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Q: At institutions of higher learning in almost every country, there are some students who have to give up their studies because of poverty. Is this the case in China? What measures have been taken to help poor students finish their studies? A: The kind of poor students you mentioned also exist in China, as China is a developing country. To help them continue their studies, China has worked out and launched a series of policies to aid students at institutions of higher learning who have financial difficulty. These policies include setting up scholarships and loans for students, introducing work-study programs, providing subsidies to students with particularly difficult financial situations, reducing and remitting tuition fees and allowing schools to proportionally take some money from the tuition fees they have received to aid students with financial difficulty. However, higher education in China has developed too quickly, especially since the country adopted a policy of expanded enrollment in 1999. At the end of 2004, there were about 13.34 million undergraduate students enrolled in regular institutions of higher learning, with a 17 percent gross enrollment rate of higher education, entering the internationally recognized stage of popularized development. But the number of students with financial difficulty is also rising rapidly. According to government statistics, there are 2.4 million students with financial difficulty in regular institutions of higher learning, accounting for 20 percent of current students, among which 1.6 million are students with a particularly difficult financial situation. With regard to this, China started to promote state-granted loans to help students. During students' stay at school and within the term of repayment of the loan after graduation, the government will pay half the interest. Since this policy was implemented, the country has examined and approved 1.15 million students for loans, with the total amount of approved loan contracts amounting to more than 9.6 billion yuan (US$1.16 billion). There have been 1.08 million students receiving 6.98 billion yuan (US$844.01 million) in successive loans, which helps a large number of poverty-stricken students successfully continue their studies. But the promotion of student loans is followed by such problems as an imperfect social credit system, students' weak awareness of paying back the money, and the banks getting no indemnity for risk. To address these problems, China has made some adjustments to its student loan policy. First, it has introduced the market method of inviting bids in determining the rate of indemnity for risk for commercial banks. Second, it has established both national and provincial-level administrative centers for student loans, and strengthened the cooperation between banks and institutions of higher learning. Third, students with student loans are to pay back all the interest themselves after graduation while the state pays the interest for them while they are in school. As well, the government has adjusted the designated time for repaying loans from immediately after graduation to within a year or two after graduation if students do not find jobs, and the term of repayment has been extended from four years to six years. For the students who voluntarily go to work in arduous areas or industries for a certain period of time after graduation, the state will pay the principal and interest for them in the form of scholarships. To share the risk of providing student aid loans, the national administrative center for the loans has also established an indemnity fund for risk, which is borne half by the central finance and half by institutions of higher learning. The fund will give banks indemnity for risk in certain proportions to the loans that the banks have provided during the year. And the 50 percent of the fund borne by the institutions of higher learning will be linked with the situation of students' repayment of the loan or breach of the contract. If a high number of students fail to pay back the loan, the schools have to give more money to the fund. This will increase the schools' management responsibility before and after the loan is provided. With these policy adjustments, poverty-stricken students can set their minds at ease since their financial difficulty is solved, while at the same time, the risk of providing student aid loans is reduced.
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