About 600 university students have been declared no longer eligible for student loans because of their poor academic performance last year, the Japan Student Services Organization said Thursday.

It is the first time the organization has taken such tough action, which was prompted by a growing number of unpaid loans.

To continue to receive the loans, students are required to renew their applications every spring at the beginning of the school year. They update the schools on their finances and reaffirm their pledge to pay the loans back.

Universities nationwide, both public and private, assess the applications and examine the students’ academic performance, including whether they earned enough credits in a given year.

If their academic performance is deemed poor, universities have a choice between disqualifying them either permanently or temporarily, or just giving them a warning to study harder. Decisions by the universities are reported to the JSSO before being finalized.

The increasing number of recipients failing to pay back the loans after graduation prompted the organization last July to tighten its verification process for the university reports.

Subject to the stepped up scrutiny were students who got away with a warning in the 2012 academic year. Of the 12,329 students in this camp, 586 were deemed by the JSSO as no longer deserving in principle to continue receiving the loans. All lost their loans for this academic year, though for some they were only suspended.

“We would like once again to remind those receiving loans that the primary objective of our program is to help them stick with their academic enthusiasm. So we want them to study hard until they graduate,” Yoshiyuki Maehata, chief spokesman for the JSSO, told The Japan Times. The organization plans to continue the beefed-up eligibility tests this academic year.

A total of ¥87.6 billion was found yet to be reimbursed to the organization at the end of the 2011 academic year, according to a JSSO report.

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