28 October 2010

Consumer credit reform impacts student loan program in Japan HE

One of the consequences of the 'massification' of higher education in Japan is the total cost of financing that education for 3 million students. Moreover, even as Japan's recessionary economy has experienced long-term price deflation, the costs of higher education and health care have gone up.

One reason for the increase in these areas is a reduction of government subsidy. Japan is consistently cited as having one of the lowest government contributions to education and higher education in the OECD. However, government contributions to higher education overlap with government spending on scientific and medical research, so sometimes it is hard to keep track of this as a social or educational indicator.  

The long-term recessionary economy has meant families tap into household savings to pay for education and health care. In the case of working class families who are trying to put a family member into higher education for the first time, savings are often lacking. So are enough scholarships. So universities, students and their families are turning to student loan programs. However, one loan program has hit a snag because of the unintended consequences of a consumer credit law reform.   

Read the entire Yomiuri article at the link below. Excerpts follow.


Banks bail on low-interest education loans

The Yomiuri Shimbun

In an unexpected side-effect of new regulations meant to deter aggressive sales practices, some banks, including Resona Bank, have stopped accepting applications for low-interest education loans designed for university and vocational school students.

Three banks operated by Resona Holdings, Inc. and some regional banks have terminated the low-interest loans, designed to help pay admission, tuition and other fees. The loans are extended to students' parents in cooperation with the educational institutions, which sometimes act as guarantor or contribute to interest payments.

It is the first time a major bank group has been known to withdraw from a cooperation loan program of this nature.

The cooperation loan program hit a snag when the revised Installment Sales Law was enacted in December.

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