The State Council holds the weekly policy briefing on July 10, focusing on the improvement of the national student loan. [Photo/Xinhua]

Hu Kaihong (host):

Good morning ladies and gentlemen. Welcome to the State Council policy briefing. The State Council executive meeting this week passed a decision to increase student loans for underprivileged students. It’s a pleasure to have Du Yubo, Vice-Education Minister with us today. Du will introduce the student loan policy and answer your questions. We have also invited officials from the Ministry of Finance, the People’s Bank of China and China Banking Regulatory Commission to answer your questions.

The State Council holds the weekly policy briefing on July 10, focusing on the improvement of the national student loan. [Photo/Xinhua]

Du Yubo:

Good morning. The State Council passed a decision to improve the national student loan at an executive meeting on July 8. The decision will soon be officially issued in the name of the Ministry of Education, the Ministry of Finance, the People’s Bank of China and China Banking Regulatory Commission. Please allow me to introduce the decision and China’s student loan policy.

First, the CPC Central Committee and the State Council have been paying great attention to helping financially challenged students. The Third Plenary Session of the 18th CPC Central Committee decided to improve the system to provide financial aid to underprivileged students. President Xi Jinping emphasized that the government should do its utmost to help the 1.3 billion Chinese people have better and more equal education. Premier Li Keqiang required that the government should speed up the improvement of the student loan policies and increase the amount of aid to financially challenged students.

Second, the country’s student loan policy has been implemented since 1999. Students who need loans can apply to financial institutions in their hometown and can also apply to the universities they are in for national loans. The total amount of the loans has been increasing rapidly. The loans offered to each student is also increasing. More and more students are able to enjoy the loans. Since 1999, the National Student Loan total payment is 120 billion yuan, benefiting over 11 million students. Of the total payment since 1999, national student loans in 2014 amounted to over 16 billion yuan and the loan benefited 2.8 million students in need, which represents over one tenth of university students enrolled in 2014.

Third, adjustment and improvement is needed for the national student loan policy. In the process of implementing the policy, there exist some issues that needed to be resolved. For example, many students with loans who decided to pursue further degrees cannot benefit from the discount policy. Also, students with particularly difficult financial circumstances face great pressure in making loan repayments. In certain underdeveloped provinces, the graduate loan compensation policy has not been implemented effectively. To further improve the national student loan policy and effectively help underprivileged students complete their education, the State Council specifically invited relevant central authorities to conduct a special study. The Education Department, the People’s Bank of China, the Chinese Banking Regulatory Commission and other departments, along with the China Development Bank and Bank of China, conducted in-depth research and scientific analysis to offer advice for the improvement of the national student loan.

Du Yubo:

There are three main policy objectives. First is to effectively reduce the financial burden of students with loans. Before the policy reform, the financial burden for students with loans was mostly due to four issues. First, students who continued education after graduation or students who had to take a leave of absence due to illness and did not have the capacity to repay. Second, repayment pressure was high for students since the loan period was relatively short and third, the principal grace period was rather short for students who have recently graduated. Fourth, for graduates with special difficulties, there is even more pressure to repay the loan. The policy reform seeks to effectively reduce the students’ financial load through improving the four aspects discussed above, to make it easier and more convenient to repay the loans.

The second objective is to promote a sustainable and healthy development of the national student loan. The policy reform further enhances the operation of the national student loan. The financial department needs to arrange discounts and compensation for risks in a timely fashion, while the financial regulators will improve the national student loan evaluation system. The education department and universities need to actively carry out and publicize the loans as a means to fund education and how they work. These requirements will assist in building a positive market environment for the national student loan, and ensure the implementation of the policy.

The third objective is to raise the management standard of student loans. This policy reform simplifies the national student loan procedures and repayment process, which ensures prompt distribution of loans. At the same time, the reform also improves the management of the national student loan by strengthening the division of labor between each department and ensuring the members of staff are fully prepared.

Du Yubo:

There are six core policies. First, the interest on student loans is fully subsidized by the financial department while a student is enrolled. The student can continue to apply for discounts and pursue further education within the repayment period. The loan interest occurred during the pursuit of a degree will be fully subsidized by the original financial department. If the student with loans takes leave of absence due to illness or other reasons, the loan interest during the absence will be fully subsidized.

The second core policy is to extend the maximum loan period to twenty years. Education and student credit loan periods are both adjusted to thirteen years in addition to the school system, with a maximum period of twenty years.

The third policy contains an extension of the grace period from two years to three years. During the grace period, students only need to pay interest, without having to repay the principal.

The fourth policy consists of the establishment of national student loan repayment assistance. Each provincial student loan management department and each university will establish a student loan repayment assistance system in order to aid graduates with loans who have suffered from illness, been the victims of a major natural disaster or misfortune, or those with a particularly low income.

The fifth policy is to improve the national student loan evaluation system. Financial supervision departments at all levels will consider and work out risk compensation while regulating the national student loan.

