Students' loan defaults
2010-Jan-14 07:52:15

Offering low-interest student loans to those who cannot afford a college education is an essential guarantee of equal opportunity.

Despite the recent climb in jobless new college graduates, a college education remains an important bridge for rural teens to cross the deep and wide urban-rural divide. It is also one of the few possible paths for urban underdogs to change their lives.

Parents seldom hesitate to tighten their belts to make sure their children do not let go of the possibly life-changing opportunity. The government has now helped them with the student loan programs.

The wonderful idea once prompted expectations of a circle of virtuousness - needy families would not have to lower their standard of living to support their college-bound teenagers; teens would be better equipped for life's potential challenges and opportunities; the country would see a larger pool of talent; and, of course, banks can collect some, though meager, profits. That should have been a win-win, happy scenario.

By the end of 2008, almost 4.4 million students received such loans. But to the disappointment of many, the pattern of virtuousness is now cracking.

The negative feedback from campuses over the years has people worrying about the future of student loans. We have been inundated with reports of college students failing to pay back the loans. But the messages from Guangdong province sound more unsettling.

When commercial banks involved in student loan programs backed off in 2003, citing difficulties in recovering their money, Guangdong authorities worked out a cooperative program with the State Development Bank that was backed by schools. The colleges pay security deposits so that their students could get money from the bank.

The dramatic rise in the number of graduates failing to repay the loans has landed both the bank and province's schools in trouble. Accusations have been tossed around in every direction.

The belief that students who have not paid the loans back should be blamed is not totally groundless. We do not like the replies from students that they defaulted on their loans because they had not been properly reminded. For that, they deserve to be reminded they are legally obliged to pay back what they have received from the bank. And perhaps all our youngsters need to be a little more grateful for what they have.

But let us not dump all blame on them. Many of them have reasons for defaulting, though that is not an excuse for refusing to pay the pretty low interest. For one thing, we should not ignore the impacts of the increasingly tight job market.

It is heartbreaking to hear that some students have said they have to find a way just to feed themselves before thinking of paying their debts. This a very real problem troubling many of today's new college graduates.

While fumbling for ways to make student loans affordable to all parties, we must continue to help those young people get jobs.

(China Daily 01/14/2010 page8)

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