Japan Press Weekly

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2016 February 17 - 23 [SOCIAL ISSUES]

Young people in Japan are struggling with repayment of so-called ‘scholarship’ loans

In Japan, a majority of university students are using “scholarship” student loan programs. This has led to a situation where many young people are experiencing economic, physical, and mental hardships due to delinquent loan payments and harsh loan collection measures such as the seizure of bank deposits and attachments of earnings.

A 33-year-old man was shocked to face a lawsuit in which a loan program operator, the Japan Student Services Organization (JASSO), demanded an immediate payment of about two million yen in student loan debt and delinquent fees of 500,000 yen. He said, “I know it’s my fault because I fell behind in making the loan payments. But, it is difficult for me to accept that the loan operator took my case to court without offering any options.”

JASSO is mercilessly taking legal actions against student loan recipients whose loan payment is overdue. In FY 2012, the organization lodged 6,193 lawsuits, a hundredfold increase from eight years ago. In FY 2014, the number of cases in which JASSO seized delinquent debtors’ wages and assets based on court orders reached 320, and 17,279 student loan borrowers were blacklisted.

Harsh collection of student loans began in 2004 when the government led by Prime Minister Koizumi Jun’ichiro privatized JASSO’s predecessor, the Japan Scholarship Foundation.

After the privatization, counselling services for loan recipients regarding repayment were eliminated and half of approximately 400 regular workers were replaced with non-regular workers.

Okamura Minoru, the JASSO workers’ union secretary general, criticized the organization for giving top priority to increasing the collection rate and for disregarding its role as an operator of public “scholarship” programs.

The Japanese Communist Party has demanded the creation of a grant-type scholarship program. In addition, as the urgent step which needs to be taken, the JCP is calling for making all student loan programs interest-free, establishing a system to reduce burdens on loan repayment, and prohibiting heavy-handed collection tactics.

Past related articles:
> JCP issues proposal calling for improvement in scholarship program [October 8, 2014]
> Create grant-type scholarship system at once: JCP Miyamoto [February 18, 2014]
> Gov’t should stop harsh collection of scholarship loans: JCP Miyamoto [April 1&2, 2013]