The sixth policy is to further enhance the implementation of tuition reimbursement policies. The reform also encourages employment of local college graduates to remote administrative regions so their loans will be paid by their universities. The local universities’ compensation funds will be fully borne by the provincial financial department. The Central Finance Administration will have incentives for those who go to western provinces based on specific circumstances.

Du Yubo:

Members of the media, this policy reform improves the national student loan and concerns the welfare of every student with loans. I hope for more attention and support, especially more publicity. Let us work together to promote the implementation of the new national student loan policy!

Thank you!

The State Council holds the weekly policy briefing on July 10, focusing on the improvement of the national student loan. [Photo/Xinhua]

China Central Television:

Most recent college graduates are in low-paying jobs — how do the new policies concerning college loans help reduce the pressure on graduates to repay student loans?

Du Yubo:

This is a very good question — and I would like to expand on the new policies.

The new policies concerning college loans can help relieve the financial burden of paying off loans in the following four ways:

First, the maximum loan term has been increased. Previously, the maximum loan term was 14 years but, according to the new policies, the loan term is now fixed at the number of school years plus 13 years, with a maximum term of 20 years. The 6 additional years of the loan term will allow students to repay a smaller amount annually. Specifically, the annual average amount the students need to repay after graduation is now 30-40 percent less.

Second, the period of time the government helps to pay the interest on college loans has been extended. Before the new policies were introduced, students who want to continue their studies and gain a higher degree could receive assistance concerning interest payment but only if they continue the academic year right after the graduation. The new policies stipulate that students can apply for the interest payment assistance for further study during their loan term. In addition, students who suspend their studies due to illness can also apply for the interest payment assistance. This means the students can enjoy an unchanged interest rate.

Third, the loan principal repayment grace period has been extended. Students who do not continue to study for a higher degree after graduation can apply for the loan principal repayment grace period, which is now 3 years — compared to the previous 2 years. The extended grace period means that students are required to repay 25 percent less in the first 3 years after graduation.

Fourth, financial assistance mechanisms will be established. Graduates who lose their ability to work or who are classified as being extremely poor, whose family has been affected by a major natural catastrophe — or a family member is suffering from a critical illness — can apply for financial assistance. Authorities at all levels who are in charge of financial assistance for college students and universities will be required to establish such financial assistance mechanisms to help cash-strapped students pay back loan principal and interest.

China Radio International:

The government will offer tuition compensation and help pay the student loan for college students if they go to work in grassroots areas. What are the detailed measures to ensure the implementation of these policies? Thank you.

Liu Xin’an, deputy director of the educational, scientific, and cultural department of the Ministry of Finance:

Sure, there are such policies. In 2009, the Ministry of Finance and the Ministry of Education initiated compensatory policies for college students and required local governments to make their own policies. Good implementation is the key to the success of these policies which will guarantee and improve people’s livelihood. In order to implement these policies, the Ministry of Finance will focus on three areas: first, arrange timely and sufficient compensatory funds so that eligible college students will get help; second, jointly work with the Ministry of Education to supervise and appraise local governments’ implementation of the policies, especially those that haven’t released such policies, to pave the road for college students to work in underdeveloped areas; third, offer appropriate rewards and compensation for provinces in western regions to ease their financial pressure. In addition, it requires joint efforts and media attention to promote and implement these policies. Thank you!

The State Council holds the weekly policy briefing on July 10, focusing on the improvement of the national student loan. [Photo/Xinhua]

Phoenix Television:

Some students have failed to pay back their loans. Are there many of such cases? And how do you ensure that they can pay back their loans on time? Thank you.

Du Yubo:

You raised a question that concerns many people. First, while helping to ease the financial burden of students coming from poor families the policy of national student loans will also help the college students stay honest. Only when the students pay all their loans in a timely manner according to the contract, can we guarantee the sustainable and healthy development of national student loans. In order to help banks giving student loans reduce risks, the State will offer them some compensation. Feedback from the banks shows that most of the students have paid back their loans according to the contract. Only a small number of students failed to pay their loans in full on time, due to various reasons. But the data shows that the real loss incurred is quite small and can be fully covered by the compensation. So what I want to tell you is that generally speaking, the policy of national student loans now operates quite well.

We have taken the following measures to increase the recovery of loans: first, to strengthen the building and application of the credit system in order to impose an institutional restriction on the students; to carry out credit education so as to increase the students’ awareness of honesty; to establish an assistance mechanism to help students with special difficulties repay their loans.

Want Daily:

Will the student loan program cover Taiwan students studying in the Chinese mainland? If yes, could you brief us on the current situation? If not, will the program consider covering them?

Du Yubo:

the question should go to Mr. Zhang Guangming, who often encounters the question and is in charge of students’ subsidy management under the Ministry of Education.

Zhang Guangming:

Let me briefly answer this question. Currently, the polices mainly apply for Chinese mainland students from underprivileged backgrounds. For Taiwan students studying in the Chinese mainland, we have other subsidies, including scholarships.

