Student Loan Program

College students can get long-term state loans to pay tuition from this spring semester. Under the ``study-now-pay-later" program, student borrowers will be allowed to pay back their loans after graduating and landing a job. Financially-strapped students welcomed the debut of the credit package, but not without some worries about paying back their debt.

Their main concern is that the interest rate for the loan is set relatively high at 5.8 percent. The rate might go up following possible hikes of the market interest rates, thus bringing heavier burdens to borrowers. Some students described the program as an ``interest time-bomb," which could explode after graduation. Others said the loans will weigh them down until they retire from work.

Excessive debt payment burdens may also lead borrowers to default on their obligations and file for individual bankruptcy. The bad loans then must be shouldered by the government using taxpayers' money. Thus, it is necessary that the authorities make the utmost efforts to make student loans available at a much lower interest rate. They also need to do more to guarantee the success of the program that is designed to help students of poor families study without experiencing financial difficulties.

For this, the government is required to go all-out to tap more financial resources to provide more loans to students at cheaper borrowing costs. Besides, it must provide more financial support to colleges and universities in a move to reduce their dependence on tuition for their school operations.

The government currently sets aside 0.6 percent of the nation's gross domestic product (GDP) for financial support for higher educational institutions. The figure is only half the average 1.2 percent of the 30 countries belonging to the Organization for Economic Cooperation and Development (OECD). And 75 percent of local colleges and universities' budgets come from tuitions paid by students, far higher than the OECD average of 25 percent. Against this backdrop, the nation's higher learning institutions cannot join the ranks of the world's prestigious schools, leaving students stripped of their right to better education.

Together with the loan program, the government plans to place a yearly cap on the increase rate of tuition in order to keep colleges and universities from hiking tuition excessively. According to official statistics, tuition fees skyrocketed by 115.8 percent between 1999 and 2009. We urge colleges and universities to refrain from tuition hikes so that the burden on students and their parents can be eased. Instead, they must make efforts to diversify their sources of income in order to ensure that there are no students who quit their studies due to financial difficulties.


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