Ex-students ‘trying to avoid repaying loans’
Print Edition
MANY former students of local universities are dodging repaying student loans, even though they are now earning, a local court said yesterday.
The district court in Yangpu, where top city universities — including Fudan and Tongji — are located, said it received 770 cases of defaults on student loans between January and July.
The Wujiaochang branch of the Agricultural Bank of China that issues student loans to 12 universities and colleges in Yangpu District said it has issued 77,000 in the past decade, totaling 400 million yuan (US$71.6 million).
The bank reported that students had the highest bad debt rate — with a default rate on educational loans of 3.5 percent in July, compared with a 0.6 percentage average on other loans.
The court said it was difficult for banks to recover the debts from students after graduation since their addresses and other contact details change.
Some 60 percent of lawsuits on unpaid government loans even failed to reach the litigants as they’ve changed address, according to the court.
The court gave an example of former university student Chen Ni who took out 11,000 yuan in loans from a local bank while studying, but failed to pay the debt after she found a job with monthly salary of 5,000 yuan in 2008.
She did not pay the debt, and did not answer phone calls from the bank nor the court, said court officials.
“She would rather use her salary to buy cosmetics and clothes than to pay back the debt,” a judge at Yangpu District Court said.
In the end, the court forced her to pay 12,000 yuan.
Students can apply for government or bank loans. Government loans have stricter criteria and a student can apply for up to 6,000 yuan a year and pay it back over 10 years.
Bank student loans have less stringent requirements and can total 80 percent of their total educational and other fees. Fees are often around 10,000 yuan a year. These must be paid back within eight years.
The court urged universities to supervise students better to ensure they pay back loans.
Banks should also keep closer links with colleges to avoid losing contact with students, the court added.
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