People's Court.
"We sent court orders to them, and about 90 percent of the students paid back the loans afterwards, but the rest have refused to pay," Yu told the Global Times Wednesday, declining to disclose specific numbers. "Some of the students have not been able to find a good job since graduation so they cannot afford to pay what they owe back.
"Others have the money, but refuse to pay," she added.
She cited a recent case where a recent graduate, who earned a monthly salary of 3,000 yuan ($443) showed up in court wearing designer labels, but claimed that she was unable to settle her 10,000-yuan ($1476) loans.
Yao attributed the growing problem to the fact that authorities are essentially powerless in forcing students to pay back the money owed to the banks that serviced the loans. She added the students who study in the city, but leave after graduation are adding to the problem as it is hard to get them to come back and pay off their loans.
"The court can't do anything about it," she said. "According to Chinese law, violating this kind of contract is not considered a crime.
"We can only detain them for up to 15 days," she added.
Applying for school loans in China is less common than it is in Western countries. The country enacted State Loans for Students Regulation in 1999, saying that students whose families suffer heavy financial burdens may be eligible for such loans.
There is, however, no benchmark figure for which household incomes qualify. The mat-ter is negotiated between the student and its university, and the contract is made through one of four major banks: Industrial and Commercial Bank of China, Agricultural Bank of China, Bank of China or China Construction Bank.
At Fudan University, students whose family income is less than 675 yuan ($100) per month are eligible to apply for a loan, according to the head of the State Student Loan Office at the school.
The man surnamed Hu added that roughly 300 students get a loan every year, and said that this figure has remained steady over the past several years.
