Interest-free money helps millions realize educational goals

Luo Kelian said he and his younger brother, Luo Hongfa, would not have had the opportunity to attend top universities in China without the national interest-free student loan program.

The 22-year-old, who hails from a small village in Luchuan county in the Guangxi Zhuang autonomous region, is a senior at Beijing Jiaotong University, and his younger brother studies at Tongji University in Shanghai.

They have both applied for interest-free student loans every year since they were freshmen. The family has financial difficulties as their father struggles with injuries sustained in a car accident, and their mother has breast cancer. Despite his injuries, Luo's father still does errands and odd jobs to support the family, providing their only source of income.

Luo Kelian's tuition and accommodation fees are 6,250 yuan ($966) per year. He applied for a loan of 6,000 yuan the first year, 7,000 the second, and 8,000 for the third and fourth years.

Luo Hongfa has applied for 6,500 yuan each year for the past three years to cover tuition and accommodation fees of 6,200 yuan.

Thanks to his academic performance, Luo Kelian was able to get more than 40,000 yuan in scholarships and grants, which covered his living expenses. He has already enrolled in his university's postgraduate program to pursue a master's degree in vehicle engineering, and because of his strong overall performance, he was exempted from the national entrance examination for postgraduate studies.

"Hardships and financial difficulties have taught me to be resilient and to embrace life with as much positivity as I can ever since I was a child," Luo Kelian said.

The student loan program has benefited millions of students who, like the Luo brothers, could not otherwise afford to attend college.

On Sept 1, officials at an executive meeting of the State Council, China's Cabinet, chaired by Premier Li Keqiang, decided to raise the loan ceiling for college students by 4,000 yuan a year from the start of this autumn semester to help those with financial difficulties pursue their academic ambitions more easily.

Undergraduates can now obtain State loans of up to 12,000 yuan annually, while postgraduate students can borrow up to 16,000 yuan a year.

Students do not need to repay the debt while studying, as the government takes care of interest generated during this period, officials said, also urging universities to offer students more part-time jobs to earn extra money.

Ou Wenhan, assistant minister of the Ministry of Finance, said at a recent news conference that China began offering interest-free loans to help students with financial difficulties pay tuition and accommodation fees in 1999. It has since doled out more than 300 billion yuan, benefiting more than 15 million students nationwide.

Interest-free loans totaling 37.8 billion yuan were allocated last year, and loans have grown at an average annual rate of 12.7 percent over the past decade, he added.

The loans are mainly used to cover tuition and accommodation, but any extra money can be used for daily expenses, Ou said, adding that students can apply for a five-year grace period after graduation, during which they only pay interest, and that the maximum period for repaying a loan is 22 years.

"No college student should drop out due to financial difficulties," he said. "Enabling students to change their destinies and realize their dreams through education affects millions of households, national development and the future of China."

Huang Jiayu, an official at the Ministry of Finance, said that although loan ceilings have been increased, the ministry does not put too much pressure on students to repay the loans, nor does it expect the number of nonperforming loans to significantly increase, as most students who apply do not choose to borrow the maximum amount.

As the personal credit system and people's awareness of the importance of credit increases, college students have been more active in repaying their loans, he said.

Sun Yuli, a senior student at Beijing Jiaotong University, said that she has been able to devote her attention to her studies over the past four years thanks to the loan program.

The 21-year-old said that when she was in fourth grade, her father suffered a brain hemorrhage, and after undergoing three operations, the family's savings were spent and they went into debt.

Her father has been paralyzed ever since, and the family of four relies on her mother, who works at a school canteen.

Sun said that she has always studied hard. She was ranked first in her county－Tai'an in Shandong province－among all the students who took the high school entrance exam, and was exempted from tuition fees at high school.

She has applied for 5,500 yuan in student loans each year for the past four years, enough to cover tuition fees, as she does not want to build up too much of a credit burden.

Sun said she has worked part-time at posts offered by the university and has found part-time work outside. She added that she was also able to get scholarships and grants thanks to her academic performance.

As an electronic information engineering major, Sun will go on to pursue a master's degree in a related field as there is great demand for IT talent in the country since it embarked on the path of innovation driven development.

"I am glad that I will be able to take what I have learned at school and use it to contribute to national development," she said. "At the same time, I will be able to improve conditions for my family and create a better future for myself."