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Tuesday, 30 April, 2002, 10:54 GMT 11:54 UK
Rising debts burden Chinese students
College students
Universities have started charging fees
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By Duncan Hewitt
BBC Shanghai correspondent
Half of university students in China who have received student loans have failed to repay them, banks have warned.

The Shanghai Daily newspaper said the problem was so bad that a special national database would be set up to track students' credit worthiness.

Officials complain that some students are using bank loans to buy expensive jewellery for their girlfriends

Special low interest education loans were introduced three years ago to help poor Chinese students cope with rising education costs.

But some students have found them hard to repay, while others have reportedly exploited the system to fund expensive lifestyles.

The loan system was introduced after China's once-free universities began charging tuition fees. These now range from around $500 to $1,200 a year.

Students can repay the loans interest free during their studies, or at low-interest rates once they find a job.

Soaring fees

Officials complain that some students are using bank loans to buy expensive jewellery for their girlfriends or to hire private apartments with no intention of repaying.

Student, China
There is a growing gap between rich and poor
The Shanghai Daily reported that in some parts of China loans are now being limited to students from the very poorest families. But analysts have warned that this could exclude some students who genuinely need the loans, making it hard for them to afford to study at university.

Problems with loan repayments are common in China where consumer credit is a relatively new phenomenon. Yet many students are thought to have struggled to repay their loans simply because of the rising costs of studying.

State media say education fees are soaring as government policies force universities to generate more of their own income, and banks have also been criticised for making the application procedures for student loans too complex.

The Chinese Government says it wants to promote higher education in order to help boost the country's economy, yet critics say the authorities are still not investing enough in education, and they say student loans will not solve the problem.

See also:

04 Sep 01 | Asia-Pacific
Chinese university in favouritism row
11 Jul 00 | Asia-Pacific
Chinese police probe exam scam
14 Aug 99 | From Our Own Correspondent
China's educational elite
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