High Insolvency Rates Stop Loans

Last spring, 190 of 745 graduates of China University of Political Science and Law that were due to repay their student loans were unable to fulfill this financial obligation. This represents an insolvency rate of 26 percent. The Industrial and Commercial Bank of China (ICBC) Xinjiekou branch has consequently stopped granting study loans to the university. This is a phenomenon throughout China, attributable to the credit system backing student loan policy never having been perfected.

Information from the Ministry of Education shows that a new plan for granting student loans is to go into effect. In future, the Ministry of Finance will accept bids from non state-owned commercial banks only. The new policy does not guarantee no-risk to banks granting loans.