Restructure the loan system
(China Daily)Updated: 2007-07-17 07:08
The student loan program needs a better structure and more government support, says an article in the Yanzhao Metropolis Daily. The following is an excerpt:
It was reported recently that some universities had declined to issue certificates of graduation and academic degrees to students who had not paid back their student loans before graduation.
To withhold students' certificates because they are in debt is obviously an unreasonable practice. First of all, certificates of graduation and academic degrees are the only proof of their qualifications. They are not property and should not become security for debts. Second, students need loans because they are poor, so how can they be expected to pay off their debts before they graduate? More importantly, withholding their certificates will only make it difficult for them to find jobs. How can these students pay their debts without earning wages?
Of course, some universities hold onto students' certificates because they have no other options. Banks tend to pressure universities to urge students to pay back the loans, leaving the schools in the difficult position of having to withhold certificates.
The phenomenon reflects a shortcoming in institutional design of the student loan system. Student loans, though issued by commercial banks, are not a commercial product. They are more like a form of public welfare. The government has an unshirkable duty to guarantee such loans.
The situation has also cast a light on the imperfections in the details and supporting systems of the student loan system. For example, the maturities of loans are too short. The term is currently set at four years and can be extended to six years at the most. But students are facing increasing employment pressure coupled with declining starting salaries. The short term of payment only adds to the difficulties of recent graduates.
(China Daily 07/17/2007 page10)
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