A government-affiliated body in charge of scholarship loan programs plans to halve the current 10 percent interest rate for late repayment to assist low-income earners amid the economic downturn, sources said Saturday.
With calls growing to lessen the burden on students facing financial hardships, the Japan Student Services Organization is making arrangements for the interest rate to be cut to 5 percent during fiscal 2014, at the earliest. The body is under the education ministry.
According to the organization, outstanding payments that are past their due date climbed to a record high of around ¥87.6 billion at the end of fiscal 2011. At present, an annual interest rate of 10 percent is charged on overdue monthly repayments.
The education ministry intends to lower the interest on late payments to between 1 and 2 percent for the first few months of delinquency and to keep the highest rate capped at around 5 percent even if the nonpayment persists, the sources said.
Ministry officials will revise a relevant ordinance to reflect the envisioned changes, according to the sources.
From fiscal 2012, which ended March 31, the ministry launched a moratorium for scholarship loan recipients whose annual income after graduation is ¥3 million or less. It is also considering such steps as creating a system to exempt academically elite students from repaying part of their loans.
But for loan recipients who delay payments over a long period, the student services organization will take measures to collect the money, for instance by taking the matter to the courts or reporting the delinquency to credit information agencies, the sources said.