Posts Tagged ‘student loans’

Beware of bureaucrats bearing student loans

Monday, February 20th, 2012

If you go to the University of Tokyo, you not only are more likely to receive an interest-free loan, but you'll probably get a job that will allow you to pay back the loan more readily.

As we explained in an earlier post, university-level scholarships, meaning grants, are pretty hard to come by in Japan. Though the term shogakukin is usually translated as “scholarship,” it’s really a student loan, administered by the publicly funded Nihon Gakusei Shien Kiko, or Japan Student Services Association (JASSO). We’ve already talked about how JASSO has increasingly cracked down on graduates who are slow in paying back these loans. According to the Asahi Shimbun, the number of lawsuits the association has brought against debtors increased ninefold over the past five years, owing mainly to the fact that graduates have not been able to find gainful employment.

The newspaper illustrates the problem with the story of a young man in Kitakyushu who last summer was instructed by JASSO to pay the entire remaining balance of his ¥2.2 million student loan. After graduating from a private university in 2006, he found a job selling kimono and started paying back the loan at a rate of ¥13,000 a month. Five months after starting the job the company went out of business. He took a job in a restaurant, but it only paid ¥140,000 a month and he was unable to keep up payments. He asked for and was granted an extension. In 2007 he got married and started making the payments again, but after a year and the arrival of a baby the burden became too much, so he asked for another extension. He quit the restaurant in June 2010 and supported his family with temporary jobs. He started making payments again but last spring JASSO asked him to settle the loan and pay back the entire balance, which amounted to ¥1.9 million. When he didn’t respond, JASSO threatened him with a lawsuit. Eventually, he refinanced the loan, which now included a penalty, agreeing to pay ¥15,000 a month until 2023.

JASSO offers two types of student loans. The first type (dai-isshu), which carries no interest, is approved for students whose grade-point average in high school is at least 3.5 (out of a possible 5.0) and whose household income is less than ¥10 million a year. The second type (dai-nishu) carries an interest rate of up to 3 percent and, according to the Wikipedia entry on shogakukin, is given to anyone who applies for it and, presumably, doesn’t qualify for the first type. A lawyer interviewed by the Asahi points out that the majority of people threatened with lawsuits by JASSO are type-two loan recipients, who typically go to non-elite schools and have trouble finding steady employment after they graduate. The gap between their expectations of what a university degree will provide and the reality of the job market can be inferred by the statistics. In 2006, JASSO sued 547 former students. Last year they sued 4,832.

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Government organ sets sights on student-loan scofflaws

Thursday, September 16th, 2010

Abandon all financial hope ye who enter here: Tokyo Univ. of Fine Arts

Abandon all financial hope ye who enter here: Tokyo University of Fine Arts

Education is big business in Japan, and as with all big businesses there are lots of government agencies and organizations who make money from it. In turn, these public organs can find themselves in just as much financial trouble as private companies, what with the continuing economic downturn.

Take the Nihon Gakusei Shien Kiko, or, in English, Japan Student Services Association (JASSO), which is mainly responsible for distributing university scholarships to qualifying students. Before we go any further, these scholarships are not what you might expect them to be if you went to school in the West. For some reason the word shogakukin is translated in English as “scholarship,” which in America, at least, describes grants given to students with extraordinary abilities, special needs or both. In Japan, shogakukin are essentially student loans. Except for some special programs carried out by individual universities, there are no grants.

JASSO is finding itself in a pickle thanks to the recession. According to the association’s statistics, only about 60 percent of university graduates in 2009 have found regular full-time employment so far. This portion, however, marks an increase over recent years. In 2004, the percentage was 53 percent for men and 59 percent for women. Since then the portion has risen slightly for men, but has dropped to about 35 percent for women. During the bubble era of the 1980s, about 80 percent of college grads found regular full-time jobs. The portion peaked in 1991 at 81.3 percent, and has declined ever since.

Many college students take out student loans from JASSO, and because fewer and fewer are finding gainful employment, the number who are delinquent with loan payments is increasing. Last year, the number of people who were more than three months behind on their payments was 2.6 times the number in 1999. These delinquent payments — not the balance or money already paid, only the money that is late so far — amounts to a hefty ¥263 billion. About 2,370,000 former students are behind in their payments, and JASSO is having a difficult time tracking them down. That’s because the association assumed the function of a different government organ called Nihon Iku Eikai in 2004 without updating its system, and they can’t keep up with the sudden increase in loan scofflaws. This is a big problem because the money they receive from former students is used to fund the “scholarships” they give to new students. This year the amount of money they will lend to university students is a little more than ¥1 trillion. That’s 2.4 times the amount they lent in 2000.

JASSO offers two types of loans, one with a maximum interest rate of 3 percent, and one that is interest-free. About half of Japanese high school graduates go on to four-year universities (the same as in the U.S., but much less than South Korea, where the matriculation rate is 89 percent), and one of the myths is that public universities are free. Actually, they are only slightly cheaper than private ones. The Tokyo University of Fine Arts, a public institution, requires ¥817,000 for the first year and then about ¥535,000 tuition each year thereafter. Waseda, the country’s premier private school, costs ¥1.2 million the first year and ¥752,000 every year after that for a liberal arts degree. That doesn’t include books, room & board and the many supplementary fees that universities require depending on your major.

So getting a good job after graduation is essential, in more ways than one. JASSO says it will start cracking down on scofflaws by sending notices to 2,360 of them at first, informing them that if they do not catch up with their payments by a certain date, they may be placed on a blacklist that will make it difficult for them to secure credit in the future.

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