The wave of rising long-term interest rates is also affecting scholarships．．．even though interest rates were low when students enrolled， the interest rates at the time of graduation apply to repayments， so to what extent will this increase in burden？
Interest rates on scholarships from the Japan Student Services Organization (JASSO), which is under the jurisdiction of the Ministry of Education, Culture, Sports, Science and Technology, are rising. This is because long-term interest rates, which determine student loan interest rates, are rising as the Bank of Japan moves away from its unprecedented monetary easing policy. On the other hand, tuition fees at universities, including the University of Tokyo, which has decided to raise tuition fees, are on the rise, and the burden of educational expenses is likely to become increasingly heavy. (Hakusan Izumi) ◆Relying on scholarships, not working part-time to focus on research A female graduate student in her late 20s living in Tokyo is worried about future repayments, saying, “I don’t want to burden my parents, so I’m borrowing the full amount to cover my tuition and living expenses.” She grew up in a single-mother household and does not have a part-time job in order to focus on her research. The scholarships he is borrowing are Jasso’s Type 1 and Type 2 scholarships, which together amount to more than 200,000 yen per month. Regarding grant-type scholarships that do not require repayment, they argue that “there are limited slots and strict requirements, such as grades,” and that it is not a system that is widely usable. “I’m also worried that my university will raise tuition fees too,” he said. ◆ Grant-type loans have strict requirements, while loan-type loans prevail The Bank of Japan lifted negative interest rates at its March monetary policy meeting. The Bank of Japan is trying to normalize its monetary policy, and long-term interest rates, which had been hovering around 0% for a long time, rose to 1% at one point. As a result, fixed lending interest rates, which had fallen to 0.07% in March 2020, have gradually risen and have exceeded 1% since April this year. In fiscal 2010, 1.19 million students, or 32.6% of students at universities, junior colleges, and graduate schools, used JASSO scholarships. Although the number of people receiving grant-type scholarships increased from about 2,000 to about 340,000 between 2017 and 2022, this is still below the government’s plan (about 600,000). The majority of students are loan-based, with approximately 470,000 students of the first type and approximately 670,000 students of the second type. The loan amounts for the second type, which bears interest, are 575.4 billion yen, and for the first type, 272.3 billion yen, far exceeding the 150.7 billion yen for the grant-type. The requirements for grant-type scholarships have been relaxed, but currently they remain strict, requiring applicants to be from large families or from private universities in the fields of science, engineering or agriculture with an annual income of less than 6 million yen. Makoto Iwahashi of the NPO Posse, who is knowledgeable about youth labor issues, said, “Many essential workers are not getting a raise,” and called for consideration of relief measures such as forgiving outstanding debts. In response, an official from the Ministry of Education, Culture, Sports, Science and Technology said, “The returned money will become the source of funds for future generations. “It’s also difficult from the standpoint of fairness to those who have had their property returned in the past.” ◇◇ ◆If you enroll in 2021 and receive a monthly loan of 60,000 yen, your repayments will increase by 240,000 yen. The interest rate on scholarships is not the rate at the start of the loan, but the rate at the end of the loan, such as at graduation. As interest rates rise, current students are likely to face an increased burden compared to the total amount they had anticipated repaying when they enrolled. For those who enrolled in April 2021, due to the Bank of Japan’s negative interest rates at the time, scholarship interest rates were low at a fixed 0.268%. However, following the Bank of Japan’s interest rate hikes, it rose to 1.21% as of August 2012. I estimated the actual repayment amount using jasso’s repayment simulation. Assuming a monthly loan of 60,000 yen for four years with a repayment period of 16 years, and applying the interest rates in April 2021, the total repayment amount would be 2,946,199 yen (monthly repayment amount of 15,344 yen). However, the most recent interest rate is 3,186,222 yen (16,595 yen), which means the total repayment amount has already increased by approximately 240,000 yen. If interest rates are higher when you graduate than they are now, your actual repayment burden will be even higher. ◇◇◇ ◆Non-repayable grant-type scholarships: “The number of types and amounts is increasing” (omitted) ◆Disadvantages include difficulty in moving or changing jobs (omitted) JASSO offers “grant-type” scholarships that do not require repayment, “Type 1 scholarships” that require repayment but have no interest, and “Type 2 scholarships” that do have interest. The second type of funds include repayments and fiscal loan funds borrowed by the organization from the government. When repaying the original funds to the government, the agency will be required to pay interest to the government. Therefore, when the interest rate on fiscal loan funds, which is linked to market interest rates, rises, the interest rate on scholarships also rises. The number of people repaying scholarships, excluding grants, is on the rise, reaching 4.83 million in 2022. Relief measures for people who are having difficulty repaying include reduced repayments and deferred repayment deadlines. The number of approved reduced repayments in fiscal 2011 increased 11% from the previous year to 41,829. The number of loan repayment deferrals also increased by 5% to 153,124. Tokyo Shimbun, September 30, 2024, 6:00am.
>>1 >The interest rate on scholarships is not the rate applied at the start of the loan, but the rate applied when the loan ends, such as at graduation. This is not a good idea.
Although the lender bears the risk of interest rates falling just as the borrower bears the risk of interest rates rising, it would be fairer to fix the interest rate at the time of the loan application.
>>1 The funds for Chinese and Korean students studying in Japan on government scholarships (free tuition, living expenses, homecoming expenses, and other support) come from taxes!! The funds for Japanese students come from repayments!! We’re not going to let them use our taxes!!! That’s the policy of the Ministry of Education, Culture, Sports, Science and Technology.
If he had voted for the party that reduced the consumption tax, his life would have been a little easier. He’s young anyway, so he probably didn’t even vote.
Scholarships are originally given to students with excellent grades, like Anne of Green Gables, but now even educational loans are being called scholarships, which makes me angry.
There is a separate system for educational loans. Parents borrow educational loans. There is a scholarship system for students themselves. There are two types: one interest-free and one with interest.
Basically, lending to students is a bad idea. This is the time when people in their 20s should be saving for marriage and having fun, so in the end, consumption drops and adults lose out. The total amount of student loans is 9 trillion yen, so just cancel it. They’re going to put together a supplementary budget of about 15 trillion yen anyway, so make it 24 trillion yen.
>>40 No, it’s strange to say it’s a joke because people who can’t get grant-type scholarships and can’t study want to go to college even if they have to take out a loan. They don’t really have to go, but they’re going anyway.
Even if you choose a fixed interest rate, the interest rate will be determined at the end of the loan. That’s definitely something that’s unique to scholarships.
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