By the end of June this year, more than 800,000 college students from low-income families had received 5.2 billion yuan (US$627.9 million) from a student bank loan program that started in 1999. But with enrollment quotas soaring, so is the number of financially strapped students.

Currently there are about 2.4 million such students, accounting for 20 percent of the total.

At the same time, banks are growing increasingly cautious about lending, particularly in making high-risk, unsecured loans to students who must depend on their own unknown future income to repay the loans.

Vice Minister of Education Zhang Baoqing announced on Tuesday that a new, improved version of the plan will help needy students to overcome these hurdles.

Under the program, poor students can apply for and get loans from banks, repaying them over a certain period after they graduate and find jobs. The government will provide subsidies to pay interest on the loans.

Of direct benefit to the banks is the implementation this year of compensation funds, which are provided by both the government and universities. Until now, the banks were required to assume virtually all the costs and risks.

The banks will also be permitted to grant or deny loans based on their own calculations of potential profit, costs and risks.

National and provincial centers for the management of student loans will be set up to strengthen coordination between lending banks and universities, an area that has been problematic.

In addition, repayment terms have been extended from four years to six years after graduation. Students unable to find jobs immediately may defer the start of repayment for up to two years.

People's Bank of China Vice President Wu Xiaoling expressed confidence in the new plan's ability to help more students stay in school. Officials from the China Banking Regulatory Commission and the Ministry of Finance also seem certain that the program will now be better managed.

In addition to the improved lending program, the central and local governments, as well as the universities, have established various scholarships.

Chinese universities granted 3.3 billion yuan (US$398.5 million) in scholarships last year, aiding 4.5 million students.

The "green light access" scheme ensures that students from poor families are allowed to register even if they cannot pay their tuition on time. The universities also help disadvantaged students to find jobs on campus once they are enrolled. Last year, 1.5 million students benefited from such programs.

(China Daily September 1, 2004)