Economic Daily:

First, most underprivileged students live in relatively poor areas, where banks and finance bureaus do not have a strong presence. You just mentioned that for graduates who choose to work in the western regions, the government will pay their college loans. How can the government make banks willing to give college loans? Second, if a student applies for college loans in his or her hometown, how long will it take for him or her to get it? Third, I found there are intermediary agents who promised to get college loans by only using your ID card. Is there a problem there?

Wang Kejin, deputy director of the Legal Department with the China Banking Regulatory Commission:

The China Banking Regulatory Commission has always encouraged banks to give college loans. Banks like the China Development Bank and Bank of China, are doing business all over the country. They have a unified policy regarding Western regions. Thus, wherever you are, even in the poorest regions, you can get your college loan no matter you applied for it in your hometown or at your school.

Zhang Guangming:

College freshmen and students who have already applied for college loans in their first year can also apply for college loans at their hometown. This time, the State Council decided to further streamlined administration at the executive meeting on July 8. If the students have all the required materials, they can get their loans by one visit to education departments above county level. There are no intermediary agencies involved in the whole process. The government and banks are working together to deal with applications and do not charge. If someone has promised to help you get college loans on the Internet, they are lying. Please do not believe them.

Hu Kaihong (host):

I have a question. How will we strengthen loan-repayment management?

Wu Xianting, deputy director of the Financial Market Department, The People’s Bank of China:

I want to say that most of students pay back their college loans. The reason we mentioned strengthening management over this is to ensure these policies will be implemented thoroughly. The People’s Bank of China (PBC) has made great efforts to promote student awareness of paying back loans since the country introduced college loans in 1999.

Wu Xianting:

This time, the PBC will carry out the following tasks. First, we will fulfill our duty as the central bank to strengthen multi-department cooperation and make sure that every qualified student can get his or her college loans conveniently. Second, we will continue to promote student awareness of the importance of paying back loans. We will order every department and affiliated agency of the PBC to implement the Regulation on Credit Information which was issued last year. We will ask all financial institutions that are involved in college loans to deliver credit information to us. We will help students to cherish their repayment record. Third, we will evaluate the effectiveness of our college loan polices to make college loan program a sound and useful one for underprivileged students.

Nihon Keizai Shimbun:

What defines underprivileged families? Take the standard family income as an example, what kind of family does the policy apply to?

Zhang GuangMing:

This is indeed a very critical issue. How to ensure that the payments are accurately distributed to underprivileged students with genuine financial difficulties is an essential question. This is because national student loans are public resources, so the Ministry of Finance provides interest subsidies and risk compensation. Due to relatively large regional differences in China, disparities in family income still exist. Thus, each region has different standards in determining underprivileged students. For example, the standard for urban districts is different from those for rural areas. Given these circumstances, to obtain a student loan, a student will submit an application, which needs to be approved by the local civil affairs department. Then, the department of student loans management will review the case, followed by verification by the bank. Therefore, there are multiple stages throughout the application for student loans. Regarding the actual implementation of student loans, the percentage of successful applications in the western region is clearly higher than those of the eastern and central regions. The percentage of students with loans in the central region is higher than those in the eastern regions, which is in line with the level of regional economic development in the country.

The State Council holds the weekly policy briefing on July 10, focusing on the improvement of the national student loan. [Photo/Xinhua]

China National Radio:

Minister Du, student loans provide many students with opportunities to go to school. However, good policies need to be implemented. My question is, how do you truly implement the policy to make students in poverty benefit from it? Do related departments have any extra arrangements? How can you ensure students in poverty truly get the funds?

Du Yubo:

Financial assistance to those in poverty is a project that concerns people’s benefits. To implement the policy, I think related ministries of the State Council should coordinate with each other. To be specific, first, every region, university and related financial institution should make detailed regulations and amend documents, such as cooperation agreements and loan contracts on time. Second, governments of different levels should establish and improve the financial assistance administration institutions and strengthen the staff members working on them. Working conditions should be guaranteed to help students go through procedures smoothly. Third, financial departments at different levels should arrange various kinds of compensatory payments — sufficient and on time. Fourth, promotion should be enhanced to make sure more students in poverty get the necessary information.

Wang Kejin:

The security of the funds concerns repayments and breaches of contract. Financial institutions, universities, education departments and financial departments have done an immense amount of work guided by the China Banking Regulatory Commission. Highlighting the importance of repayments, as Minister Du just mentioned, should involve banks and financial institutions. They should try various kinds of promotion before graduates leave campus, keep in contact with them and they can run employment campaigns on campus. Besides, we can also innovate the financial service mode. After graduates leave campus, repayments are spread over a long period of time. We will make it convenient for students to pay the loan — we will innovate the mode so that the repayment can be done online, and students’ parents can also participate in through point-of-sale (POS) machines and e-banking services. The Bank of China also set up WeChat groups to keep in contact with students. What’s more, there is also compensation for loan risks offered by the government, so the security of the student loan is quite good, thanks.

Hu Kaihong (host):

Due to the time limit, today’s briefing is over.