Despite the increase, he said, most students still would leave no stone unturned to get money for tuition and living expenses through any other channel rather than a bank.

After this year’s autumn enrollment, China has now 7 million university students. Among them 20-30 percent are from lower-income families and 10 percent from poverty-ridden families. Yet, strangely enough, the state-subsidized education loans do not appeal much to these groups of students, especially freshmen, despite Chinese government encouraging poor students to get bank loans to help with their education.

Traditional mindsets against debt contributes greatly to student reluctance to take out loans. Borrowing on credit is relatively new in China, and many people still think borrowing money is something shameful. This is especially true in north China where people are more conservative, according to a survey conducted in Beijing, Shanghai, and the coastal province of Zhejiang.

Students in the north feel pressured to steer clear of loans for fear that people will look down on them for being poor. Some parents don’t like loans because they think the debt will pose too great a pressure on their children.

“I wanted to apply for loans, but my relatives were against it, saying that I, as one of the very few university students in a big family, should be supported by them all. So why bother borrowing money? They were afraid I would be looked down upon by my peers and might not study well under the pressure of debt,” said a freshman from Peking University.

Another freshman said, “If even a slim hope were left, I would not choose a bank loan. I do not consider borrowing money something to be proud of.”

Meanwhile, in the south, students find that getting a bank loan makes them feel capable of supporting themselves. The more loans they get, the better they feel.

“The more loans I receive proves that I am trusted to have the ability to pay back, which makes me feel valuable and encourages me to study harder,” said a university student in Zhejiang.

Another student from the Fudan University in Shanghai agreed: “Using my future money to realize today’s dream seems attractive to me. I spend my own money, why should I be ashamed.”

Whatever the attitude of their clients, banks have their own complaints about student loans.

For various reasons, a credit rating system does not exist in China, something that entails great risk for banks. Many banks are offering loans to university students just because of state policy. To reduce risks, they prefer students with excellent academic performance and are reluctant to give loans to freshmen.

What’s more, some students have proved to be bad clients. Some can’t be traced after they graduate. Experts urge that a credit rating system be established to better manage the loan business. More contact between banks and university students would not only enhance the awareness of modern personal financing among the young but also accumulate information needed for the establishment of a credit rating system.

Apart from all this, the concept of student loans is not a familiar one to most students. Most freshmen do not know the procedures and are wary of trouble and inconvenience. Information about student loans needs to be improved, with students being educated about both their procedures and requirements.

Relevant state departments should be engaged in cultivating the concept of personal financing and in helping people to realize the significance of a good credit rating. Efforts from all sides could pave a more solid way to promote state-subsidized loans. This would not only boost the financial business but also help more students with their education.

The system of state-subsidized student loans was launched in 1998 jointly by the People’s Bank of China, the Ministry of Education, the Ministry of Finance, and the State Taxation Bureau to support poor university students to finish their schooling. Under the system, the loan interest rate is equally shared by the state and the individual person. So far, the system has benefited 170,000 students with a total contract loan of 1.26 billion yuan.

(china.org.cn by Guo Xiaohong sources from China Economic Times, China Youth Daily, Liaoning Education Press and China News Net 09/29/2001)