November 9, 2008
Following the government review of the scholarship loan system for higher education students, the Japan Student Services Organization (JASSO), an independent administrative agency, has decided to report the names of graduates who are in arrears on scholarship repayments to credit information institutions, starting from April 1st, 2009. If one fails to make payments for several months, JASSO will put the person’s name on the “black list,” making it difficult for the person to obtain credit cards or apply for bank loans.
The JASSO is also considering publishing the names of universities with high rates of graduates in arrears and paying contingency fees for successful collectors. These plans have given concrete shape to the 2006 government basic economic policy known as “Big-boned policy,” which called for removal of the maximum limit of interest on scholarships at 3 percent and enhances collection. The concept is to turn the scholarship system into a money lending business.
System to help students is in danger
The scholarship program was established with the aim of financially assisting young people so that they would not give up continuing their study for economic reasons. It is based on the constitutional right to receive education. The purpose and range of application of this system is totally different from the loan business that lends money only to those who are credit worthy.
In Japan, where tuition fees are the world’s highest, the average cost of four years of university education per student is 9 million yen. It is too heavy a burden for the average family. The scholarship loan system should be replaced with a grant program making it unnecessary for users to repay. Japan’s is a loan system requiring graduates to make payments over many years.
One out of two young people has a low-paying contingent job. It is difficult for many graduates to immediately repay their scholarships. It is cruel to take punitive measures instead of applying grace periods against these scholarship loan users when they are in arrears for several months.
If this approach is applied, young people who are eager to receive higher education will hesitate to apply for scholarship loans. A program that is available only to those who have the ability to repay cannot be called a scholarship.
The government is using the increase in the number of those in arrears as a pretext to review the system. The present situation arose due to a sharp increase in the number of scholarship loan users in the past 10 years. In a single fiscal year, the repayment rate is 94 percent, and marks more than 100 percent, if advanced repayment is taken into account. This shows that the organization is not in bad shape or that morals of scholarship students have deteriorated.
Reasons given for delays in repayment are mostly economic difficulties, including low income (45 percent) and joblessness (24 percent). Even the present system ensures that economic difficulties due to disaster, illness, unemployment, and some other similar reasons can be reasons for postponing repayment of the scholarship loan. There are many scholarship loan users who fall in this category but are under pressure to repay because they failed to formally apply for delayed repayment. It is necessary to flexibly apply the postponement system to really support recipients.
One of the sources calling for the scholarship system to be changed is the banking industry which wants to expand its market share, as proposed by the Japan Association of Corporate Executives (Keizai Doyukai) in 2007. The business organization called for the scholarship system to be commissioned to the private sector, since it is best suited to the business of money lending.
It is necessary for the government to stop meeting the demands of major banks, which are engrossed in speculative investments and are reluctant to lend money to smaller businesses, while refusing to spend several billion yen, which is necessary to guarantee young people’s right to education.
For a reliable system
The Japanese Communist Party issued a proposal in April and calls for all scholarships to be made interest-free as before, and moratoriums be given to low-income earners until the income level reaches a certain annual level (3 million yen) as in Britain, by introducing a benefit-based scholarship.
The need now is to improve the scholarship system to make the system available and reliable for everybody.
The JASSO is also considering publishing the names of universities with high rates of graduates in arrears and paying contingency fees for successful collectors. These plans have given concrete shape to the 2006 government basic economic policy known as “Big-boned policy,” which called for removal of the maximum limit of interest on scholarships at 3 percent and enhances collection. The concept is to turn the scholarship system into a money lending business.
System to help students is in danger
The scholarship program was established with the aim of financially assisting young people so that they would not give up continuing their study for economic reasons. It is based on the constitutional right to receive education. The purpose and range of application of this system is totally different from the loan business that lends money only to those who are credit worthy.
In Japan, where tuition fees are the world’s highest, the average cost of four years of university education per student is 9 million yen. It is too heavy a burden for the average family. The scholarship loan system should be replaced with a grant program making it unnecessary for users to repay. Japan’s is a loan system requiring graduates to make payments over many years.
One out of two young people has a low-paying contingent job. It is difficult for many graduates to immediately repay their scholarships. It is cruel to take punitive measures instead of applying grace periods against these scholarship loan users when they are in arrears for several months.
If this approach is applied, young people who are eager to receive higher education will hesitate to apply for scholarship loans. A program that is available only to those who have the ability to repay cannot be called a scholarship.
The government is using the increase in the number of those in arrears as a pretext to review the system. The present situation arose due to a sharp increase in the number of scholarship loan users in the past 10 years. In a single fiscal year, the repayment rate is 94 percent, and marks more than 100 percent, if advanced repayment is taken into account. This shows that the organization is not in bad shape or that morals of scholarship students have deteriorated.
Reasons given for delays in repayment are mostly economic difficulties, including low income (45 percent) and joblessness (24 percent). Even the present system ensures that economic difficulties due to disaster, illness, unemployment, and some other similar reasons can be reasons for postponing repayment of the scholarship loan. There are many scholarship loan users who fall in this category but are under pressure to repay because they failed to formally apply for delayed repayment. It is necessary to flexibly apply the postponement system to really support recipients.
One of the sources calling for the scholarship system to be changed is the banking industry which wants to expand its market share, as proposed by the Japan Association of Corporate Executives (Keizai Doyukai) in 2007. The business organization called for the scholarship system to be commissioned to the private sector, since it is best suited to the business of money lending.
It is necessary for the government to stop meeting the demands of major banks, which are engrossed in speculative investments and are reluctant to lend money to smaller businesses, while refusing to spend several billion yen, which is necessary to guarantee young people’s right to education.
For a reliable system
The Japanese Communist Party issued a proposal in April and calls for all scholarships to be made interest-free as before, and moratoriums be given to low-income earners until the income level reaches a certain annual level (3 million yen) as in Britain, by introducing a benefit-based scholarship.
The need now is to improve the scholarship system to make the system available and reliable for everybody.
